The Business Case for Advocacy

11 Jan, 2017


The Business Case for Advocacy

The formula is a simple one. Even an English major can understand it, which is fortunate since so many people who work in public affairs have liberal arts educations.

And the formula can be of tremendous help when trying to speak to your CFO or other higher-ups in the organization in language they understand.

In terms, that is, of return on investment.

Imagine you’ve identified a public policy challenge — say, a proposed tax that could be defeated and, if it is beaten back, saves the company X million dollars. Or a regulatory change that opens up a new market. You feel there’s a good chance you can achieve the desired outcome — maybe a 75 percent chance, given the political situation at the time. The company is willing to invest Y dollars in the effort. Unfortunately, that gives you only a 50 percent chance of success. But spending Z will push the likelihood of success up to 75 percent.

This heftier investment will enable you to mount the campaign that experience teaches you will be more effective and more likely to yield the success the organization craves. Armed with this data — basic as it is — will help you make your case for the larger investment.

Probability of Success

“The calculation is a simple numerator/denominator equation,” says Chris Bender, head of public affairs at Novozymes North America Inc., whose team developed the equation. “The numerator is a rough estimate of the business opportunity. The denominator is a rough estimate of the public affairs cost. The resulting fraction, converted into a percentage, yields the probability of success. Raise or lower the denominator and the probability goes up or down.”

The beauty of this equation, Bender says, is that it enables public affairs professionals to talk to their peers in other departments of the organization (i.e., those who control budgets) in terms they understand.

Welcome to the new world of public affairs: where metrics are used not just for justifying past efforts but also for assessing the advisability of future activities — and putting a price tag on them.

An ROI Focus

“People have not always felt that public affairs can be quantified,” says Sheree Anne Kelly, the Council’s senior vice president. “The ‘old school’ of public affairs didn’t focus on ROI. Some things are more readily measured than others, of course. But it is encouraging whenever we see how the profession is learning to apply these kinds of calculations in clearer ways. This is especially the case when the objective is to estimate in advance which tactics will work and which won’t, and to use these metrics to decide how to pursue our goals.”

Welcome to the new world of public affairs: where metrics are used not just for justifying past efforts but also for assessing the advisability of future activities — and putting a price tag on them.

“It is almost always useful to think in terms of how public affairs efforts support business goals,” she says. “That’s how you showcase your value and understand what business goals your efforts are supposed to advance. Are you preserving the company’s license to operate? Generating or protecting revenue? Helping open new markets? These are the real returns on a public affairs investment, and we need to be able to discuss what we do in terms of how it supports the business.”

‘Portfolio Perspective’

Bender uses the term “portfolio perspective” to refer to the mindset in which government relations teams think in business terms. “We always want to show that what we’re doing is a business function,” he says. “We’re not IT. We’re not HR. We’re a business function. While we shouldn’t expect public affairs people to have MBAs, we do need to develop enough sophistication that we can talk with MBAs. And if we develop enough credibility through our ability to explain why what we do has bottom-line benefits, the MBAs will come to us when they have a need. That should be our goal.”

When Alan Hardacre, head of corporate affairs strategy for Imperial Tobacco Group, joined the company five years ago, debate over the European Tobacco Products Directive (EUPD) was raging. Among other changes, the new rules would require 65 percent of tobacco packaging to carry health warnings, compared to 30 percent before.

“These and other requirements were a major issue for our business,” Hardacre says. “The different company divisions and business units all had their own priorities for what they thought the government relations team should be doing.”

Some of these initiatives were contradictory. That meant options had to be compared, and tough choices had to be made. It also meant there would need to be commercial justifications for these decisions.

“This was an ‘a-ha’ moment not just for us, but for others in the company as well,” Hardacre recalls. “We had to come up with a clear priority-engagement list, and we developed it with help from the company’s commercial-assessment group. The group that worked on EUPD has stayed together ever since, and this fight alone has been a real icebreaker for us in terms of our being understood and included as a commercial function of the company.”

Over the past 18 months, Hardacre’s department has developed what he calls a “global corporate affairs barometer.” Working with the company’s global business intelligence team, Hardacre and his colleagues can amass sufficient data to show the potential commercial impact of one public affairs program compared to another — and what the preferred program will cost to execute.

“Using assessment tools we developed but remain proprietary, we’ve been able to identify reactive risk and proactive opportunity,” Hardacre says. “We’ve shared all of this with our commercial colleagues around the world. Now they can justify their own priorities to their management teams.”

“Hardacre remembers what it was like before this change took place. “We would be in meetings where the commercial people were talking in quantitative terms, while we were talking in qualitative terms,” he says. “We realized we needed to establish that we are a business function, too.”

Measuring Results

So far, Hardacre says it is too early to discuss the specific results of some of these efforts. For that reason, it is too soon to consider their model an unqualified success, at least externally. “I can say that so far, it is has been a massive win for us, in terms of its internal use,” he says.

Jon Newman of The Hodges Partnership, a communications firm in Richmond, Va., says what Bender, Hardacre and others are doing, while encouraging, has its limits.

“These kinds of tools can be helpful in talking with the CFO to help make sense of budgets,” Newman says. “But it is important to remember that in any government affairs or grassroots effort, a lot of variables just can’t be factored in. You can be engaged in a grassroots campaign where it doesn’t really matter how much you spend because you can be up against some lone critic for whom this has become a life’s mission. He can just dig in his heels and keeps up his opposition, no matter what you do.”

Measuring Relationships

And some results — and actual “wins” — don’t lend themselves to quantification. “The value of building relationships is almost impossible to quantify,” the Council’s Kelly says. “What you want, ideally, is for a decision-maker — a legislator or journalist, for example — to trust you enough that they call you before they introduce a bill or take a position on an issue. The value of that kind of relationship can’t be measured.”

Of course, it is easier now than it used to be to quantify some outcomes. You can count “click-thrus” or likes, but in themselves, these don’t measure actual influence. “A wonderful thing about social media is that Facebook and other platforms actually work with you to estimate what you will get for how much you are willing to spend,” says Karla Cobreiro of Krep DeMaria PR & Marketing in Miami. “You can see your options, down to an estimate of cost-per-click. They can help you predict the results.”

Outputs vs. Outcomes

“But such results are what I call ‘outputs’ rather than ‘outcomes,’” Kelly says. “Outputs, such as click-thrus, don’t always tell you what really counts — how you moved the dial on an issue, how you changed perceptions or strengthened your reputation. For that, you might need a stakeholder survey. Those can be more revealing than trying to measure success in terms of legislative wins and losses. There are thousands of forces at work that determine why a bill passes or fails.”

Predictive models are certainly more of an art than a science. “So far, we can use these tools to decide which of maybe two options to choose,” Hardacre says. “We can plug in some figures, and if the results of Option A and Option B are roughly the same, we can’t make a determination on that alone. But if one is massively different from the other, then that is significant, and we can base an argument on that. They enable us to anchor ourselves as part of the commercial business function of our company, and that in itself is a win.”

Want More Information on This Topic?

Contact Sheree Anne Kelly, senior vice president.

Additional Resources

Engaging Business Units Effectively for Public Affairs