What you need to know:

• Confronted with an estimate from the sustainability department suggesting 59 per cent of all group emissions were media and marketing, NIB has become one of 35 brands to sign up to GroupM and Scope3 reporting across its campaigns and marketing programs.
• The revelation came as NIB, like many large Australian organisations, face mandatory climate reporting on both direct and indirect carbon emissions under new Australian legislation. Right now, it’s businesses over $500m that are captured by legislation outlined in a bill that this month was finally passed by both houses. But within the next four years, businesses with more than 100 employees will face the same mandatory reporting rules – and the reports must be audited and will be held to the same standards and rules as financial reporting.
• It’s the Scope 3 emissions, those that cover the entire supply chain – which marketing and media activity falls into for every brand and agency – that are the major challenge, representing the vast bulk of all emissions for a company.
• However, it’s not just reporting rules triggering increased activity around measuring and tackling media and marketing emissions. It’s also a desire to live up to brand credentials and values. University of Tasmania, another Scope3 client ranked the number one uni for climate action globally, says it’s been able to reduce emissions by over 30 per cent through simple campaign optimisation in its first three months, and continues to see emissions fall.
• Key to getting buy-in at University of Tasmania was switching out clickthrough metrics – vanity metrics several in the industry still favour – and embracing conversion as a key measurement and outcome for its marketing programs.
• Through its first campaign optimisation, Uni of Tasmania was not only able to reduce emissions, it increased conversions by 264 per cent.
• Right now, optimisation is running in parallel with improving marketing performance thanks to tackling low hanging fruit like made for advertising sites and clickbait, say Scope 3 and GroupM. Both claim clients have not suffered a decrease in performance because of optimisation.

Subtle shift in emphasis

Imagine being a senior marketer in a large Australian organisation and having the head of sustainability tell you your team is responsible for over half of all company emissions and you have to do something about it.

That’s reportedly what happened to the marketing team at ASX-listed insurance group, NIB, as work got underway last year to begin mandatory reporting of the insurance group’s carbon emissions. Having been confronted with estimates showing news media and advertising accounted for nearly 60 per cent of NIB’s total group emissions profile, head of marketing and digital, Chris Donald, was faced with the sticky problem of finding a way to cut them back – all while retaining marketing’s performance and commercial contribution.

Be warned: The request for NIB’s marketing team to get on top of emissions will not be an isolated case. From 1 July 2024, Australia’s largest organisations and financial institutions became subject to mandatory climate reporting laws requiring them to disclose information relating to carbon emissions governance, strategy, risk management, metrics and reduction targets. The rules begin trickling down to companies with over $200m from 1 July 2026, then from 2027 to companies with two of the following: More than $50 million in consolidated revenue; at least $25m in gross assets; at least 100 employees.

In the first year, reporting is restricted to Scope 1 and Scope 2 – direct emissions generated by the business. But from year two, reporting conditions also require companies to disclose Scope 3 emissions – those occurring up and down a company’s supply chain. In fact, Scope 3 are estimated to account for up to 98 per cent of a company’s total emissions.

Cue the monster marketing and media emissions problem – one many may not have seen lurking. Electricity in the warehouse, petrol for the truck fleet – sure. Data centres running cloud-based servers – yes. Jet-setting executives – ok. But advertising – really?

Really. Because every impression carries a carbon cost, and Australia’s power grid, while under transition, is more carbon intensive than those of many comparable economies. Meanwhile, every additional step in the digital ad supply chain – where a single impression can be auctioned off hundreds and even thousands of times – increases the carbon footprint. Hence advisories like Scope3, helmed by former AppNexus chief Brian O’Kelley urging companies to cut out unnecessary bloat. (O’Kelley reckons firms that cull ad supply chains can halve digital ad emissions within 12 months.)

“Media and advertising accounts for 59 per cent of the total NIB Group emissions profile,” Donald tells Mi3, a figure based on initial assessments. “We partnered with EssenceMediacom/Group M and Scope3 to develop a reporting tool to break down our media activity, and show emissions, down to an individual campaign or ad placement. That means we can balance business outcomes, and get the best results from our media mix.”

That figure quickly improved thanks to more accurate reporting, then improved again with some basic media optimisations and choices.

“Importantly, this tool helps us talk to publishers and partners to understand their sustainability approach,” Donald adds.

The media and marketing industry’s very big emissions problem

NIB is one of 35 clients now using GroupM’s advertising emissions reporting dashboard, dubbed ‘Project Alpha’. The health insurer went live in February this year with data backdated to the start of FY24. Project Alpha kicked off about two years ago as a way to help Australia’s media and marketing industry to begin reducing carbon emissions. The initial focus has been on programmatic media, starting with digital display and video. The tool connects using APIs across all the media agency’s platforms and digital campaigns.

Once the sustainability reporting ball got rolling internally at NIB and sustainability KPIs came at the marketing department, it clearly became the right time to start talking Project Alpha, EssenceMediaCom client partner, Tom Willson, says.

“They knew they had to move away from just doing a rough estimate on what their emissions are and look at something more data-driven and sophisticated,” he says. Using the dashboard, clients can see a real-time, customised view of measurement across all campaigns they’re running, viewing emissions by campaign, channel, digital partner and publisher. It also goes granular to help with optimising emissions.

