Advertised Emissions: Explained

Tim Cross 28 June, 2023 

In order to effectively cut greenhouse gas emissions, you first have to be able to measure them in order to know where most emissions are generated, and make the appropriate changes.

Companies across the media and advertising landscape are now taking steps to measure the emissions generated by their business – which includes their own direct emissions, and those generated by other companies in their supply chain as a result of their business. Given the complex web of relationships which connect up advertisers with publishers and broadcasters, these calculations can be very complex.

But there’s a whole category of emissions which some in the industry say is going largely unaccounted for, ‘advertised emissions’. Those who advocate for this concept believe that until advertised emissions are taken into account, a major source of emissions will be ignored by the industry.

The Basics

The term ‘advertised emissions’ was coined by Purpose Disruptors, a group seeking to drive sustainability within the advertising industry, and econometrics firm Magic Numbers. It was inspired by ‘financed emissions’, a concept used in the financial services industry which calculates the GHG emissions associated with a financial institution’s loans and investments.

Applying similar logic to advertising, advertised emissions seeks to measure the emissions which result from the extra consumption of goods and services which is itself driven by advertising. As Purpose Disruptors puts it, “The more adverts we see, the more stuff we buy, the more stuff gets made and more emissions are generated”.

The concept can be applied to businesses across the landscape. For agencies, it relates to sales generated by ad campaigns they work on for clients. For ad tech companies, it would include sales generated by ads which they facilitate. And for media owners, it would include sales generated by ads which run on their media properties.

The Technical Details

At an industry-wide level, advertised emissions are quite simple to measure.

For each industrial sector, Purpose Disruptors and Magic Numbers look at the total ad spend within each sector, and the average return on ad spend in each sector. This shows the extra sales generated by advertising, in money terms. For example, if £100 million is spent on advertising, and the average return on ad spend is 5, then £500 million worth of sales is generated by advertising in that sector.

This figure is then combined with the average GHG emissions generated by that sector per £ of output. So, when £100 worth of goods and services are sold within an industry, what quantity of GHG is generated as a result? Putting these figures together then gives advertised emissions – the emissions generated as a result of extra goods and services created and sold as a result of advertising.

The formula then is:

Advertising spend by sector x Advertising return on investment by sector x GHG emissions per £ of output by sector = Advertised emissions by sector

Purpose Disruptors calculates that total UK advertised emissions in 2022 reached 208 million tonnes of CO2eq (carbon dioxide, or equivalent weight of other greenhouse gases). This was up from 186 million tonnes in 2021.

But while calculating advertised emissions is not too difficult at a sector-wide or industry-wide level, calculations are more complicated for individual businesses.

In large part this is a problem of attribution. Imagine that an agency creates and executes a digital ad campaign for a major car brand, and the resultant sales generate 100,000 tonnes of CO2eq. The agency might then take this figure as its own advertised emissions for that campaign.

But the agency isn’t the only player involved. The ad tech companies involved in targeting and delivering the ad, and the publishers which displayed the ad, also helped generate those extra sales. If every company in the advertising supply chain uses that same 100,000 tonnes CO2eq figure, total advertised emissions would be massively overcounted. But splitting this 100,000 tonnes CO2eq figure between all participants is difficult.

Purpose Disruptors said in its most recent advertised emissions report that it has convened a group of brands, agencies, and media owners to help co-create a methodology for individual companies, to try to solve this problem.

The Pros and Cons

Aside from these measurement difficulties, some believe there are wider issues with the concept of advertised emissions.

British advertiser trade group ISBA recently put out a statement saying that it doesn’t back the model, highlighting the ‘displacement effect’ of advertising as one issue. Essentially, not every ad campaign drives outright increases in consumption. In some cases, consumers might buy more of one product as a result of an effective ad campaign, but less of a competing product.

Others believe that advertised emissions calculations incorrectly assign responsibility to agencies and media owners for other companies’ business models. ISBA believes that agencies’ primary focus should be cutting emissions from their own operations, as that’s where they’re able to have the most direct impact.

Advertised emissions calculations can also throw out some counterintuitive results. For example, if an ad agency works with a major airline over the course of five years, and during those five years that airline manages to halve its own emissions, then the agency’s advertised emissions would drop – despite the fact that the agency hasn’t played an active role in bringing down emissions. Or suppose an ad agency runs a terrible campaign for a car brand which results in a drop in sales. This would go down as a credit within the advertised emissions formula, despite the fact that the agency was actively trying to drive more sales, not less.

But perhaps the biggest issue for advertised emissions is that it’s politically difficult for many companies, which ultimately is a big part of why the concept hasn’t gone mainstream.  Finding ways to cut emissions from their own operations is one thing, but cutting off major clients is another.

Despite all this, the concept still has a big intuitive pull. Cutting off clients is difficult – but not impossible. UK newspaper The Guardian for example has stopped running ads for fossil fuel companies (and more recently for gambling brands), acknowledging that this decision comes with a financial hit.

As is often stated in discussions around the ad industry’s sustainability goals, our industry’s greatest power is its power to influence consumer behaviour – for better and for worse. Completely ignoring this power when calculating the industry’s impact on climate change seems like a considerable oversight.

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About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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