A common approach
to calculating the financial effectiveness and efficiency of
public sector marketing is possible according to a new report from
the Central Office of Information (COI).
The paper shows that the 1998-2005 Teacher Recruitment campaign
not only paid for itself; but should provide returns of another
£85 for every £1 spent. While the Tobacco Control campaign, is
estimated to have saved the economy £7.1bn; against an advertising
spend of £49.3m between 1999-2004.
The paper proposes a series of universal definitions to ensure
practitioners adopt the same terminology and outlines a 10-step
process to help government communicators determine sensible and
robust estimates of Payback - the absolute financial benefit
delivered by marketing - and Return on Marketing Investment (ROMI)
- the number of pounds of Payback delivered, less the cost of the
marketing - for every pound spent. It also provides six key
principles that should underpin this.
Done well, analysis of these measures can be used to not only
better demonstrate the role of communication in helping deliver
successful policy objectives, but also the real value to the taxpayer.
The study is thought to be the first of its kind. Developed in
collaboration with two leading practitioners in the field of
marketing evaluation, DDB’s Les Binet and Sarah Carter, it aims to
stimulate discussion among government, the marketing industry and academia.
The report explains that while evaluation of the return delivered
on investment by public sector marketing is currently carried out
across government - and in some cases very well - it is carried
out inconsistently in terms of methodology and approach. While not
all communication interventions are suitable for a monetised
approach, the authors argue there should be at least common, and,
at best, universal, practice across government.
The authors recognise that the two most difficult steps in
calculating Payback and ROMI are isolating the effects of
marketing from the effects of other factors, such as legislation,
innovation in public services and changes in the economy, and
putting financial values on the outcomes.
However, the paper asserts that the majority of benefits to
society can be ascribed a financial value. It uses real examples,
such as the savings in treatment costs to the NHS from reducing
smoking, and the reduced cost to administering the tax system from
encouraging on-line self assessment; to demonstrate this.
COI hopes that, following feedback, the document will become the
definitive guide on this issue for public sector communicators, in
the same way as HM Treasury’s ‘Green Book’, which sets out the
core principles on which all public sector economic assessment is
based. It plans to create a summary and technical guide in the New
Year.
Mark Lund, COI’s Chief Executive said:
“At a time of great pressure on public finances it is right to be
looking closely at how communicators measure the benefits of what
they achieve for what cost. COI has always looked to deliver
value-for-money through cost-effective campaigns and marketing
activity, but we recognise evaluation is a complex and evolving
discipline. We hope that this paper stimulates healthy debate
among experts, both within and beyond the field of public
communication, on this issue.”
Editor, Les Binet added:
“We have been impressed and excited by the analytical rigour and
professionalism of this project, and we feel that commercial
organisations could learn a lot from the principles outlined in
this report. Hopefully, this marks the beginning of a fruitful
dialogue between our two worlds.”
Ends
The document can be downloaded from the COI
website at coi.gov.uk/ROMI.
For further information, or to speak to one of the authors,
please contact Katrina Whenham at COI on 020 7261 8915.
Notes to editors
* COI is the Government’s centre of excellence for marketing and
communications. We help government and the public sector meet
their policy objectives through procurement and delivery of
marketing and communications services that achieve maximum
effectiveness and deliver best value-for-money.
* This paper forms part of the Holistic Evaluation Initiative
pioneered by COI, which aims to improve the ways in which
government measures the effectiveness of its communications
activity.
* To comment on the paper, you can join the debate online at
coi.gov.uk/blogs/bigthinkers or email thoughts directly to evaluation@coi.gsi.gov.uk.
The deadline for feedback is 6 January 2010.
* 10-step process
1. Map objectives to outcomes and check
expected contribution
2. Identify stakeholders and set the
scope of analysis
3. Plan to measure campaign outcomes
4.
Measure the impact of the campaign
5. Put a value on the
impact of the campaign
6. Calculate Payback at present values
7. Calculate costs at present values
8. Calculate Net
Payback and ROMI
9. Understand Payback and ROMI
10.
