Measuring the Value of Communication
Paul A. Argenti
Tuck School of Business at Dartmouth
Tuck School of Business Working Paper No. 2005-31
In the past several years, determining the effectiveness of communications activities has become increasingly important both to communications professionals and to the greater business community. In 2004, the Communications Executive Council (CEC) conducted a survey of hundreds of chief communication officers in major corporations; 79 percent of the respondents stated they believed communication performance measurement was more important than it had been three years earlier. Survey respondents also ranked Measuring and Communicating Effectiveness of the Function as the second most important issue facing the communications industry.
Not everyone in the communications industry views measurement in the same light, though. While some embrace the science of measurement as it relates to communications, others look at communications as an art outside the realm of formal measurement. Quotations from two corporate communications professionals illustrate this dichotomy:
You can't manage what you can't measure. Everyone's looking for a seat at the table, and they ought to be looking at measurement for getting to the table and staying there.
Bill Margaritis, SVP Worldwide Communications and IR, Fed Ex
I cringe at the idea of return on investment because that sounds like what we do ought to be so predictable when it's not.
Bill Nielsen, former Corporate VP of Public Affairs, Johnson & Johnson
Despite the naysayers, however, most communications professionals are increasingly recognizing the truth in Margartis' words; without data on the effectiveness of their activities, communications professionals cannot gain the credibility they desire from senior management.
In this article, we examine the importance of measurement to the communications industry, the insufficiency of measurement in communications, how communications professionals' measurement needs are changing, obstacles to meeting measurement needs, and the potential benefits from understanding the link between communications and business value, and, a new possible solution.
This discussion is essential to understanding that the communications industry needs a way to add meaning to the data it already has; to link existing data to business outcomes; and to demonstrate that effective communications activities move organizations toward their business objectives.
In many cases, companies do not require more or better measurement, only better use of existing measurement data. And once the communications industry has the ability to understand how its activities affect business outcomes, communications professionals can have a greater effect on business outcomes going forward rather than simply justifying what they have done in the past. To that end, we also discuss what we believe are the keys to measuring the contribution of communications activities.
Number of Pages in PDF File: 16
Keywords: communication, measure, value
JEL Classification: M19
Date posted: February 7, 2006