Giving Method to our Madness… More on Media Relations Measurement

posted by Brendan Hodgson

The Commission on Public Relations Measurement & Evaluation at the Institute for Public Relations recently published a new report on the “Perspectives on the ROI of Media Relations Publicity Efforts“. (thanks to the folks over at Corporate Engagement for highlighting it…)

It is an important read, as it outlines a number of approaches for measuring the ROI of media relations programs in the context of an independent activity, as well as within the context of a broader marketing campaign. Most importantly, it reinforces the importance of PR measurement to our business overall.

Why is demonstrating ROI so important today? According to the report’s authors – Fraser Likely, David Rockland and Mark Weiner – they suggest (and I hope they do not mind me pulling directly from their report): 

Resources are limited. In today’s economy, there is constant pressure on all marketing budgets, including media relations publicity. This means an organization will only invest in publicity activities that they know will make a direct contribution to increased revenues. Media relations publicity must prove it has an impact on the bottom line.

Scrutiny is increasing. Clients are increasingly holding their PR firms, departments, and consultants accountable for demonstrating public relations results. This accountability includes comparing those results against what was invested to obtain them. It is not enough to simply generate impressions through publicity; the quality of those impressions are equally important, as well as their impact on target audience behaviors and the resultant financial consequences.

Marketing has become more sophisticated. Public relations is expected to contribute to the execution of business strategy and thus the results obtained from that execution – not just create “noise” or “buzz” or “image.” The head of marketing is now asking: “Other areas supporting marketing campaigns can measure ROI, why not the PR function?” “What’s the ROI of our media relations publicity efforts in our marketing campaigns?” “Should I buy more or less advertising or media publicity, or invest it all in store promotions

Some additional and notable asides:

ROI is not the same as Cost-Effectiveness:
In its report, the Committee defines “return” as the “financial benefit derived by the organization… from the public relations or communications program or campaign.”  On the other hand, “Cost-effectiveness” as defined here is the “use of programs or campaigns to avoid costs in the first place by mitigating risk factors such as negative legislative, regulatory or legal actions through changes in stakeholder and/or organizational behaviours.”

On Ad Value Equivalency (AVEs):
AVE’s continue to be a much-debated measure, even among the Commission members: “…there are some on the Commission… who feel it is heresy. Other Commission members have done research to show the ability of AVEs to contribute to a ROI measure…” However, the conclusion is that “AVE’s really are a cost-effectiveness measure and not a true ROI measure.”

On measurement budgets as a percentage of overall budget:
According to the Commission: “generally speaking, measurement should be between 2% and 10% of a media relations budget.” 

On the ability to link media relations to sales and other financial results:
“This paper has not found that magic answer, but we are confident that there are models in existance that will work in the right circumstances and with the appropriate caveats.”

And that last point deserves to be highlighted. It is critically important, in my view, that the client fully understand at the outset that effective ROI measurement may require as much effort on their part as ours and that, without that effort, only so much can be achieved.

An example of this would be a US-based client we worked with recently who was attempting to market to a specific Canadian demographic in a specific region. Throughout the process we sought to ensure that, in tandem with our media relations efforts, mechanisms were put in place at various points of contact within the client’s operations that could be used to identify linkages between our efforts and the impact of those efforts on the client. In this case, we encouraged them to include a simple question: ‘where did you hear about us?’ on the back-end of every phone call received by a Canadian inquiring about the client and its services. Unfortunately, there was no real discipline in implementing this. As a result, and while we could correlate actual registrations during various campaign phases, we weren’t able to determine how many inquiries or leads the campaign generated overall.

But I also think that what is missing here is the notion of “Return on Expectation”. In the end, if the client is satisfied and feels value-for-money has been received. Is that not enough? Personally, I don’t believe it is. But it is an important consideration that we all need to examine more closely. Success to our clients may not always be what we think it should be. And understanding those factors can also play into the ROI/ROE equation.

2 Comments
02

Jun
2006

David Phillips

Brendan, If we imagine that a media legacy is an asset, it might be thought that media relations is a service that maintains this (intangible) asset, a balance sheet item.

If this is so, then what we really seek is evidence of return on assets deployed (not ROI).

This takes some press relations activity out of P&L and puts it on the ballance sheet.

Imagine the effect on your clients if they did not get coverage. Their share price would drop.

Is PR really a balance sheet matter?

PS – How do you count the column centimetres that go towards the AVE measure? Not all stories are a full page placement. In any event, I see the model in the paper and the ROI is not discounted. If these awful practices are to be continued and strange sums are to afflict PR people, they might as well put them onto proper accounting context.

02

Jun
2006

Brendan Hodgson

David, that’s an interesting concept, and one I had not considered. To that point, however, how does one go about putting a value on that asset, and how does one measure either appreciation and depreciation of that asset?

Furthermore, would it not make more sense to value that asset agains overall reputation vs just media? Or do you feel there are multiple assets at play, each with its own value?

Heresy though this statement may be, I don’t believe that media coverage is as significant determinant of share price (other than in times of crisis)as I think you’re suggesting…  

And to your PS – Like you, I’m certainly no fan of AVEs, so share your concern.

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