“It’s that interesting blend of marrying traditional performance KPIs into this new emerging world of emissions CPMs,” Willson says. “That’s been a huge game-changer from our side.”

So far, according to Willson, clients haven’t had any drop in performance from early emission optimisation. According to Scope3 head of ANZ, Joanna Georges, initial campaign optimisation can swiftly wipe 20-30 per cent of emissions off a brand’s tally (outliers are up over 40 per cent) simply by tackling low-hanging (and commonly rotten) fruit.

“We’ve not seen any drop in performance from early emissions optimisation,” claims Willson. “It proves they correlate together and can work side by side: We can continue to maintain performance, while reducing our emissions from digital campaigns as well.”

That’s arguably because a lot of initial optimising correlates to cleaning up your programmatic advertising act by removing waste, bots and ‘made for advertising’ (MFA) sites. “Because you’ve never seen it before, the moment you start seeing initial lists of who isn’t performing from an emissions point of view, it does allow you to make quite easy choices to begin in,” Willson admits.

It’s a comment begging the question: Does this mean programmatic advertising, particularly display, shouldn’t be much of anyone’s marketing budget these days given there’s a) so much rubbish and b) above-average emission sites?

“If you buy across the open web even with platforms that try and stop MFA – [controls] which NIB uses – anything that’s not traditional MFA isn’t necessarily picked up in a lot of these as there are so many new tactics,” Georges responds. “There are significant differences we see, even from some of the top DSPs. It’s not their fault nor the agencies in terms of how they’re buying, it’s just the tech is getting smarter. We don’t physically have the staffing – nor do content providers – to tackle this.

“Yes, it’d be nice to go direct I/O [insertion order] every time. One of the recommendations we put forward to NIB was to go buy a green media package, and that is focusing on more direct relationships. But it’s not about avoiding programmatic – that’s unfeasible for anyone to really do. Audiences use more than just news from the likes of the Channel Nines and Sevens of this world – we know that. We can’t just go ‘let’s just cut programmatic’, because then we’re not actually targeting the people we want to target and we’ll go back 15 or 20 years.”

Willson adds programmatic “drives a significant impact to business numbers, so it’s very much still a key channel”.

“It’s just how you do it better. You have that traditional form of optimisation we’re doing from a media point of view; this is elevating that media for good side of things and trying to clean up some of that as well – that’s how we’re coming to this with some of the optimisations we’re making.”

Measurement scrutiny also comes to the fore – and ditching persistent vanity metrics. Georges argues NIB’s above-average approach to measuring advertising ROI plays a supporting role because it’s measuring against more sophisticated figures like conversion, versus clickthrough rates.

“We sat there and made sure across any brands that we understand what performance means: If you’re after just a clickthrough rate and it’s just clickbait sites, that’s a different conversation,” she says. “Because NIB had better metrics, they were not just dependent on what we call ‘industry’ metrics. So they never came and said ‘hey, we’re willing to do this but only if you can assure us there won’t be more than an X percentage drop in performance’.”  

Willson elaborates further, pointing to advanced media mix modelling and a focus on short and long-term growth within more sophisticated measurement approach.

“The days of last-click attribution are starting to erode… at this stage, we’re looking at full long-term growth performance and marrying that with some of the emissions data we’re getting as well,” he says. “We don’t just measure on clickthrough rates anymore, we have quite sophisticated KPIs depending on what part of the funnel – from quote driven to getting a policy to attention and viewability. There are lots of data points.”

Uni of Tasmania’s first emissions dip

Another of Scope3’s local clients that has converted to conversion and ditched the click is University of Tasmania. At this month’s IAB MeasureUp conference, the education provider’s marketing director, Courtney Geritz joined Georges on stage to talk about its first campaign optimisation trial in partnership with agency, Pivotus, to actively reduce emissions.

The campaign, from March to May, resulted in a 76 per cent drop in gco2pm (grams of CO2 per thousand impressions – the metric being used to measure advertising emissions) in one month, and a 30 per cent decline in total media emissions overall. The ongoing commitment to reduce emissions has seen an additional 10 per cent drop and University of Tasmania is currently performing 20 per cent below the Australian benchmark for web ads.

Acknowledging most marketers have “been responsible for a bit of spray and pray here and there”, Geritz said the big decision Uni of Tasmania and its agency, Pivotus, made was to forego clicks – a metric that nonetheless remains very real in many organisations today – in favour of conversions. The precedent was there: A previous campaign for acquisition reoriented away from clickthroughs resulted in a 35 per cent increase in conversions.

The emissions optimisation work then resulted in even more substantive gains: a 264 per cent higher conversion rate.

“The benefit was we had a lot of equity in our relationship with our agency,” Geritz said. “One added advantage was we had trialled a number of initiatives, not just Scope 3 – where we’d emphasised finding quality audiences over quantity of audience. That was particularly important as the lifecycle of students in terms of consideration set is 18-24 months on average. That attribution model is quite a challenging one for us to manage.

