We cannot expect to do well in communication
if we do not know what doesn't work.
One of the crucial points is to know if we invest our budget properly
and to know how much to spend in order to talk to the people we want to talk to.
Over the years, I developed a mental model
to understand the concept of Return on Investment,
and this is the topic of the following video.
Let me introduce to you to the Pyramid of Influence and Return On Investment
This pyramid has two big variables.
The first one is: how influential are you?
Can you convince someone else that what you do is important.
That will be the first parameter and the second one is actually your return on investment.
Each time I spend €1, how much attention to I gain?
I divided the markets into five different streams of communication.
One of them is communication, what we practice in the public sector.
The second one is the press:
so publishing articles or broadcasting on TV.
The third one is marketing: selling products on the market.
The fourth one is public relations
which means influencing the press to report on your particular stories,
and finally advertising.
What we call advertising is paying for people's attention,
whether on TV, or in the press, or on the Internet so that they purchase a product.
Each of these different streams of communication
really has one audience in mind.
In communication we often hear the term "General Public".
The problem with "general public" is that it means nothing at all
because we are talking about every one that could hear our information.
In Europe that is 450 million people
minus babies and people who cannot understand base level communication.
The Press talks to a readership, and when you're in the news business
you don't want to talk the readership of your biggest competitor
who might talk to a completely different audience in a different way.
You're targeting your particular readership.
In marketing you're putting a product on the market,
you want to talk to potential consumers,
people who could purchase that particular product.
So if you're selling a product for men you're not targeting women.
The PR industry talks to influencers,
a small number of people who could produce the story for them at a larger scale.
These are most often journalists.
Finally, there is advertising,
when you're putting an advertisement on TV, on the radio or anywhere else,
you're trying to catch a very small part of the audience
which is the person the most likely to purchase the product now.
So if we're taking communication again
we are trying to talk to a 100% of every one in Europe.
That's too much, that's impossible to have any sort of influence.
If you want to talk to everyone you can't even measure it.
The press usually havea segment of 10 to 20% more or less of the entirereadership population.
That's the case of the Guardian, around 10%
and the Daily Mail in the UK with 20%.
And the Daily Mail doesn't try to sell to readers of the Guardian.
In marketing, we are talking about 30% of the market
for the largest brands on the market.
That's the case for the sugar industry for instance
with the most prominent sugar brands.
Almost everyone buys sugar,
but still you're not talking to a 100% of buyers.
The PR industry talks to influencers.
These are maybe 10 or 50 people in their audience
but these people have the power to multiply the attention and run other stories.
Finally, advertising, which ranks at the top of the influence
and the top of return on investment talks to about 1% to 8% of potential buyers.
We are trying to talk only to these people
because otherwise that would be a waste of money.
when you place the ad on TV,
when you are putting an advertisement in a newspaper
you want to have the people that are most likely to buy it.
Let's dig into marketing and consumer segmentation.
I'm taking Coca-Cola, a brand known by everyone.
I don't know if you've noticed that many products by Coca-Cola
have different types of audiences.
The glass bottle version actually has a very specific type of audience.
We're talking to ethnic minorities who have children
They are aged 18 to 49, probably male,
and these people tend to read sports magazines,
watch "The Simpsons" and "The 70s show".
This is Coca-Cola's categorisation for this particular product.
The can is talking to people who are younger,
unmarried, probably students who are in their first job
and have a smartphone.
Two different audiences, two different products
and we are talking about one of the largest commodities which is Coca-Cola.
Let's watch a counter example which is the European Commission
talking to a lot of different people. You can tell me who.
I just got a message about this great product.
This device would help millions of people in the rehabilitation process.
Consumers saving money and investors earning.
But there's a problem, ideas need opportunities
and investors to make them happen.
So how can we help?
Come, Follow me.
If you want to watch the entire video you can with the link in the comments.
What I wanted to show in this particular video is that
I'm not very sure if we're talking to entrepreneurs,
investors, people who have ideas,
if we're talking to journalists to report about this particular new package and program,
or if we are talking to every citizen to show that we're investing their money correctly.
It's very difficult to be sure of who the audience is
because we have one single product trying to talk to many different audiences.
This all goes back to the investment in communication in general
and how careful you are with the money you spend.
If I'm taking Coca-Cola for instance again,
we have $45 billion in revenue generated by Coca-Cola every year.
and they know that they are spending about 10% of the entire budget in advertising.
They have a very precise count of how many people
purchase Coca-Cola, thanks to their marketing.
In the EU we have a much larger budget per year
to spend on programs and EU funding, a lot of different activities.
and we spent only 0.4% of our budget on communication and advertising.
Within that particular budget of communication
even if they work hard to measure it,
we are still not very sure of how many people are reached
when we spend €1 of communication advertising
or on the salary of people working in these fields.
Return on investment is a notion which every company has adopted
but it's still rarely used in the public sector.
One of the reasons why it's unused is because
we do not know our audience well enough,
so we are not sure exactly who the specific people we need to talk to are
so that our organisation does well.
If I have a project, building a bridge in Romania, for instance,
should I talk to everyone in Europe or mostly to the people who could cross that bridge,
or those who could report about the story that this investment for a bridge in Romania
is actually extremely successful in unlocking the economy of the region.
I would have two different projects because
I'm talking about two different things, two different types of people.
Once you really know your audience
you can start to be creative because you've been strategic before.
I'll take an example I really love of the Guardian and The Observer
who, every weekend, produce a sort of small newspaper
with all the weekend activities you could do
and you will see that they know their audience so well
that they know what could be funny for them, what could make them share it.
That is when you know your audience, that is the key.
Can you be creative without knowing your audience? Absolutely not.
But if you know your audience, this is the sort of thing you can produce.
Finally the conclusion of this video is simple:
if you can't measure it, you can't improve it.
Return on Investment is not just a metric for a profitable company,
it's a measurement for anyone who's spent any budget on employees,
on service providers, on any sort of service.
You have to be sure of who you are talking to
so you can know how many people in this particular audience you managed to attract.
If you want to dig into the sources I used in this particular video,
I've compiled a slide and I recommend for those
who are very interested by the topic to purchase this book
"The Media Handbook"
which details every channel of communication
and the return on investment on most of them when you communicate.
It's an advanced reading but this is the most exhaustive source
you could read about media, about target audiences and about budget.
Thank you very much for sticking with me.
Next week we are digging into a strategy and communication plan.
Have a great day and see you soon.