Understand your real marketing carbon footprint to crack sustainable business performance (2/3)

Because we believe that the sustainable transformation of organizations is the revolution of the next 10 years — in the same way that digital technology was for the past decade — we want to re-imagine a Marketing Mix Optimization capability to accompany a change that is profoundly shaking up our clients.

While marketing has been one of the cornerstones of our activities, we no longer see it only as a promotional tool: We are firmly convinced of its immense potential to change the game on decarbonization.

In this article in a series looking at How Marketing Mix Modeling can become a powerful tool for sustainable business performance, we will go from measuring impact to true decarbonization by exploring how you can understand the carbon drivers of your marketing mix.

How to see the bigger picture

What are we talking about when we bring up the carbon footprint of marketing? It refers to any marketing action and/or investment that directly or indirectly contributes to generating greenhouse gas emissions. The only way to have a good vision is to look at them holistically.

Indeed, advertisers usually only look at the carbon footprint of their marketing channels, especially their digital and offline media plans. The scope of carbon impacts is actually much broader. It includes three types of impacts: direct, indirect and a longer-term impact that extends to consumer habits.

Direct impact from your marketing investments

60 Megatons or the total CO₂ emissions from online advertising worldwide in 2016. This is the equivalent of 60 million round trips from Paris to New York by plane. (Source: Environmental impact assesment of online advertising – November 2018)

Advertising production and broadcasting, mobile data consumption and device usage… you already know: Your campaigns generate CO₂ emissions. In terms of content production, for example, shooting a commercial involves transporting people and equipment by plane and car, a fossil fuel-intensive job. In the case of a digital campaign, it is distribution of the content that will consume electricity both to host the media (to store it on servers, in data centers) but also because the terminals used for consumption of this same media (televisions, smartphones, digital screens) by the end users consume additional electricity.

These are all aspects taken into account to calculate the direct impact of your marketing investments.

Incremental impact from your marketing contribution to sales

Unfortunately, the CO₂ from your marketing investments’ emissions does not stop at this scope of “Advertising production and broadcasting, mobile data consumption and device usage.”

Let’s look at the big picture. The core of your business is making incremental sales. As a result of your effective marketing investments, more “carbon-intensive” manufactured products and services are sold regarding the usual organic sales; this “additional” volume indirectly generates additional CO₂ emissions from marketing. That’s why you need to consider the carbon footprint of these products today, from their design to their end of life. You will discover that their impact is far greater than the first scope.

Taking the automotive sector as an example, we compared the carbon footprint of a media plan (direct impact) with the carbon footprint of the additional vehicles sold as a result of the same media plan (indirect impact). The effect of the media is 0.5% in the first case compared to 99.5% for the effect produced in the second case. The indirect effects of the media in relation to the product’s carbon impact therefore go far beyond the production and distribution of a campaign.

0.5 % vs. 99.5%: these numbers are dizzying, but they help us understand the true nature of the carbon footprint of marketing investments. It is these indirect impacts — the additional product sales generated by advertising — that you should now focus on. Why? If they are not included in a holistic calculation highlighting direct and indirect carbon effects — even though it is by far the most CO₂ emitting item — any “green” initiative you may take in media will always appear anecdotal and will be akin to greenwashing. These figures also suggest an interesting avenue to work on for marketing strategy: From now on, you will have to play on the complementarity of your media mix AND your product mix. We will come back to this.

Long term impact on social imagery

We have talked about the direct and indirect impacts of marketing investments. There is a third one, which is clearly outside the scope of data, of MMM, but which no one can ignore: It concerns the role of marketing on collective imaginations. In the end, doesn’t marketing sell dreams? When advertisements praise the adventure of driving a comfortable SUV, they are pushing consumers to buy a vehicle with high carbon content. Tomorrow, the exercise will involve calling for desirable (and profitable) restraint. Will we go so far as to say that this is a social issue and that the entire sector bears a collective responsibility for it? The debate is open.

However, this scope is more difficult to quantify, so we have not included it in this article

Understand all your carbon footprint at a glance

In view of these different types of impacts, the question comes down to “marketing for green,” i.e., how to implement an efficient marketing strategy in a context of carbon constraints.

This is where data and Marketing Mix Modeling come into their own. We have adapted our approach and our MMM platform to analyze in depth the direct (i.e. broadcasting-related) and indirect (i.e., incremental sales-related) CO₂ emissions of each marketing and media channel. For the first time, MMM sheds light on the relationship between the efficiency of marketing investments and their carbon cost.

How MMM can help you to distribute the carbon impact of your marketing investments and product mix

As we said earlier in this issue, we are thinking about the best strategies for integrating decarbonization into your business decisions. For this, we believe that the MMM tool is a given. For more than 20 years, it has proven itself to be the best tool to measure the business relevance of your marketing investments. Multi-constrained, multi-KPI and multi-stakeholder, this methodology highlights thousands of indicators like no other. We have evolved it to adapt it to the current challenges: Our platform now integrates new environmental indicators that allow dual financial and non-financial management. And still, we may not have reached the bounds of what MMM is capable of measuring.

On the three emission scopes we have defined, we now give MMM the new task of measuring and screening all the direct impacts of your media (whether on- or offline) as well as the indirect impacts linked to the contribution of marketing to additional sales (see the diagram below).

What MMM can measure

By introducing the carbon footprint as a new marketing performance indicator (as a constraint to be kept or as a target to be reached), the new-generation MMM is a real strategic asset: It provides the key to allocating your investment efforts between carbon footprint, media mix and product mix. It helps you to manage change both in the short term (your current challenges) and in the long term (preparing redirection of your product mix in a reasoned, gradual way; we will come back to this).

Our MMM platform combines both business and sustainability KPIs by design

How do we calculate your direct and indirect greenhouse gas emissions?

Behind an equation that may seem quite complicated, there are in fact elements that are by nature already mastered by MMM. Explanations:

• Your total carbon impact (CO₂e_total) is logically understood as the sum of your direct and indirect emissions.
• Your direct emissions are calculated on the basis of your direct emission factors (EFdirect), which are read through the prism of the volume of CO₂ generated for each euro invested. Ekimetrics has its own carbon calculator.
• Your indirect emissions are calculated based on your indirect emissions factors (EFindirect), which are read through the prism of the volume of CO₂ generated per euro of additional sales. This figure is calculated from customer data or data from LCAs.
• Historically, MMM analyzes marketing investments and their contribution to the sales performance of your organization. Today, its use is extended and enriched to measure the carbon impact of your marketing levers and products.

It is clear that a greenhouse gas emissions report cannot be absolute. It is an order of magnitude and a starting point for monitoring actions and progress over time. At Ekimetrics, we believe that the challenge is not to have the most efficient calculator — even if it must be as optimized as possible — but to question the redirection of its investments and probably its product mix.

Contact our data experts!