POV

The importance of innovation and creativity in business (Boyles 2022) and in society at large (Moran 2012) has long been recognized. Creativity is also generally viewed as a critical element in marketing and advertising. Indeed, creativity is often considered to be among the most important and unique contributions of the marketing and advertising functions.

Creativity has been shown to serve as a crucial driver of firm profitability and sustainability (Bollinger 2020), that enables companies to increase their business performance and gain a sustainable competitive advantage (Im & Workman 2004), by differentiating their products from the competition (Song & Montoya-Weiss 2001). It supports the generation of original and valuable ideas (Amabile 1983) as well as the development of creative products (Amabile 1996).

In a recent study, 82 percent of marketers saw creativity as a superpower of marketing (World Federation of Advertisers 2022). In that same study, 28 percent viewed creativity as critical for business. According to Rosengren et al. (2020), creativity enables organizations to increase the attractiveness and memorability of their advertising campaigns, standing out from their competition. It acts as a catalyst for brand recognition, an anchor for consumer memory, and a bridge that connects the commercial message to the audience’s emotive landscapes.

Advertising researchers have argued that creativity is the X factor that can elevate the functional to the phenomenal, transforming mere information into a compelling narrative that resonates with consumers on a profound level (West et al. 2019). The advertising industry, unsurprisingly, concurs with this view and claims that “Creativity is fundamental to best-in-class marketing. It has often been called the spark and driving force behind effective marketing communications.” (LIONS and WARC 2023).

The Creativity “Crisis”

In the face of such opinions, it is perhaps surprising that there are concerns about current investment in creativity, its contributions, and its effectiveness, at least as measured by financial performance. Institute of Practitioners in Advertising (IPA) publications by Field (2019) and Wood (2019), have argued that there is declining trend in the effectiveness of creatively awarded campaigns, backed up by IPA data that show creatively awarded campaigns were no more effective than non-awarded campaigns.

Such concern is not unique. Similar concerns about the state of creativity in advertising and society at large are common. (Barbot and Said-Metwaly 2020; Bronson and Merryman 2010; Kim 2011). Such concern exists even as evidence suggests that innate creative talent has not significantly diminished over time (Barbot and Said-Metwaly 2020). Even if creative talent is available, there is the question of whether enough time and resources are being invested in creativity. The Marketing Accountability Standards Board (MASB) has initiated a project to answer this question (MASB 2024; Stewart 2023).

Systematic research on creativity has its origins in the 1950s (Runco and Jaeger 2012). In the subsequent 75 years, a large and diverse body of literature has been generated, and comprehensive research collections have been published (Hennessey and Amabile 2010; Kaufman and Sternberg 2019; Runco 2004). This literature has addressed theories of creativity (Runco 2023), factors that facilitate and inhibit creativity (Nickerson 1999), characteristics of people who exhibit unusual creativity (Csikszentmihalyi 1996), and characteristics of creative organizations (Steiner 1971), among others.

In addition, bodies of work have focused on the role of creativity in numerous domains, venues, and disciplines ranging from the arts to the sciences (Kaufman and Sternberg 2019). This review of the literature on creativity – at least with respect to the definition of, management of, and financial return on creativity in advertising – is the first step in the broader MASB initiative.

Challenges to Investing in Creativity

A review of the literature makes clear that there are positive returns to investing in creativity, whether at the level of strategy development, product message (value proposition), or message delivery. Nevertheless, there are frequent expressions of concerns about a lack of creative focus in advertising, marketing, and business more generally (Bronson and Merryman 2010; Burghes 2024; Field 2019; Mahdawi 2022; Ness 2015). The current state of the literature suggests that these challenges are less about knowledge related to creativity and research on the role of creativity, and more about a lack of knowledge and facility with what is known. The white paper, “The State of Creative Effectiveness” by the Lions and WARC (2023), delves into the complexities and challenges currently faced in measuring creative effectiveness in advertising.

This paper concludes that more than 40 percent of marketers are discouraged when it comes to promoting creativity at the boardroom level and offers a critique of existing practices, exposing potential disconnects between academic theories and industry applications. It also concludes that two-thirds of marketers find it difficult to understand the contribution of marketing to the bottom line. If marketers do not understand this relationship, they will certainly not be able to explain it to others.

The European Association of Communications Agencies (EACA) and Effie Europe (2022) further examine the debate regarding rigor and practical applicability, pointing out the gap between what is known about the role of creativity in effectiveness and how it is applied – or often not applied – in real-world scenarios. Their analysis indicates a need for bridging theory and practice, ensuring that the insights derived from valid research are actionable and valuable for practitioners. Reinartz and Saffert (2013a, 2013b) also explore the practical application of creativity within the advertising industry.

At the heart of much of the debate about investments in creativity and the creativity crisis, are questions about financial return. These are fair questions, and anyone asking for resources should be prepared to justify the need for and use of the resources so requested. There are two dimensions of appropriate justifications: (1) the anticipated return, including the amount and timing of the return; and, (2) the risk that the return will not materialize, that costs will not be recovered, or that there will be negative unintended consequences.

As the Lions and WARC (2023) white paper and others (Allocadia 2021; Stewart 2019; Webster et al. 2005) make clear, there is significant criticism of marketing’s ability to quantify its contributions in financial terms. The excuse that it is difficult is not credible. All business is difficult! The CEO and CFO must justify the use of resources and the return on those resources for the whole firm. Justification of an advertising campaign is much easier.

Similarly, the frequent complaint about the “short-termism” of CEOs and CFOs fails to acknowledge the considerable understanding of short-term and long-term outcomes of the people in these roles and the facts that, (1) short-term failures often reduce options in the future; and, (2) funds received in the short-term are worth more than funds received in the future – the concept addressed by discounted cash flows.

Advertising and marketing generally will be considered a cost and managed as such without a clear link to the financial performance of the firm. Investments are by definition forward looking and linked to financial performance.

DOWNLOAD the Marketing Accountability Standards Board 2024 report on “The Financial Return on Creativity: The Case of Advertising”