‘Effectiveness of our sponsorship budget: How to be accountable?’

Q: We’re a medium-sized pharma company carrying prescription products.  Our marketing is all directed to medical doctors.  In your last Friday’s column you mentioned Al Ries and Laura Ries.  We were reminded that some two  or three years ago, we attended your Al Ries and Laura Ries marketing forum.  Al Ries was so persuasive that he converted our CEO to favor PR and after, he shifted all of our advertising budget to PR.  The greater percentage of our PR budget now goes to sponsorship of doctors to attend conventions abroad, attend seminars here, and provide funds for medical research as well as for playing golf.

Our CEO met with us two weeks ago and told us to read a book that he said you (the Senior MRx-er) recommended to him to read on “accountable marketing.”  He read the book and said that he’d like us to present to him by mid next month how we propose to be accountable for the effectiveness of our sponsorship budget.  We’ve also read the book but found no specific reference to this new requirement of our CEO.  Will Marketing Rx please help us with even just some practical tips?

A: As help, what we can do is to share with you our experience in advising our own pharma clients about sponsorship.

At one time, the Senior MRx-er was marketing research mentor to top executives of a large pharma company.  That was in the early ’90s when sponsorship became a highly controversial issue.  The issue centered around the specific practice of the top three or four leading pharma companies in sponsoring top prescribing doctors to expensive medical conferences abroad and even to the Olympic games.

During the sponsorship planning session, the company resolved to inhibit itself from such kind of sponsorship events and at such a “scandalous” scale.  When it came to the need for evaluation, the planning participants reached also a consensus that they would assess the effectiveness of any sponsorship event for its “goodwill building benefits to the company.”

During its mid-year corporate strategy review, however, the company CEO was heard asking: “Will the sponsorship team please tell us what has been the prescription productivity of our sponsorship events over the past six months?”  While he was reminded about the “consensus” regarding sponsorship’s “goodwill building effectiveness,” the CEO went ahead anyway to say: “Yes, of course I remember but how else can you justify its large budget except through its obtained prescription and revenue contribution?”   So, he instructed the sponsorship team to seek the assistance of accounting and redo its presentation to include some estimates of the “prescription and revenue returns on sponsorship investment.”

Let’s learn from this example.  Ask: “What did this company do right about evaluating sponsorship’s effectiveness?”  Then after this, ask: “What did it do wrong?”

What did it do right?  First, it engaged in the good marketing practice of setting a norm of sponsorship effectiveness.  It sought consensus on that norm and agreed to evaluate sponsorship in terms of its “goodwill building benefits.” It was also good practice to remind the CEO of the effectiveness norm because it’s the kind of nontraditional effectiveness scorecard that’s difficult to keep in mind or even to remember.

What did the company do wrong?  First and foremost, while the planners specified and were able to agree to evaluate sponsorship’s effectiveness in terms of its “goodwill building benefits,” they did not work out a good metric or formula to measure the attainment of those goodwill building benefits.  As Tom Peters has told us: “What is not well measured is not well managed.”

You can actually link the CEO’s insistence on the “prescription and revenue returns on sponsorship investment” to this absence of a good metric to measure the attainment of goodwill building benefits.  If you add to this absence, the “nontraditional” character of this effectiveness norm, then you have a situation waiting for scorecard neglect if not eventual rejection.

It was also obvious that there was no buy-in or may be only superficial buy-in from the most important corporate assessment officer, the CEO.  If the sponsorship team made extra sure about that buy-in, the CEO’s instructions for the team to get Accounting’s “assistance … and redo its presentation to include an estimate of the prescription and revenue returns on sponsorship investment” would not have been heard.

Just as important if not the more or most important responsibility of the sponsorship planning team was keeping everyone especially the CEO informed about each sponsorship event’s “performance” during each month of the past six months.  The fact that it did not suggest that the sponsorship plan had no or did not include a good monitoring system.  It provided for some evaluation procedure but evaluation is different from monitoring.

The what-did-right items above tell you what you should reinforce in your  proposal to your CEO regarding your being accountable for the effectiveness of our sponsorship budget.  On the other hand, the what-did-wrong items tell you what you should correctly include in that proposal.

Keep your questions coming.  Send them to us at [email protected] or [email protected]. God bless!