A report on the MAX project

Mike Donahue

This paper reports on the progress of a joint project between the AAAA and the Management Science Institute designed to communicate to CFOs and CEOs that a great deal is known about the effective management of advertising expenditure. The project aims to identify best practice in how advertising expenditures are budgeted and evaluated.

INTRODUCTION AND BACKGROUND

The MAX project is sponsored by the 4As and the Management Science Institute (MSI) and stands for Managing Advertising Expenditure for Financial Performance. It developed out of the realisation that marketers on the one hand, and CEOs and CFOs on the other, approach the budgeting process differently, and speak different languages.

There are assumptions (largely incorrect) shared by CFOs and CEOs about marketing communications that are deleterious to the development of a better measurement process. The most unsophisticated way, based on the amount spent in the previous year, may seem an appropriate measure to CEOs and CFOs but it is not appropriate from the advertising industry standpoint.