Memo to Obama: Ask them to show the ROI

First of all, in the interest of transparency, I measure events and communications for a living and some of my closest friends organize these events. Secondly, I firmly believe that corporate events can have a positive impact on the bottom line. So, I'm puzzled when I hear angry Senators, Congressmen, media and US citizens express their outrage at Bank of America's Superbowl spree, Wells Fargo's planned junket to Las Vegas, AIG's boondoggles and other excesses.

Any of us who are in marketing know that there is some justification for taking sales people and customers off site for an intimate sales pitch. Anyone who's managed an internal communications program knows that staff offsites are great bond-builders and generators of fresh thinking. So why aren't they saying that for every $1 spent on events, they generated $xxx in sales or that they saved $xx in expenses. My guess is that it's because no one's measuring the ROI of any of this stuff.

For years everyone has either not calculated the returns from these events or measured the wrong thing - -counting eyeballs or attendance rather than revenue. Every banker currently being called on the carpet for wasting taxpayer dollars should have had hard numbers to fling back in the faces of their questioners. Instead they are issuing vapid, defensive press releases, they should be able to cite specific returns, and if they say they can't do that, I know a bunch of measurement experts who can tell them how.

Which brings me to my latest memo to Obama. Why not extend the accountability you espouse for your administration to the organizations you are bailing out. If you spend TARP money on marketing, you should have to report ROI just like any other financial details. If not you are tacitly conceding that marketing is a waste of effort.

Comments

[Jeff Paul Scam]

Hi, I found your post really interesting, my friend and I run a small internet marketing business at home. We are roommates, so after our day job, we spend an hour on research and work.

[Liz Guthridge]

Yes, people should show the ROI before others show them the money. This may be a case where small businesses are out in front of the big guys. As a small business owner who consults primarily with Fortune 500s, I'm always calculating my ROI on marketing expenditures. I'm also always exploring high impact/high touch actions with low cost--which supports my desire to be LEAN and do more with less.

[Natalie]

I am an aspiring event planner and I really believe that the importance of events can't be overlooked. Those internal events do wonders for employee motivation and work ethic. With these hard economical times, events still need to happen even if they aren't as extravagant as before.

Also, I am a student at BYU and I am excited for your upcoming visit to our campus here in Utah!

[Isaac]

Your point about measuring these events is absolutely valid. However I think a distinction needs to be made here between some of these activities. A trip to Vegas for company bonding and a sponsorship of a super bowl event are quite different events requiring different explanations. If I'm Wells Fargo I'll have a tougher time explaining a recognition trip for employees whose contributions have been to a bailed out company. However I still want to talk about employee retention statistics, talk about specific things that have come from these past trips.

In terms of sponsorships marketers need to do a better job at defending their spending and it shouldn't be that hard to do. How are we going to make money if we don't get new customers and encourage existing customers to spend more? Again though, use statistics and talk about the cost effectiveness of the event compared to other alternatives. Someone in the organization had to have done the analysis at some point. Right?