PF Blog

“Prove to me that it works.”


15. October 2013

By Robert F. Lauterborn, CBC
James L. Knight Professor of Advertising Emeritus
University of North Carolina at Chapel Hill

That’s the standard senior management response to requests for budget increases for advertising or any other medium. And often our responses are weak and unconvincing.

That’s because we shouldn’t be asking for increases in the ad budget or the PR budget or whatever. We should be demonstrating how we are contributing to the achievement of specific, measurable company objectives – sales and marketing goals or strategic initiatives.

That presumes that we know what the management’s critical challenges are, which often people in the functional trenches don’t. Partly because we don’t ask. And no one would think to tell us.


Early in my career the presumptive heir to the chairmanship of a company I was working for required all his direct reports on the corporate staff to justify their budgets to him. I was up last. The bloody sessions stretched on into the evening, whereupon since it was so late he proposed that he and I go across the street to a bar and get something to eat while we talked.

It was the luckiest night of my life to that point. A few beers in, after I had told him I didn’t want to talk about some arbitrary budget and had given him a vision he’d never had before of the true potential role and value of marketing communications, he turned to me and said, “OK, smart guy. Here are the five most critical challenges the company is facing, the stuff that’s keeping us senior management guys awake at night.” He ticked them off one-by-one and issued this challenge: “Think you can help us with those?”

Hallelujah! “Thank you, Jesus,” as my Bible Belt friends might say. Who could ask for anything more?

Within 18 months we’d knocked off all five of them, initiating five major integrated marketing communications programs each of which required an investment several times larger than the company had ever budgeted for this function before. And no one batted an eye. In fact, when I’d finished presenting one of them, the chairman asked me two questions. “Bob, are you sure it’ll work?” Meaning of course, "Will you bet your job?" We bet our jobs every day, whether we know it or not. The second question was the one that choked up the other managers in the room, though: “Do you have enough,” he asked. “Can I give you some more?”

That’s what happens when you break out of the bad habit of trying to defend budgets and cross over into the place where you really need to be: persuading the senior management of your company to think of communication as an investment, rather than as a cost.

Yes, I know, they still have to enter it on the books as a cost, thanks to the cross of double-entry bookkeeping that Luca Pacioli nailed us to back in the 15th century, but that’s just accounting. What matters is that they understand that no matter where they have to put the numbers, communication functions as an investment and they need to think of it that way.

So do we, of course. I used to tell my students that we weren’t training them to be little old ad makers, we were teaching them to be investment counselors. They were going to go to the management of their companies or to their clients and say, “This is how I recommend you invest x thousands (or millions) of dollars.”

Obviously when we do that, we have to be prepared to answer the question, “If you’re an investment, how do I measure the return on that investment? I can put that same amount of money in the bank and get x% back on it; what do I get if I invest it the way you're advising?”

And that means that we need to learn how to calculate the value of what we do in whole new ways. Of course it’s easier in the case of marketing communications; we can figure out how much incremental profit a company will realize as a result of achieving a particular marketing objective. (I would never try to calculate the specific contribution of an ad or a marketing PR initiative, though; we need to look at the contribution of the total IMC effort.)

For something like crisis communications, perhaps the investment return might be best stated in terms of losses avoided. Maybe similar cases can provide benchmarks, good and bad.

In any case, whatever it takes, we need to get away from measuring output into measuring outcomes and the real return on investments in communications efforts.

Need more information?

Robert F. Lauterborn, CBC
James L. Knight Professor of Advertising Emeritus
University of North Carolina at Chapel Hill
School of Journalism and Mass Communication
Chapel Hill, NC
919-933-5475
rlauterborn.com
Email

ROBERT F. LAUTERBORN, CBC was the first holder of the distinguished James L. Knight Chair – an endowed, tenured post made possible by a million-dollar grant from the Knight Foundation "to enhance the teaching of advertising." Prior to this appointment, he was director of marketing communications and corporate advertising for International Paper Company worldwide. Before joining IP, he spent 16 years with General Electric in various corporate and marketing communications management positions. Lauterborn worked on all sides of the advertising profession – account, media, creative and client – and in several corporate public affairs capacities. He co-authored the book, Integrated Marketing Communications: Pulling It All Together and Making It Work. He is also a co-author of The New Marketing Paradigm, and of How to Write Great Advertising.

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