Mark Lund's COI: From 'lifeblood of ad industry' to political football

Gideon Spanier
8 Feb 2010

At first glance, Mark Lund ought to be the most cheerful boss in ad land. His organisation was recently crowned not only Advertiser of the Year but also Advertiser of the Decade by the industry magazine Campaign.

What's more, Lund oversees a £540 million budget, up a recession-busting 43% last year. Spending on digital marketing alone almost doubled to £40 million.

No wonder Campaign has hailed his team as the “lifeblood” of the ad industry — at a time when virtually everyone else has slashed spending.

The reason that Lund has been flush with money is that he is chief executive of the Central Office of Information, the government body that is responsible for planning and buying advertising, marketing and communication on behalf of almost every Whitehall department from the NHS to the Army.

Advertising, including digital, takes up nearly half his budget while the rest goes on marketing, PR and so on.

Last year, the COI overtook the consumer goods giant Procter & Gamble to become the single biggest advertiser in the UK, as government increasingly looked to influence citizens' behaviour on issues such as obesity, binge drinking and sexual health. Innovative campaigns include using social networking websites for RAF recruitment.

Alas, for the ad industry at least, this era of big spending could soon be over. Government advertising has become a political football in this election year.

The Tories have promised cuts of as much as 40%, or £230 million, to 1997 levels. It is one of the few specific policy pledges that shadow chancellor George Osborne has so far made.

Labour has signalled it will also wield the axe, perhaps by 20%.

As chief executive of a Whitehall-funded body, Lund is at pains not to be drawn into politics. But he admits: “Everyone is preparing for a period of pressure on public expenditure. The need to demonstrate effectiveness of spend is paramount.”

Lund, who only joined as COI boss last June, has already commissioned research to show that the return on marketing investment can far outweigh the initial outlay.

So the COI says its 2008 anti-tobacco campaign may have cost £26 million but claims it persuaded 171,000 people to quit smoking in one year, saving the NHS £113 million.

Lund is pushing for “effectiveness of spend” in other ways.

He cites the recent decision to centralise all the COI's media-buying in the hands of one firm. M4C, part of WPP subsidiary Group M, won a fiercely contested pitch for the contract last Thursday.

Previously COI used a string of firms to buy advertising across different media channels such as press, TV, online and so on. “It will help us to spend less money for a better result,” says Lund of the M4C deal.

Some industry insiders have suggested privately that the deal means COI could now have too much bargaining power over ad rates. Lund is keen to play down such fears, while still being aware that he must be seen to drive a hard bargain for the taxpayer.

“Any negotiation has to be a two-sided affair,” says the COI boss who has spent nearly three decades in the private sector, most recently as chief executive of Delaney Lund Knox Warren for nine years.

The COI does not control its own budget. Everything depends on how much individual Whitehall departments hand over.

For that reason, the 43% budget increase in the year to March 2009 may be a little deceptive, says the COI, as departments have been doing less themselves and delegating more to Lund's organisation.

But sceptics, particularly the Tories, still suspect that the Government has been ramping up its own self-promotion in advance of a general election.

Lund declines to comment on the size of this year's budget but points out that it operates to “very high levels of transparency”. Industry observers believe that spending won't be higher than 12 months ago — around £540 million.

Lund says it is “flattering” for the COI to be hailed as the “lifeblood” of the ad industry but insists “it doesn't bear much examination” given that UK advertising is a £19 billion-a-year business.

Whatever he may say, his team has considerable power. Advertising agency bosses are currently fretting about the COI's “roster review” as it decides which private firms will be on an approved list for future creative work.

Any agency that doesn't make it onto the new roster, announced in the autumn, will theoretically be excluded from any COI commission over the next four years — no small matter when money is tight.

Change is certainly in the air. Osborne recently co-wrote an article with the behavioural economist Richard Thaler, author of acclaimed book Nudge, in which he said: “A Conservative government will require all public bodies that want to launch marketing campaigns to state precisely what behaviour change the advertising is designed to bring about, and an element of the advertising agency fee will be made contingent on achieving the desired outcome.”

Osborne's argument is that advertising doesn't have to be the answer when persuading citizens to change behaviour.

On carbon emissions, for example, the “nudge” to change could be an energy firm spelling out on a consumer's bill how much his neighbours also spend — to encourage fuel efficiency.

So it will be fascinating to see how the COI adapts if the Tories win — Lund is a fan of Thaler's book. Osborne's suggestion that part of the ad agency's fee should depend on a successful outcome is not that radical. It is commonplace in the commercial advertising world.

Lund says the COI will cope with whatever cuts are made. The wider ad industry will have to brace itself too.