What about the input, the costs of communication? How can we measure that?

What about the input, the costs of communication? How can we measure that?

Author: Dr. Reimer Stobbe

The input is usually underestimated when measuring impact or controlling communication. It is clearly defined in the DPRG/ICV impact levels: external costs and internal expenses. Formally, the controllers want to compare the input with the outflow. And communicators also try to determine the return on their activities with the “ROI” – overall and for individual activities. But ROI is of course only possible if the investment is also determined. How can this be measured?

Cost management in companies does not initially meet our requirements. There are two perspectives:

Cost centers represent the organization – each unit has at least one. They are used for cost controlling purposes. All personnel and material costs are “primarily” reflected in a cost center. Personnel costs also include travel and training costs. Secondary costs include allocations from other units. For example, IT (licenses, internal and external) is charged to the communication cost centers. Everything is broken down by cost type. These are the foundation and serve the bookkeeping, the accounting, as the basis for cost allocation. For example, we find printing costs, fees, entertainment and much more. In the accounting system, all invoices are assigned to cost types. It may be that we find all agency invoices under fees. However, some may be elsewhere because of the title of the invoice.

So that’s not going to work. To allocate costs to measures, we need cost collectors that correspond to the logic of our communication processes. We can talk to the cost controllers about this. However, there can’t be too many of these cost collectors in their system – otherwise it all becomes too complex on their side. Projects can have temporary cost collectors – but these are then structured in the same way as the fixed cost centers.

First of all, we need to think about what we actually want to measure. In some cases, there are already options on the tool side. For example, social media paid metrics such as cost per click or per conversion or even per lead are specified. The latter is of course fine in (technical) connection with the customer database. However, it is already difficult here to include the costs for the landing page in the CMS, for example.

In principle, it makes sense to separate special projects from “ongoing operations“. Or average costs for a website can be calculated as a lump sum. That is often enough. Internal expenses can also be allocated or estimated as a lump sum. It is important that we work with the same clustering in the further impact levels as far as possible. Using marketing as an example: how much did we invest in the lead campaigns and how many leads were generated at the end of all campaigns? And how was that for a specific division in the company? In marketing, complex statistical methods are used to calculate the correlation between communication and sales key figures (marketing mix modeling).

It is ideal to have a separate ID in the systems for each defined cost object (project or similar) in the communication. If it is possible to store the cost ID in your own project management system or even, with good cooperation, in the accounting system as a cost collector, then the costs per ID can be read out automatically in the booking rhythm. However, the external service providers must allocate their expenses in their invoices according to the IDs. This requires a bit of preparation, control and follow-up.

If you work with projects and rough clusters for operations with internal time recording based on IDs, you also get a better handle on the internal workload. That’s reasonable for employees – agencies do that too. And the works council agrees, because only part of the time is recorded – but it needs approval because of possible performance monitoring.

Why costs and not investments? In operational management, there is a need to recoup everything that costs. This is referred to as relieving the organizational cost centres of communication. All costs are allocated to the earning business units. They increase the prices there. And this often makes central units such as communications unpopular.

A fundamental rethink is needed here: The operational perspective on communications work does not do it justice. Corporate communications has a strategic function within the company. It must ensure that all relevant stakeholders are willing to cooperate, as this is the only way the company can achieve its goals. This is measured in reputation management. To this end, part of the operating profits in strategic management is invested in this potential for success, which ensures that money can still be earned in the future. Only when the role of communication in corporate management has been clarified is there an awareness that it is an investment in the future – not just an annoying cost.

About the author

Dr. Reimer Stobbe worked in corporate communications at Munich Re from 1999 to November 2024 and was responsible for impact measurement and analytics, among other things, from 2004. Dr. Stobbe, who holds a doctorate in history, played a key role in the development of standard methods in the field in Germany as the long-standing head of the Communications Controlling working group of the International Controller Association. For several years, he was a lecturer in communications management at the Quadriga University of Applied Sciences in Berlin. He is currently co-head of the impact measurement cluster in the CommTech working group.