ROI for PR is very similar to ROI for advertising = tough to put hard measures. Despite that, we must measure the effectiveness of PR. I am looking at a couple of dimensions: # of positive coverage with influencers within the industry vs. # of negative. Value of coverage needs to have a weight to it as WSJ probably carries much better weight than others. I also put weight on "unassisted" coverage i.e. coverage that didn't result from a press release or a pitch since these prove that thought leadership is sticking to the authors.

Ultimately, you will need to look at the hard metrics you have, Net promoter score (NPS) or brand awareness/understanding and measure what is the improvement worth in terms of profitability and revenue and how the activities are expected to move the needle with the hard measurements. A couple of jobs ago, I also put "good" coverage on a timeline with the stock price to value whether news and coverage were moving the needle in the market esp. if the indices didn't cause the movement.

posted 10 months ago

If you look at the cost of getting an article about your firm in the WSJ vs. the cost of placing a half page national ad in WSJ then PR can be very cost effective. Determining the direct ROI is difficult, but if a company is striving to build brand awareness unsolicited validation of your product or service through media coverage will leverage and strengthen your paid advertising.

posted 10 months ago

Public relations is neither marketing nor selling. The only metric for public relations is the intrinsic value called good will.

posted 10 months ago

PR helps build credibility and ultimately helps to increase market share over time as part of an integrated strategy. Measuring the effectiveness of PR is sketchy at best. However, if you see the type of business you do shift after a gradual and sustained PR push, then you might be able to justify ROI.

Usually what I like to do to help create the foundation forROI is to attach an ad equivalency to the PR we get (I.E. an article = the value of a full page ad.) This allows you to place value on a PR push, making the effort easier to justify.

posted 10 months ago

My advice is to make the recomendation to follow the budget. What level are you doing the ROI calculation? All divisions and all departments? Then I would say yes & always. Are you doing the new product development calculation? Then I would say probably. On a much smaller scale if you are just looking at the IT budget for the underlying technology of a non IT company? Probably not.

posted 10 months ago

Unless a person is financially independent and genuinely doesn't care about what people think of him or her, PR is relevant to that person. There are very few people to whom PR is not relevant.

As for ROI, as long as one is struggling to achieve something—and who isn't?—ROI is relevant to the one struggling to achieve.

Hence, for almost all human beings, both PR and ROI are relevant. And it's difficult to imagine what would be the point of engaging in PR if one didn't care about one's ROI in relation to it. The point of PR is to influence one's public—an extremely difficult achievement, considering that most people I've met seem pretty determined to do whatever the heck they feel like doing, irrespective of what I or anyone else would like them to do.

So, I think it's not a question of whether PR or whether ROI, but how much emphasis one puts on PR. As a small businessperson, I don't think there is a day that goes by when I don't think about how members of the public perceive and interpret what I do, and it plays an extremely important role in my long-range planning, which is going on in my head incessantly: what new thing can I do to motivate people to take interest in my services? (I need about five clones just to implement the ideas I have in my head right now.)

I think you're looking for some way to measure ROI for PR. If so, I am sorry to say that I don't believe there's a standard for this that cuts across all industries. In fact, I think it's a soft, rather than hard, measurement. I'll take it a step further: in this realm, I think intuition supersedes logic, and probably the best thing a person could do to develop a sense of ROI in relation to PR would be to systematically engage in spiritual practice, which is the best way I know to evolve spiritually. For me, the path is yoga.

I love logic, but not all aspects of knowledge can be acquired by means of rational thought.

posted 10 months ago

Hi Richard

The exercise of calculating ROI on PR as a stand alone activity is severely imited. It must be considered in the context of the overall marketing plan before it can be 'valued'. Did PR influence the response rate for a direct mail campaign that was running at the same time? By how much? Would advertising have achieved the same lift? Better? Worse?

Point being is that we have spent way too much time and money trying to cobble "ROI" figures at an isolated activity or campaign level. The impact of your marketing dollar, be it spent on PR or elsewhere, is dependent on what other marketing you are doing, external factors (interest rates, weather, etc), as well as segmentation, profiling, quality of the creative, etc.

This is why I don't think a PR agency can ever assess ROI - even if they were not biased towards showing a positive contribution. They simply do not have all the data or the right perspective to calculate ROI.

Andrew

Links:

• http://www.kneebone.com

posted 10 months ago

PR like advertising, both have several angles that are not possible to quantify easily or quickly or accurately. Brand "building" does not happen in a couple of months but in years therefore trying to get a straightforward ROI calculation is (IMHO) a mistake. Even if you are pushing a product without the need to build brand because the brand is well known already your PR will affect the brand for good or for bad in the long run.