(Optional) Advanced Payback and RMOI
* Six key principles
1. Start with an understanding of what
your campaign is trying to do and how it will work
2. Isolate
the impact of your campaign from the effects of other factors
3. Make conservative but realistic estimates of the value of
the impact
4. Be transparent; show all your working and list
all your assumptions
5. Net Payback is usually more important
than ROMI
6. Do not use Payback and ROMI to make decisions in
isolation from other measures
* Further details on the editors and authors of this paper:
Editor: Les Binet
Having read Physics at Oxford and
Artificial Intelligence at Edinburgh University, Les joined the
Account Planning department at BMP (now DDB London), in 1987. He
now heads DDB Matrix, the agency’s in-house econometrics
consultancy. Les has played an important part in establishing
DDB’s reputation for effectiveness, having won more IPA
Advertising Effectiveness Awards than anyone else in the history
of the competition. In 2004 he was elected an Honorary Fellow of
the IPA, in recognition of his services to the advertising
industry, and in 2005 he was Convenor of Judges for the IPA
Awards. In 2007, Les Binet and Peter Field published “Marketing in
the era of accountability”, a major study of the factors that
influence marketing effectiveness.
Editor: Sarah Carter
Having been awarded a first in Human
Sciences at Oxford, Sarah spent four years in marketing at
Unilever before joining the then BMP (now DDB London) as a
planner. Since then, she has worked alongside some of the best
planners in the world across a huge range of brands and sectors.
Sarah has a particular interest in new ways of understanding
people (e.g. running DDB Grapevine - a “word on the street” panel
of cabbies, beauticians and hairdressers and bar men). She has
authored papers on a range of subjects for industry publications
and won the Market Research Society Best Paper Award. She has also
co-edited with Les Binet, more than 40 award wining IPA
Effectiveness papers, helping DDB win Effectiveness Agency of the
Year for a record four times.
COI author: Kevin Traverse-Healy
Kevin has been involved in
communication and strategy consulting for over 30 years.
Immediately before joining COI’s Strategic Consultancy in 2006, he
was a strategy adviser to European Commission vice-president,
Margot Wallström. He has since acted as an ‘international
communication expert’ for a number of European evaluations,
reviews and feasibility studies. He was previously a director of
advertising and PR group Charles Barker; Traverse-Healy &
Regester Ltd and the Centre for Public Affairs Studies. Kevin, who
has an MA in Mass Communication from Leicester University, is a
visiting communication sciences faculty member at the University
of Lugano. He is a Fellow and past president of the Chartered
Institute of Public Relations.
COI author: Matthew Taylor
Matthew graduated with a first in
Maths from Lancaster University and University of Maryland and
joined the Civil Service as an analyst in the Cabinet Office. He
went on to work for Accenture as a management consultant, where
his public sector clients included NHS Connecting for Health and
the National Policing Improvement Agency. Matthew joined COI as a
Strategic Analyst in 2008 and has worked on projects for the Royal
Air Force, Department of Health, Government Equalities Office,
Health and Safety Executive, Department for Business Innovation
and Skills and the School Food Trust.
COI author: Charlotte Tullett
Charlotte graduated with a BA
Hons degree in Geography from Oxford University. She worked in
Account Management at Tequila before joining Tullo Marshall Warren
as a Strategic Analyst. During her time there she managed research
projects into audiences, sectors, macro and micro environments for
a wide range of clients including Nissan, T-Mobile, British
Airways and Sainsbury’s. Since joining COI, also as a Strategic
Analyst, in 2008, she has worked on projects for Department of
Health, the Home Office, the Department for Business Innovation
and Skills (formerly DIUS) and The National Patient Safety Agency.
Contacts:
COI Press Office.
prenquiries@coi.gsi.gov.uk
Katrina Whenham
Phone: 020 7261 8915
Mobile: 07817
198783
Fax: 020 7928 7761
katrina.whenham@coi.gsi.gov.uk