The Source for Communicators

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June 6th, 2007 How much is your communication worth?

How can you calculate the true cost of communication that changes behavior? Members of the Measurement Forum on Melcrum's new free online community, T he Communicators' Network, are already debating this ever-green topic, with some useful practical advice offered by measurement expert, Angela Sinickas.

In response to a question asking "how can we calculate the ROI of an annual report?" Sinickas advises: "Always look for a behavior that would be a desired outcome of the communication, because behaviors have a financial value.

In this case, she says, the desired outcomes after reading an annual report would be:

For the average public, and for institutional investors, to either buy shares for the first time, buy more shares, or decide not to sell existing shares if he/she/they were considering it before reading the annual report.
For securities analysts, to recommend either holding or buying.

Then, says Sinickas, you would need to conduct a couple of surveys to be able to calculate an accurate ROI.

Calculating an accurate ROI
"I would conduct a random sample survey of all current shareholders. The first question would be to identify which share-related behaviors they exhibited since the date the annual report was widely published: bought for the first time, bought more, sold some.

"Depending on the answer to this question, they would get variable follow-up questions to determine to what extent reading the annual report affected the behavior. First, had they read it at all? For those who did, to what extent (on a percentage basis) did the annual report influence their behavior vs. other inputs, such as recommendations of analysts, their own brokers, their friends, pressing financial need, etc.

"Based on the percentages, you could take a percentage credit for the annual report on the financial value of more people buying or holding on to shares. When that happens, the share price goes up.

"A similar but separate survey could be conducted of analysts to determine to what extent the annual report influenced their recommendations to buy, hold or sell shares in that company. You could track any major dips/increases in purchases of shares shortly after the majority of analysts made their recommendations – after the annual report was issued."

If you have a question related to communication measurement – or any other element of corporate communication – why not sign up to the free network now and discuss it with your peers.

See you next week.

Mandy Thatcher,
Editor
mandy.thatcher@melcrum.com

P.S. We've also got a new edition of the Melcrum Podcast ready for you to download. This week, Sona Hathi talks first to Visa Europe's head of internal communications, Mark Darby, and then to Melcrum MD, Robin Crumby, about our new Communicators' Network.

Further reading
Vital Statistics - The most common measurement tools Introducing a new measurement approach at BP Vital Statistics - What are your peers thinking?