The Dilemma of Determining Total Marketing Spend

If you could start from scratch and build a model for marketing at your institution that would maximize effectiveness and efficiency, you certainly wouldn’t create one that risks being siloed or uncoordinated with marketing budgets spread across schools, departments, and offices.

Yet, these circumstances ring true for many higher ed CMOs, especially at larger institutions.

Performance expectations are high. With responsibilities ranging from enhancing reputation to driving results in the areas of enrollment, advancement, and lifetime engagement, CMOs play an increasingly critical leadership role for institutions to achieve their strategic priorities.

Couple those expectations with the added pressures created by constrained budgets and intense competition, and an institution’s marketing dollars must work harder and go further. It’s logical then that a university president or board of trustees would ask the following: “How much are we spending on marketing across the entire institution? Is it the right investment? What’s the outcome?”

When expenditures are distributed across a college or university, these questions are not easy to answer. Central marketing leadership is held accountable for the institution’s total marketing activity but may only manage a quarter of the total marketing spend across the enterprise. (The average among Big Ten Conference universities is 25%. While at Indiana University, I surveyed Big Ten peers on total marketing spend in 2017. Among colleagues who knew or were willing to estimate, they reported that central marketing managed approximately 25% of the university’s total marketing expenditures on average.)

It’s a basic point: you can’t determine ROI unless you first know the “I,” your total investment. But how?

Benchmarking spend—whether across an institution or across higher education—is a challenge because there is no standardization in what we count and how. “Marketing” may mean different things at different institutions. In the book Rework, authors Jason Fried and David Heinemeier Hansson take a holistic view of marketing as “something everyone in your company is doing 24/7/365.” At RHB, we concur with this audience-centric perspective that considers all touchpoints. But if “everything is marketing,” how do we begin to track marketing spend?

For budgeting and tracking purposes, we have to define it tightly and ensure that units across your institution are counting the same thing. At Indiana University, we based our definition more on the work purpose than the work product (such as printed materials). In order to track total spend, we defined “marketing” as any owned or paid media where the university was strategically targeting an external audience, the university controlled 100% of the message development, and the university controlled 100% of the media placement. We didn’t account for combined marketing and communications activities, and perhaps there were other ways we could have improved this definition. For the purpose of tracking, it sufficed because everyone was counting the same thing, and we provided budget worksheets with detailed categories for guidance. Academic schools and key units would then submit their projected marketing budget each spring for the forthcoming fiscal year. It was projected spend and therefore not exact, but it gave us a sense of where we were collectively as a university. We could then benchmark across the institution, analyze trends, and identify opportunities to gain efficiencies.

Once you have a budgetary definition of marketing, you have a foundation for tracking, which will help drive longer-term marketing effectiveness and efficiency for your institution.

Back to the Big Ten… I also asked marketing peers in 2017 if they were able to track total marketing spend. Of the 14 universities, only three tracked overall marketing spend (or projected spend) across the enterprise. Two somewhat did, and nine did not in any way.

The attempts at tracking came in two forms. One is reviewing purchasing data, but inconsistencies or inaccuracies in coding can prove cumbersome and frustrating. The other—a more proactive approach—is collaborating with units and having them share marketing plans and budgets with you. Of course this approach only works if you have developed the requisite trust on campus.

A step toward building that trust is eliminating the mindset of “centralized” and “decentralized,” which focuses on who has control. Rather, the overarching objective is to optimize outcomes for marketing as a whole, regardless of organizational structure.

A decentralized structure can seem like an uphill battle, especially if it is deeply rooted in a responsibility-centered management (RCM) budgeting model, where academic units are responsible for the financial ramifications of their decision-making and thus have ownership of their revenue and expenses.

Centralizing marketing spend, or even moving in that direction, is a long game—and may not be a feasible solution for your institution. As a first step toward maximizing the ROI of your marketing dollars, CMOs need to understand the total marketing expenditures across the entire organization by establishing a budgetary definition of marketing and a mechanism for tracking spend. In parallel, central marketing leaders and their teams must build trust, add value (through expertise and resources) to unit-based marketing efforts, and create a culture of the whole for marketing at their institution.

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Rob Zinkan

Rob is Vice President at RHB.