Measurement Sherpa Skills: 4 Steps to Budget for a Measurement Project

This article is part of The Measurement Advisor’s Special Issue on the Measurement Sherpa, an in-house data wrangler and measurement resource who organizes, queries, and gains insight from data. Our coverage follows the development of a Sherpa’s skill and experience, from newbie to pro, and is organized in three levels:

Sherpa Level One: Getting Out of Base Camp

• Introducing the Measurement Sherpa
• 10 Signs That You Need to Hire a Measurement Sherpa
• 5 Reasons Why You Really Want to Become a Measurement Sherpa
• The First 5 Steps to Take to Become a Measurement Sherpa
• Learning on the Job: Notes from a Sherpa-in-Training

Sherpa Level Two: Climbing the Mountain

• Must-have Equipment for a Measurement Sherpa
• Commonly Confused PR and Social Media Measurement Terms
• 6 Books That Should be in Every Measurement Sherpa’s Library
• Katie Paine’s Advice for Measurement Sherpas: Dos and Don’ts for Reporting Web and Social Media Analytics

Sherpa Level Three: Peak Operations

• Matt Clement: Fort Worth’s Sherpa
• Lisa Binzel: Measurement Evangelist
• How to Get the Best from Your Measurement Sherpa
• Mastering the 6 Projects a Measurement Sherpa Must Know How to Do, including as separate articles:
  • Measurement Sherpa Skills: 4 Steps to Budget for a Measurement Project
  • 6 Keys to Managing an RFP Process 

It’s vital that a Measurement Sherpa knows how to budget for a measurement project. Here is the four-step system I’ve developed over the years and used for many clients. Let me know how it works for you.

Step 1. Figure out what is a reasonable amount of money to spend

For years the experts, including me, have told you to spend 10% of your communication budget figuring out whether the other 90% is working. But that doesn’t really tell you how to allocate that 10%, nor does it cover all scenarios. For example:

• If your organization is facing a reputation crisis that could cost it millions in lost revenue and shareholder value, then knowing how your stakeholders are talking about the issue is priceless.
• If you’re launching a new product that is critical to the future of the company, you may need to budget a lot more for benchmark research on your competition.
• And if you’re an agency trying to make a tight budget fit against a very large wish list, that 10% will be the first to element to cut.

So here’s a better approach. Look at the program/campaign/project you’re trying to measure. Now look at the total budget for that project. Factor in the importance of the project to the bottom line of the organization, and make an educated guess as to what is reasonable to spend on measuring the success of that program.

Look at it this way: If you’re spending $500,000 for an incremental lift in sales of a product that costs $100,000, then you’ll be a lot more willing to invest in measurement than if you’re spending $25,000 on a product that costs $10. So use your best judgment and your knowledge of the organization or your client. Go as big as you think you can and still have it make business sense.

Step 2. Determine what you need to measure

If you want to measure awareness, you’ll need to do some survey research. Here the choices are pretty cut and dried. If you can get away with a simple consumer survey, you can buy responses from Survata for $1 per completed response. If you need to test awareness among a narrow demographic or professional group, figure a minimum of $100 per completed survey. How many completed surveys does your budget enable you to reach? If it’s less than 100, then surveys aren’t the way to go.

If you want to measure message penetration, subtleties in positioning, or nuanced sentiment, you’ll need human coding.

If you’re tracking audience response and/or engagement, you can probably get away with Google Analytics with maybe additional help from something like Sprout Social at $50 per month. Or, if you want to look at a broad spectrum of social channels, then try Simply Measured for $500 a month.

Step 3. Allocating the budget

Ideally you’d want to measure everything. But if you have a tight budget, you may be forced to pick one. For media analysis, or anything that demands human coding, there’s a simple formula that I’ve used for years.

Let’s assume you’re trying to budget for an annual measurement program. You’ve decided that a reasonable budget is $50,000. You know you’re going to need quarterly reports. A written analysis report costs a minimum of $2,500. So four a year = $10,000.

Collecting the content will cost you a minimum of $4,000 a year. If you’re like most organizations, with a lot of search terms and a lot of publications, assume it will cost you a minimum of $20,000.

So you’re now down to $20,000 left for reading and coding. Assume an industry average of around $4 a clip. $20,000 divided by $4 means that you can code 729 clips a month. You can plug in your own variables into this Budget Calculator:

Step 4. Decision time

If your calculated clips per month sounds like a reasonable number, then you’re good to go. If it’s only a fraction of what you envisioned, then you have three choices to help you stay within budget:

1. Elect to do a random sample. Typically you would sample by media outlet type or channel. The downside of random sampling is that you can’t use real numbers, only percentages. This is important to remember when reporting results.
2. Reduce your target media outlets to only those that really influence your target audience.
3. If you’re planning to measure the competition, reduce the number of competitors.

∞

Thanks to The Daily Galaxy for the image.