Australian Marketing Institute – Alarm bells ring with membership numbers

I’ve just received an invitation to the Australian Marketing Institute’s annual general meeting and its ‘2008 Annual Report’.

all for money
Originally uploaded by Thiru Murugan

This years AGM is focused on Value Creation Through Marketing and learning to speak the language of business, by using marketing metrics.

In the spirit of this marketing festival, I have decided to read the ‘2008 Annual Report’ and its financial statement, so I can discover what particular marketing metrics are being used by my beloved Australian Marketing Institute.

Let’s be honest, financial statements are not sexy and are design to confuse directors and stakeholders alike.

But, in my experience you do find some good stuff…just like I discovered on page 17 under the heading Members Guarantee and Revenue.

I know counting can be difficult sometimes, but I do have a few questions relating to the Australian Marketing Institute membership size. According to 2008 Annual Report: 30 June 2008 the number of members was 6,475 (2007: 5,536).

But hold on. Didn’t our long serving CEO triumphantly announce
membership levels had passed 6,800, that’s what he said in September’s
issue of Marketing Update and using the same 30 June 2008 date.

Holy Vegemite…we’ve lost 375 members! Now the alarm bells start ringing.

But you might say “It’s just a simple mistake.” Possible, but there’s more…

In the report, a key outcome under the title ‘Review of Operations’
was a 17.6% net increase in membership, for the period ending 30 June
2008. On face-value, that sounds like a very successful outcome for our
old executive team and you would expect cash pouring into the Pitt
Street office.

Well, not really…the revenue figures are pretty much flat compared with the huge increase in membership.

To find out what’s going on, I decide to analyse the revenue figures
using a couple of simple mathematical formula including this one:

Members subscription fees ÷ Number of Members = Average membership fee

And this is what I found.

In the financial year ending 30 Jun 2007, using the above formula
and the figures provided by the Australian Marketing Institute, they
received on average a total of $164.97 in membership fees from each
member. Year ending 30 Jun 2008, this figure drops to $147.76. Some
people might say this is significant.

Especially, when you consider the basic annual membership fee is
$260.00 ex-GST. Now, can you see where I going with this – $260.00
compared to $147.76?

Now, let’s take a closer look at the much trumpeted 17.6% growth
rate in membership and the less talked about 4.7% growth rate in
‘Members subscription fees’.

The 17.6% growth rate equates to a grand total of 939 new members.
Now, if every one of those 939 new members paid the basic membership
fee of $260 ex-GST, our ‘Members subscription fees’ would have
increased by a grand total of over $244,140…but it didn’t, ‘Members
subscription fees’ grew by only $43,483.

In real terms, every new member that joined in the year ending 30
Jun 2008, paid on average only $46.31 for their membership, a startling
drop of 70% compared with $164.97 paid in the previous financial year.

If this trend continues, the Australian Marketing Institute will be
giving away free membership. We’ll be the Bucket Value Institute

Did I tell you that I love reading financial statements? It’s an art
I learnt after losing shit loads of cash when Onetel collapsed. 

I haven’t finished just yet. If you divide the total amount of
revenue from ‘Members subscription fees’ ($956,734) by the basic annual
membership fee of $260.00 ex-GST, it should give a rough guide to how
many professional marketers pay the basic membership fee.

The answer is…3,680.

There’s more…unfortunately, the ‘2008 Annual Report’ doesn’t give
any membership revenue breakdown under the ‘Members subscription fees’.
But I can assume it includes revenue generated from the CPM program,
student membership and the new graduate membership.

If that is the case and you remove this money before doing the same
calculations, there is a good chance that over 50% of the Australian
Marketing Institute memberships are non-practising marketers (students)
or worse, non-paying members.

I think its time the Board of Directors have to ask some questions.
Remember directors, the buck stops with you guys and girls…

If our membership is nearer to 3,000 practising marketers and not
the 6,475 published in the ‘2008 Annual Report’, not only are we losing
out on valuable revenue, but the perception that the Australian
Marketing Institute is Australia’s peak marketing is lost.

You cannot be classed as Australia’s peak marketing body, if you
only have less than 5% of practicing marketers as members. Sorry,
students don’t count until they start practicing

Even the ‘Functions revenue’ looks grime. A 17.6% growth in
membership only created a 1% increase in function revenue, meaning
either heavy discounting or overall member attendance is declining.

I know my calculations are rough and the figures subject to many
variables, but even with more accurate figures the trends don’t look
good.

However, if any senior members of the Australian Marketing Institute
would like to explain and prove me wrong…no problems, once I’ve seen
the proof, I’ll quickly remove this post and replace it with strong
apology.

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