Recently, members of the IPR Measurement Commission joined in an online discussion following a question by Elizabeth Rector of Cisco asking her fellow members what percentage of the total communication budget is typically spent on insights, metrics and research throughout the industry. Leaders in the profession are wondering: do we have sufficient data regarding how much is spent on these metrics? What exactly is categorized as “research” within the budget? What factors play into how much is spent on insight, metrics and research?

Mark Weiner, (Outgoing IPR Measurement Commission Director and Cision Chief Insights Officer): The notion that any fixed research budget allocation can be applied across different organizations and situations may be misleading. While a 15% research allocation may be insufficient to prepare for a breakthrough product launch, 1% may be too much if you’re simply milking a dying brand. To put it simply, it depends.

Mo Hamid (Incoming IPR Measurement Commission Director and Managing Partner of Radian Partners): As is illustrated by the range of answers from IPRMC members, the answer depends upon the circumstances that a brand and/or their agency partners are facing. When the stakes are high and decision-makers need to be sure about something, research budgets tend to be high. I’ve seen brands undergoing substantial change spend in excess of 25% of their overall communications budget on research and measurement. What we need to be careful about as communications practitioners, I believe, is advocating for an outsized research budget regardless of what the business circumstances are. Sometimes spending more on research makes sense, other times, not so much.

George Sutcliffe (United Technologies): Gartner published a communications budget report that says measurement and monitoring spending as a percentage of communications budget is about 4%.

Angela Sinickas (Sinickas Communications): Note that the 4% would fluctuate depending on the size of the company and the size of the communication function’s budget. It takes virtually the same amount of money to conduct a survey for a company of 300 employees as for a company of 30,000 (excluding comment analysis). That same cost would be a much larger percentage of the budget for the small company and much smaller for the large company. That percentage may need to increase if the company is relatively small.

Tina McCorkindale (Institute for Public Relations): This is a question that gets asked a lot and our response is typically “about 10%” but, of course, that number depends on a host of factors. Sometimes you need more research and sometimes you don’t. Budget, timing, the overall goal, and the importance of the program to the organization are all factors that play role.

Katie Paine (Paine Publishing): For the record, the 10% came from a speech that Walt Lindemann (former IPR Measurement Commission member and head of research at Ketchum at the time.)  He felt that 10% was the minimum requirement. My argument has always been that it just makes sense to spend 10% of your budget to figure out whether the other 90% is working. Put another way – how much are you spending to shout at people vs how much are you spending to listen to them?

Jennifer Bruce (Adobe): About 2 years ago we conducted an audit on PR monitoring/measurement/reporting spend. We included agency and contractor costs but not FTEs. Based on that analysis and agency feedback, we found we use 15% of the communication budget on monitoring, measurement and reporting. My colleague, Susanne Sturton, also raised the question of how are we defining insights, metrics, and research? We’ve included monitoring and reporting costs in Adobe’s figure as that’s a critical component in carrying out and conveying valid insights, metrics, and research to our internal stakeholders.

Sean Williams (True Digital): There is a dearth of data on resources for internal communication as well. The main figures I’ve seen do not break out internal communication, and consequently the question of budget and internal communication headcount gets asked nearly every time we discuss measurement. In the PRSA Employee Communication Section, we are considering commissioning some original research seeking to establish stronger causal connections between internal communication and impact. I do feel, however, that perhaps we need to specifically address the resource and budget questions.

I conducted an informal study years ago among banks and found no consistent factor for how to determine resources – size of organization, market cap, number of employees, branches… it was all over the place.

Michael Wolfe (Bottom Line Analytics): If the question is “communications research” (ad research, copy testing, media mix modeling, etc.) as percentage of communications spend, I think 4% is highly overstated. When I was working for a major American beverage corporation, the number was about 1.5%.  A typical but modest marcom spend for a brand is about $30 million.  That means $1.2 million is spent on communications research.

Tim Marklein (Big Valley Marketing): Jennifer’s point on what’s included or not is a huge factor here. I have often talked to clients who say, “we don’t spend anything on measurement,” and then we find they’re investing a lot of internal and agency time monitoring and reporting – including wasted time chasing every last clip manually.

The same goes for what types of measurement and analytics they count as “communications” or “public relations,” and what gets counted against other marketing and business functions. For example, web/digital teams are usually responsible for web analytics and search analytics investments, yet most communication/PR clients would not count that in their analytics investment – and worse still, they often don’t use the data to inform their work.

In short, we have a *research/data fragmentation* problem combined with a *functional fragmentation* problem that make the estimates hard to compare. With that said, I typically find most clients are investing 2-5% of their budget on research, analytics and measurement – though that easily becomes 5-15% when they factor in the “uncounted” time (internal and/or external). The more “mature” data-savvy clients may be investing 8-12% of their non-advertising communication/marketing dollars, but that all-in investment is managed well with expert people, processes and tools. I tend to exclude advertising from these estimates.

Mary S. Miller (Miller Comms, Inc.): My two cents will just muddy the already “fragmented” approach Tim spoke of, but I want to share another perspective.  Since I believe and promote that ALL communications should be measured for effectiveness, each individual project/program has a measurement component when that program budget is built.  Not all clients have been willing to execute the measurement piece of the project, but most are.  They want to know whether the program met its objectives (e.g., cost-savings, market share growth, reputation gain, increased employee engagement), which has a corresponding value assigned at the outset of the program.  Bottom line, if the benefit/value gained doesn’t exceed the cost of the program execution and measurement, not worth the spend.  Historically, I have found bosses and clients won’t tolerate much more than 2-3% of the total project budget. This does not include advertising media spend.

Angela Sinickas (Sinickas Communications): Rather than talking about a percentage, I would recommend using a needs-based budget; what do you need to know and what would it cost to obtain that information?

Mark Stouse (Proof Analytics): I agree. One way to look at this from a needs point-of-view is “what do you need to prove and how badly do you need to prove it?” If the answers are that you very much need to, then you should adjust the budget accordingly.

Johna Burke (AMEC): I continue to believe we are farther from getting a handle on the actual spend for measurement and evaluation of communication. In general, the ‘reported’ figures are artificially low because when communicators use tools, free or paid, they are not allocating for the time spent by staff, which produces an artificial expectation and reality of the real cost of measurement and evaluation in the marketplace today. A leading example of this is PR agencies, which include monitoring, measurement & evaluation (often simple reports) as part of their retainer because the client will not approve/provide an allocated budget for insights.

The Takeaway

Multiple factors play into how much of a budget is allocated for research, making it tough to determine an exact percentage. Experts discussed percentages ranging from 1.5 to 15 percent, and these numbers may mean different things for different organizations and brands. To accurately compare statistics and find an industry standard, a framework should be discussed to determine what should be considered as “research” and how other factors such as organization type and size factor in. Although current conversation surrounding metrics doesn’t provide definitive answers, practitioners should maintain an open dialogue to gain insight on industry estimates and, moving forward, this dialogue may lead the way to new and efficient measurement frameworks.

Heidy Modarelli handles Growth & Marketing for IPR. She has previously written for Entrepreneur, TechCrunch, The Next Web, and VentureBeat.
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