Greg Jarboe wrote a great piece a few weeks ago on SearchEngineWatch.com called “Measuring PR in cold, hard cash.” He talked about the need to “measure public relations in both PR outputs and business outcomes.” The article resonated with me because I spent most of the last six weeks trying to do just that.I’ve been all over the web looking at case studies and searching for ways to quantify – in business terms – the results of my PR program. I actually found some great ideas and will be sharing that in a post this week. But first, I want to talk about what I didn’t do.
In the midst of my digging for ideas to map PR results to business outcomes, I received a direct mail piece from a NY-based PR firm claiming last year they “achieved an average ROI of 500% on behalf of its clients.” It’s quite a claim and it definitely caught my attention. But then the letter went on to claim that “for every dollar [X PR company's clients] paid for public relations, they would have had to have spent at least five times that much to achieve similar results with advertising.”
(sigh)
Okay folks, I know a lot of PR people fall back on the advertising value equivalent as a measure of success. As an industry, we struggle to attach dollar figures to our results – something that the c-suite wants. So I can understand the appeal of this comparison. But it is flawed on so many levels.
First, let’s accept that a comparison chart is not proof of ROI. ROI, as you know, means return on investment. Specifically, it’s defined as: the ratio of money gained or lost on an investment relative to the amount of money invested. The key words in that sentence are money gained. NOT money saved. NOT money that could have been spent elsewhere. Simply, money gained. To show true ROI on a PR program, you’ll need to attribute sales to that program. When the amount of sales exceeds the entire cost of the program, you’ve got positive ROI. Of course, this is difficult to track specifically to PR, so the PR person who can demonstrate ROI is few and far between.
Assuming you accept all of the last paragraph, I’ll admit I can still see the why folks try to show that PR is more cost efficient than advertising – because many times we must compete for the same finite budget. That’s where the practice of calculating advertising value equivalents comes into play. This is the practice of measuring the relative size of an article, mapping that to the cost of a similarly sized ad in the same publication, and then claiming that the article was worth the same amount of the cost of an ad.
Even if you’re trying to show why budget should be allocated to PR over advertising, it’s still a very flawed practice for oh-so-many reasons. First and foremost, ads are created by the company. That means they’re on message, positive in nature, typically have a call to action and the company in the headline, and don’t mention the competition, except to bash them. How much of your editorial coverage fits that exact description? Exactly, so you can see how quickly the comparison falls apart. Also consider how much an ad on the front cover of BusinessWeek would cost, since it’s impossible to get. Or the value of PR results in the form of analyst endorsements, industry awards, speaking opportunities, and even a presence in the blogosphere. How much would advertising there cost? You get my point. (For a great list on why this method is incredibly flawed, check out this post.)
I still agree with Jarboe that we must start mapping PR outputs to business outcomes, but we can’t take the easy look-at-how-great-these-numbers-are way. We also can’t simply push coverage numbers and call it a day. I think the right answer is a hybrid of good ol’ fashioned PR results, such as coverage and industry accolades, measured against business outcomes, like increased traffic or leads, with a quality overlay to account for improved perception. I’ve been experimenting with several ways to do that (with zero budget), and will present those in my next post for your feedback. I don’t claim to have the answers, but I’m hoping as an industry we can figure it out (and soon).