It’s been 50 years since the economist Milton Friedman published an essay in The New York Times Magazine that argued that companies are best at focusing on making money. “The Social Responsibility of Business Is to Increase Its Profits“ is a work that has influenced much of what we see in the areas of executive remuneration, performance KPIs, shareholder rights and laws and norms on corporate governance. Friedman’s philosophy is the basis on which many technology and media platforms argue their dominance and lack of transparency.
Who is responsible when so few hold power?
Friedman’s proposal, that ethical issues should be the sole responsibility of individuals and the government, looks myopic half a century later. It takes on even more dystopian undertones when we consider how much power is concentrated in the hands of so few.
Is it Mark Zuckerberg’s responsibility to allow disinformation to spread on his social-media platform? Is it Zuckerberg’s responsibility to use his influence and money to squash foreign competitors while lobbying to be free from anti-competitive restraints and to increase Facebook's dominance and bottom line? Who is ultimately accountable to billions of users who are voluntarily sharing private information in exchange for what seems like a “free” service?
Followers of Friedman’s doctrine would say that Zuckerberg is doing his job. Common sense suggests otherwise, and it is good that the business community and some governments are taking this issue to task.
Business can make media accountable
At the recent Association of National Advertisers' Media & Measurement virtual conference, Procter & Gamble’s chief brand officer, Marc Pritchard, shared how the company is leading a constructive disruption to transform media into a force for good and a force for growth. In addition to reviewing its participation in TV upfronts, bringing greater investment into programmatic and direct buys, and working with minority-owned media companies, Pritchard also pressed the urgency for validated cross-platform measurement.
With organic share rising and sales growth expected to increase into 2021, during a time when many companies are struggling, why does P&G care about being a force for good?
Perhaps it is because P&G can speak with conviction and numbers that make the story compelling to shareholders. According to the company, accurate portrayals in advertising have proven to increase trust and purchase intent by 10%.
Similar outcomes were reported in a 2019 study by the Deloitte-owned agency Heat. Brands that presented diverse demographics in their advertising saw an average stock gain of 44%, and those with the highest diversity clocked in 83% higher consumer preference.
Starbucks has built its business on such belief. Howard Schultz long voiced the company’s commitment to be “people positive, planet positive and profit positive,” and in his time as CEO, famously described Starbucks as a "performance-based company driven through the lens of humanity." The brand paused all social-media advertising in July to revisit its approach to digital content, brand safety and transparency, and we can anticipate that it will be one of the corporations putting greater pressure on media to be more accountable.
How do companies get it right?
Friedman was wrong for his inability to address the long-term impact of a profit-only approach. Social responsibility is good for business. It is good for people, and it is good for the planet. For companies wanting to be part of this growing movement to call media into accountability and make a shift to sustainable growth, here are three things to do:
- Build it in, don’t bolt it on: Engendering equality, diversity, environmental and other social/community causes is a seed you plant internally, as well as in the mind of your audience. It is not a bouquet of flowers that you display during events.
- Track and measure, and always link to brand and business: In his ANA presentation, Marc Pritchard talked about trading reach for relevance and resonance when they diversify their media supply chain to work directly with minority media platforms. P&G has an accountability dashboard where gender and diversity goals are set by brand, by agency, with the aim to extend that to production partners and media platforms. We are long past the John Wanamaker era where we can claim not to know which half our advertising money is wasted. Insist that a measurement framework is tablestakes, not an option.
- Be authentic: While it is obvious and profitable for companies like Unilever and P&G to be advocates of gender equality, it would be disingenuous for a tobacco company to care about health or pollution. Identify a higher order purpose that is intrinsic to your organisation’s reason for existence, that will drive growth.
No company survives on altruism and benevolence, but every company can be influenced by consumers and regulated by governments to find a middle ground between ethics and profits.
Shufen Goh is principal and co-founder of R3 Worldwide, a global independent consultancy focused on driving transformation for marketers and their agencies.