What's the value of a CEO's speech? How would you answer if your job depended on it?

Freelance speechwriter and Ragan speaker Ron McCall called me the other day to ask what I knew, if anything, about how to analyze the cost-benefit of a speech.

I didn't want to tell him the editor of Speechwriter's Newsletter had no more idea than his Springer Spaniel about how to quantify the value of a speech.

So I e-mailed him my declaration of ignorance. "Don't feel left out. Nobody else has an idea either," said the Southern Gentleman.

And then McCall shared with me his thinking on the subject. I share it with you, in hopes you'll have some input.

Ron McCall, on how to calculate the ROI on a corporate speech:

I know the cost of a typical speech to be about $100,000 (expense details include cost of labor for CEO, writing and approval staff, dedicated travel for the Chief, care and feeding on the road, etc. etc.). What I'm trying to estimate is the return on that 100K investment.

The American Marketing Association estimates the typical sales call to cost $275. We've already determined that CEOs speak in public, by and large, for one reason, and that's to sell the public on brand equity and corporate reputation. (I mean, seriously, how many times have we heard a CEO say, "Get me in front of customers!")

OK. CEOs are not in Administration, but in Sales & Marketing. So, let's say a CEO speaks to an audience of 200. The cost recovery of the talk would be 275 X 200 = $55,000. But if we've done our jobs right, the CEO would not be speaking to purchasing managers, i.e. the typical sales call, but to peers, other CEOs or opinion leaders, who carry a much higher value. What value? Don't know yet, but a recent article in USA Today estimated that the total compensation package for a CEO is $14M/year or $2375/hour based on a 16-hour day. So, we can estimate that an audience of peers (200 of them) has invested a collective $475,000 to hear your CEO talk for 20 minutes, with Q&A, round it up to one hour.

So, the monetary cost recovery range of the typical CEO talk (20 minutes, plus Q&A) is from $55,000 on the low end to $475,000 at the high end.

Now, if your CEO says, "I want to get out about 15 times next year," you can recognize that he's say, "I want to invest about a million five in my engagements next year." (100K X 15).

But what if he followed it up with saying, "And I want a return on capital (prime) plus 5%, same as I'm challenging my other operations to deliver."

Gulp!

That means you'd have to come up with a return of 5.75 (prime) + 5 (or almost 11%) or $165,000 on your Communications Plan and return $1,665,000 to the General Fund. Or get fired!

Would it not make sense to avoid the $55,000-type engagements (55,000 X 15 = 825,000, which means you get to meet Donald in the Boardroom) for a better option of high-value audiences, i.e. $475,000 X 15 = $7,125,000, which means you've earned amnesty and cannot be voted off the island for turning 1.5M into $7.1M!

Fodder for an episode of Ripley's Believe it or Not? Not really. More and more CEOs are demanding an ROI, or at least a justification for spending their time (a valuable corporate resource) on oral communications.

That's why I'm raising the issue.

Speechwriters, is McCall's analysis on-target? Do you have another way to tally the value of a speech? Or do you believe that trying to quantify a speech is a fool's errand溶o matter what the CEO demands?

Ron and I預nd my dog Slim謡ould love to get your thoughts.