Now, having said so, I used to work an agreement with the PR agencies I worked with to make sure that we were both on the same page on how I was going to measure their work.

Based in the communication strategy our path to get to our own equation was more or less like this:

1. We laid out our goals very clearly: what target we were trying to reach, with what message and through what type of media

2. Based on that, then we made a list of the specific media (by name when possible and then by audience) making sure we agreed on what was (for us or for my client) the "extremely desire media", the "desire media", the peripheral media, as well as no relevant media.

So, once we got the "results" (where our brand finally make it), we took as a base what the same space in that media would have cost if it was an ad instead of an article, and we add a % to that price depending on :

a) if everything that we wanted was conveyed in the article (brand plus the right message in the right environment would give it way more percentage that just brand) being the main reason I talk about environment because while I agree that the same space in an article should cost more than an ad, because the perception in the target audience is different is also true that if it is an article that 'smells' like an ad that perception shifts against the brand.

b. We also added (or not) a percentage to the advertising price depending on where that specific media was in our list, if it was an extremely desired channel or not.

Again, I don´t think there is a way (yet) to really-completely- accurate measure the total value of a PR action, but this system was very useful for me as I engaged in this equation several areas of the company as well as the PR agency. And we agreed on the equation beforehand... so when the results were back we had way less ´disagreements´ about how to measure the ROI of the action.

My 2 cents, Sandra :)

posted 10 months ago

Richard,

I will answer the question in two parts: firstly how do you measure the value of your PR output and secondly how do you measure the ROI.

In my company, for the first part, we have developed a methodology the uses the core idea of AVE and expands on it. Based on our objectives we have laid out 5 parameters - whether the clip is in our "Category A" list of media vehicles, if we are mentioned in the headline, etc. Depending on the number of parameters the clip scores on, its absolute AVE is assigned a weight (ranging form 0 to 3). The sum total of all such weighted AVE is the "value" of the PR program for the month. However we recognize that the number we get through this method is arbitrary. Hence we don't focus on the number itself but on the month on month change in the number. We also use other measures (rather the month on month change in them) such as SOV, % coverage as a result of release versus industry story, etc.

The second part, i.e. what is the "return" (hence ROI) of a PR program, in my opinion is slightly philosophical and dependent on one's world view. My personal take is that PR program or any communication program is for the benefit of the business measured in terms of its revenue, profit and market share. However the time frames in which different programs deliver varies. For the PR program, I believe, the measure should be whether in a period of 2-3 years the program has created enough impact for your business to substantially reduce its spend on more obvious (and more expensive) programs like advertising, tradeshow participation, etc. In other words if the business can reduce these expeses to say 3% of its revenue as opposed to the earlier 5% w/o change in the net impact these programs have, then I believe that the PR program has delivered on its ROI.

One company that comes to my mind that has succeeded on such a measure would be Infosys (www.infy.com)

Cheers

posted 10 months ago

I always rely on Return on Investment analysis for any marketing programme. I want to know the true costs of the campaign, the number of leads, the conversations and the profit generated. This works better in some industries than others. However, in complete contradiction, I believe that PR cannot be measured when it is implemented well. The purpose of PR is to place your organisation in the buying publics eye and to create a thought leadership position for your business. By their very nature, it is very difficult to measure the response rate to PR campaigns. This in no way diminshes their importance to your overall marketing strategy.

posted 10 months ago

Just because PR is considered intangible, does not mean it’s not subject to ROI expectations.

The most desired and attractive form of ROI is a direct monetary return demonstrated through increased sales, increased share price, increased memberships, increased sponsorships, funding or other financial criteria - all depending on the company’s objectives.

The PR strategy and all associated activities must be aligned with achieving those objectives. The PR vehicles and tactics must be examined and weighed for their effectiveness in generating the desired result.

Two quick examples:

1) We were hired by the executive of a publicly traded technology company who sought to increase stock price. We positioned the executive as a thought leader in major media and developed an e-newsletter to educate its publics on the technology. Within six months, the company’s stock price increased by 566%.

2) We were engaged by a restaurant chain to drive consumers to their new and existing locations and position the company for acquisition. We targeted regional consumer publications for fun, quirky stories about the restaurant, taking them from nine to 19 locations, and got them placed in restaurant trade media as a strong, viable and well-run organization. Within two years, the company was acquired by a major investment group.

In both cases, the ROI was assessed by the client.

posted 9 months ago

Before you can answer that question you need to determine what type of PR your company requires. At each level of organizational development, a company will require different PR activities; often multiple PR activities. One could argue that Investor Relations are PR, Rapid Response is PR, and so on.

