Guidelines for marketing communications planning to enable corporatewide ROI analysis & reporting.

1. Marcom Analysis & Reporting
October 3, 2002

2. Marcom Analysis & Reporting
Topics
Objectives
Accomplishments to date
Overview of Marcom ROI model
Dependencies

3. Marcom Analysis & Reporting
Objectives

4. Marcom Analysis & Reporting
Objectives
Track performance of campaigns &
communication channels

5. Marcom Analysis & Reporting
Objectives
Track performance of campaigns &
communication channels
Inform budget planning & allocation

6. Marcom Analysis & Reporting
Objectives
Track performance of campaigns &
communication channels
Inform budget planning & allocation
Enable channel management & strategic
customer contacts

7. Marcom Analysis & Reporting
Objectives
Track performance of campaigns &
communication channels
Inform budget planning & allocation
Enable channel management & strategic
customer contacts
Establish effective reporting process

8. Marcom Analysis & Reporting
Objectives
Track performance of campaigns &
communication channels
Inform budget planning & allocation
Enable channel management & strategic
customer contacts
Establish effective reporting process
Deliver customer-oriented research

9. Marcom Analysis & Reporting
Objectives
Track performance of campaigns &
communication channels
Inform budget planning & allocation
Enable channel management & strategic
customer contacts
Establish effective reporting process
Deliver customer-oriented research
Determine M arcom ROI

10. Marcom Analysis & Reporting
Accomplishments to date
Roll up/reporting of 2002 activities
Reports for analysis of media creative costs
Identified marcom baselines
Established benchmarks for marcom mix allocation
Enabled revenue reporting

11. Marcom Analysis & Reporting
Overview of Marcom ROI

12. Marcom Analysis & Reporting
Overview of Marcom ROI
Marketers surveyed by M C* waste
L
on average 26% of marketing
budget
Average Waste = 26% of
Budget
36%
20% 19%
17%
% of M C
L
Respondents 4% 3%
1%
1-10% 11-20% 21-30% 31-40% 41-50% 51-60% 61-70%
* Marketing Leadership Council Benchmarking Research: Measuring
Marketing P erformance, August, 2001

13. Marcom Analysis & Reporting
Overview of Marcom ROI
M C survey* shows limited ability to
L
calculate marketing ROI Fewer than a third of
marketers can show
returns for more than
half of their marcom
spend.
30% 35%
24%
% of M C
L
5% 6%
Respondents
0% 1-25% 26-50% 51-75% 76-100%
* Marketing Leadership Council Benchmarking Research: Measuring
Marketing P erformance, August, 2001

14. Marcom Analysis & Reporting
Overview of Marcom ROI
M C obstacles to improved ROI:
L
* Marketing Leadership Council Benchmarking Research: Measuring
Marketing P erformance, August, 2001

15. Marcom Analysis & Reporting
Overview of Marcom ROI
M C obstacles to improved ROI:
L
Lack of data (58%)
* Marketing Leadership Council Benchmarking Research: Measuring
Marketing P erformance, August, 2001

16. Marcom Analysis & Reporting
Overview of Marcom ROI
M C obstacles to improved ROI:
L
Lack of data (58%)
Lack of consistency in measurement (52%)
* Marketing Leadership Council Benchmarking Research: Measuring
Marketing P erformance, August, 2001

17. Marcom Analysis & Reporting
Overview of Marcom ROI
M C obstacles to improved ROI:
L
Lack of data (58%)
Lack of consistency in measurement (52%)
Lack of expertise (50%)
* Marketing Leadership Council Benchmarking Research: Measuring
Marketing P erformance, August, 2001

18. Marcom Analysis & Reporting
Requirements for measuring ROI*
? 1. M know current value of the customer
ust
* Measuring Bra Com unication ROI by Schultz & Walters
nd m

19. Marcom Analysis & Reporting
Requirements for measuring ROI*
? 1. M know current value of the customer
ust
X M be able to identify messages sent to
ust
customer
* Measuring Bra Com unication ROI by Schultz & Walters
nd m

20. Marcom Analysis & Reporting
Requirements for measuring ROI*
? 1. M know current value of the customer
ust
X M be able to identify messages sent to
ust
customer
X M be able to measure the difference in
ust
response (income flow) from customer/
prospect
* Measuring Bra Com unication ROI by Schultz & Walters
nd m

21. Marcom Analysis & Reporting
Model for measuring ROI
Focus on business-building communications
vs. brand-building communications:
Business Building Brand Building
Short-term returns Long-term returns
Transactions Brand value
Immediate expense Amortized investment
On the margin Replenishment
Variable cost Fixed cost

22. Marcom Analysis & Reporting
1. Assess Demand/Opportunity
Requirement Assumptions Totals SMLF LLF Corp Gov Academic
Historical demand $0 $0 $0 $0 $0 $0
Estimated % increase/decrease in demand 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted demand $0 $0 $0 $0 $0 $0
Total legal market and requirement
expressed in dollars and percentages

23. Marcom Analysis & Reporting
2. Assess Income Flow vs. Costs
Income Flow Assumptions Totals SMLF LLF Corp Gov Academic
Base share of requirement 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Base income flow to West $0 $0 $0 $0 $0 $0
W share of market and requirement
est
expressed in dollars and percentages