“When you talk to the c-suite, it’s easily mitigated by the fact conversions are increased. This offsets the views you might lose on clicks. It’s about having challenging conversations with agencies, being upfront and honest about how we get quality conversions while living and breathing the values of our brand.”

As a tertiary education institution living and breathing its climate credentials, it’s critical to build brand through more sustainable practices, Geritz continued. University of Tasmania has held the title of number one university in the world for climate action for three years running according to the Times Higher Education Impact Rankings.

“Sustainability is a point of differentiation for our university,” she said. “It’s now how to overlay sustainability as part of this to ensure we’re getting quality conversions but at the same time doing our bit for the organisation and our values around sustainability. So the risk we might not get the same number of views wasn’t even a risk.”

Again, what’s helped here is that the publishers and sites cut out as part of the optimisation process were largely higher risk inventory including ‘made for advertising’ sites.

“Climate risk wasn’t the majority of impressions,” Georges continued. “Only about 200,000 impressions were being served on high-risk inventory. But those average emissions were 770gco2pm, a considerable amount. To get a 30 per cent drop on a proportion of the campaign fairly easily by avoiding sites that aren’t actually generating you real results anywhere makes it easy.”

The size of the problem

Marketing and media emissions are substantial. On average, a 5-million impressions campaign generates 5.4 tons of carbon emissions – about two laps of Australia in the car or a return flight from Melbourne to London. The average Australian spending two hours per day on TikTok is generating 2.6 grams per minute.

“Everyone thinks aviation is bad but have we ever looked at our own industry and considered how bad it is?” Georges asks. She cites the figure 1 million metric tons of CO2 are emitted just from non-viewable impressions annually. That’s a massive carbon impact from ads people can’t even see, as well as “dollars coming out of your business,” she says.

Willson is starting to see more marketing departments tasked with reporting on, and improving, their carbon footprints through KPIs. Couple this with the fact two-thirds of Fortune 500 companies have significant climate initiatives, and it’s a topic marketing and advertising peeps are not going to be able to avoid for much longer. Georges quotes three in four marketers will look or start to measure and reduce emissions in 2024/2025.

This year’s Global Media Sustainability Framework released at Cannes in June further shone a spotlight on the issue. All agencies involved, the World Federation of Advertisers, partners and Scope3, have agreed to a five-step process and metric methodology, starting with the world’s top six channels: Digital, TV/video, OOH, print, radio/audio and cinema. Formulas are on their way to help marketers, agencies and media understand what it means from a measurement point of view and how to get your ducks in a row.

“If you start measuring and reducing, not only are you doing good for own companies and brand, you’ll be doing something for the planet and have something significant to say in terms of saving emissions and money. You can’t hide under a rock anymore,” Georges urges. “People are wanting to do better; some are very unaware. By making a stand you’ll generally get more audience and have more appreciation for customers and employees, which helps with retention.”

For Geritz, the numbers speak for themselves. “As a marketer, it’s always how you position brand and how your customers perceive that. Verbatim comments from students gave us great NPS and one reason is because of commitment to sustainability,” she says. “What you do, how you position your brand and commitments you make in terms of sustainability are very real, tangible outcomes customers are interested in.”  

Yet Georges is still having conversations where such figures come as a big surprise to marketers. “They’re saying oh, well we’re a manufacturing company we need to worry about solar panels on the roof. That’s absolutely great. But that’s not something you can control. This is something you can control.”

10x AI emissions incoming

Both Willson and Georges did agree measuring emissions across all of marketing and media is still a work in progress. “We’re at the crawl stage of this, getting some runs on the board in terms of initial optimisations,” says Willson.

“Speaking to DSPs, they’re all in the background trying to figure out what’s the best way to do this. They’re getting early-stage products where you can select green emissions ‘marketplaces’ for lack of a better word. Being able to optimise in terms of pulling in their AI optimisation algorithms is something they’re going to solve fore. There’s so much advancement coming, but getting in early, showcasing what you can do Is great – and it’s a great thing NIB has been able to do.

“It’s got to start with your leaders… that enthuses the rest of the team to champion and drive that forward.”

And no one has really talked about the incredibly large carbon emissions footprint AI will incur yet either. Georges notes a standard search versus AI search is 10x in terms of emissions.

“There’s a lot we haven’t even touched and scoped. But it is something you should be aware of, especially with what I’d call ‘useless data’,” she told attendees at the IAB MeasureUp event. “You might hate me for this… there is whole bunch of data sets that are really not needed, or are 10 years old and not appropriate for where we are now. There is a lot that could be deleted and not stored forever.”

Georges is also keen to make sure people don’t perceive this to just be the problem of media publishers themselves or seen as some kind of ‘tax’. 

In fact, the opposite can be true, with publishers able to make significant savings from reducing the numbers of parties in the supply chain and reconfiguring their stacks, gaining more client dollars in the process. MSN for example, reduced 80 per cent of emissions on its site in just four months after a client threatened to take them off the plan, having only spent US$12 the previous quarter.

“MSN saw that as a good reason to start reduction efforts before they started being removed by other clients,” Georges said. From 1595 gco2pm, MSN emissions are now at 110gco2pm.