24. Marcom Analysis & Reporting
2. Assess Income Flow vs. Costs
Income Flow Assumptions Totals SMLF LLF Corp Gov Academic
Non-Communication costs ($) $XX $XX $XX $XX $XX $XX
Non-Communication costs (%) X% X% X% X% X% X%
Communication costs $XX $XX $XX $XX $XX $XX
Advertising $x $x $x $x $x $x
Direct Mail $x $x $x $x $x $x
Internet $x $x $x $x $x $x
Trade Show $x $x $x $x $x $x
Promotion $x $x $x $x $x $x
Sponsorship $x $x $x $x $x $x
Publicity/PR $x $x $x $x $x $x
Distinguish communication expenses from
non-communication expenses

25. Marcom Analysis & Reporting
2. Assess Income Flow vs. Costs
Income Flow Assumptions Totals SMLF LLF Corp Gov Academic
Contribution Margin ($) $XX $XX $XX $XX $XX $XX
Contribution Margin (%) X% X% X% X% X% X%
Income flow from each segment (less
communication and non-communication costs)
expressed in dollars and percentages

26. Marcom Analysis & Reporting
3. Determine baseline with no marcom spend
No Communication Investment Totals SMLF LLF Corp Gov Academic
Change in Share Requirement (+/-) X% X% X% X% X% X%
Resulting Share of Requirement X% X% X% X% X% X%
Resulting Customer Income Flow to West $x $x $x $x $x $x
Less: Non-Communication Costs $x $x $x $x $x $x
Less: Communication Cost $x $x $x $x $x $x
Net Contribution $X $X $X $X $X $X
Assumptions:

27. Marcom Analysis & Reporting
3. Determine baseline with no marcom spend
No Communication Investment Totals SMLF LLF Corp Gov Academic
Change in Share Requirement (+/-) X% X% X% X% X% X%
Resulting Share of Requirement X% X% X% X% X% X%
Resulting Customer Income Flow to West $x $x $x $x $x $x
Less: Non-Communication Costs $x $x $x $x $x $x
Less: Communication Cost $x $x $x $x $x $x
Net Contribution $X $X $X $X $X $X
Assumptions:
1. Customer requirement remains the same

28. Marcom Analysis & Reporting
3. Determine baseline with no marcom spend
No Communication Investment Totals SMLF LLF Corp Gov Academic
Change in Share Requirement (+/-) X% X% X% X% X% X%
Resulting Share of Requirement X% X% X% X% X% X%
Resulting Customer Income Flow to West $x $x $x $x $x $x
Less: Non-Communication Costs $x $x $x $x $x $x
Less: Communication Cost $x $x $x $x $x $x
Net Contribution $X $X $X $X $X $X
Assumptions:
1. Customer requirement remains the same
2. W share of requirement will decrease
est

29. Marcom Analysis & Reporting
3. Determine baseline with no marcom spend
No Communication Investment Totals SMLF LLF Corp Gov Academic
Change in Share Requirement (+/-) X% X% X% X% X% X%
Resulting Share of Requirement X% X% X% X% X% X%
Resulting Customer Income Flow to West $x $x $x $x $x $x
Less: Non-Communication Costs $x $x $x $x $x $x
Less: Communication Cost $x $x $x $x $x $x
Net Contribution $X $X $X $X $X $X
Assumptions:
1. Customer requirement remains the same
2. W share of requirement will decrease
est
3. Change of requirement estimates based on
historical data and management judgment

30. Marcom Analysis & Reporting
4. Estimate impacts of communication investment
Communication Investment Totals SMLF LLF Corp Gov Academic
Communication Efforts (initiatives) X X X X X X
Contact Points X X X X X X
Total Communication Investment $x $x $x $x $x $x
Change in Share of Requirement (+/-) X% X% X% X% X% X%
Resulting Share of Requirement (%) X% X% X% X% X% X%
Resulting Customer Income Flow to West $X $X $X $X $X $X
Less: Non-Communication Costs $x $x $x $x $x $x
Less: Communication Costs $x $x $x $x $x $x
Net Contribution $X $X $X $X $X $X
Measure total investment
against customer groups

31. Marcom Analysis & Reporting
5. Determine marcom ROI
ROI Calculation Totals SMLF LLF Corp Gov Academic
Incremental gain/loss vs. no investment $x $x $x $x $x $x
Incremental ROI x% x% x% x% x% x%
Compare total investment to
resulting change in income flow

32. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/
share

33. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/share
Don’t know customer value (L V)
T

34. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/ share
Don’t know customer value (L V)
T
B M is lower priority client for DB
M S M

35. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/ share
Don’t know customer value (L V)
T
B M is lower priority client for DB
M S M
Commitment:
T & M
op iddle Management support

36. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/ share
Don’t know customer value (L V)
T
B M is lower priority client for DB
M S M
Commitment:
T & M
op iddle Management support
Consistent budget management

37. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/ share
Don’t know customer value (L V)
T
B M is lower priority client for DB
M S M
Commitment:
T & M
op iddle Management support
Consistent budget management
Resources:
Manage/ maintain marcom roll-up & reporting

38. Marcom Analysis & Reporting
Dependencies & Impediments
Data:
Don’t know market size/ share
Don’t know customer value (L V)
T
B M is lower priority client for DB
M S M
Commitment:
T & M
op iddle Management support
Consistent budget management
Resources:
M anage/ maintain marcom roll-up & reporting
Expertise to build marcom ROI model