Your PR activities should be part of an overall sales and marketing plan that supports your marketing strategy. In this way, value can be assigned in context to each aspect of the plan and success or failure is more easily, and we hope, more objectively determined.

The ultimate measure of any marketing strategy is increased revenue, client retention, and strong earnings.

posted 9 months ago

This is a tricky question and it all depends on the context in which the PR investment is made. Ultimately, you want to measure all the incremental, but only the incremental investments made. For example, if you were spending the same on PR before the marketing investment in question, then you would not count it because what you are really trying to measure is the return on the additional investment you made to support your marketing initiative. However, if any part of the PR investment was made to support the new initiative, then you would include it in your ROI calculation. Having said that, you can still measure the effect that your PR has on the effectiveness of your your existing, new, or overall marketing by setting up experiments to make changes in PR and measure how that affects various parts of your marketing. But as far as ROI goes: measure all the incremental [expenses] and only the incrementals but do so throughout your supply chain/ market delivery vehicle.

posted 9 months ago

How to Calculate the Relative Value of PR in B2B
by
Toby Younis

Caveat: My experience is B2B. The following may or may not apply to B2C.

Hypothesis: PR measurably contributes to the year-over-year top line, bottom line and CAGR line.

If one were to believe the fundamental raison d’etre of public relations is to improve, over a explicit period, the public’s perceptions of an entity, then it would be necessary to measure the state of the publics perception (Perc(start)) at the beginning of the period, and again at the end of the period (Perc(end)), usually via a form of survey.

The final calculation of PR Value is dependent upon the above measure.

The high-risk assumption in all this is that improved perception results in new customers. But, it is my opinion that the literature would support such an assumption.

Once one had measured the beginning and end states of public perception, the remaining factors in the calculation are:

Calculated Perc(delta) The difference in perception between the
beginning and the end of the period.
Known Cust(value) The value to the business of a single
customer, over the period.
Known Cust(cost) The cost of acquiring a new customer.
Known Cust(new) The number of new customers acquired
over the period.
Known Cust(old) The number of customers lost over the period.
Calculated Cust(delta) The net gain in new customers.
Calculated PercCust(ratio) The ratio between the difference
in perception over the net gain in new customers.
Known Pr(cost) Cost of public relations over the life of the period.
Calculated Expense The cost of Public Relations plust the cost
of Acquiring New Customers
Calculated Income The Value of the new customers
Calculated PR(value) The Net Present Value of the
Public Relations Program

The calculations are:

Perc(delta) = Perc(end) – Perc(start)
Cust(delta) = Cust(new) – Cust(old)
PercCust(ratio) = Perc(Delta) / Cust(Delta)
Expense = PR(cost) + (Cust(new) * Cust(cost))
Income = Cust(delta) * Cust(value)
PR(value) = (Income – Expense) / PerCust(ratio)


Hope this helps.

I think I may even have a simple spreadsheet somewhere that performs the calculations.

posted 9 months ago

Richard - there are a variety of techniques to measure PR. Frankly I have never found any particular formula totally accurate. To me, it's the answer to the question - did this particular p.r. strategy achieve the intended result? How many books were sold as a result of the campaign? Did this focused and targeted campaign have an impact on sales of the product or service, in a given market or nationally? Same for the question of a change in perception on the issue? Naturally, tracking sales, or a shift in public opinion has a variety of methodologies.

Wikepedia has some good stuff for you on this topic. Here's the url:
http://en.wikipedia.org/wiki/Public_relations_measurement

Hope this is useful,
Mike Schwager

posted 9 months ago

It's very difficult to measure ROI for PR. First of all, what are you measuring? If it's the amount of procured coverage, then you can quantify the number of impressions, the value/importance of the media outlet & the procured coverage, the equivalent advertising cost and a percentage or amount for the added value of editorial placement.

But if you're measuring the business impact of the coverage, then it's extremely difficult because as Andrew Rybak states, the impact of other marketing activities and external factors is paramount and these are things that you have no control over.

I used to do PR for a mass market retailer for whom I launched dozens of private label brands and generated huge amounts of coverage. The client's inventory supply system wasn't very good and more often than not we drove people to empty shelves, generating negative media coverage in the process. We also supported many promotions where you had to swipe a card or present a coupon at the cash register and found that at many of the stores the cashiers had no clue. I had an argument with a cashier who vehemently told me that I must have mistaken the store running the promotion and that perhaps I should be shopping at the competition...

posted 9 months ago

Dear Richard,

Your question is both interesting and tricky, Interesting since it involves sentiments of religious nature (whether it is ethical and/or possible to at all measure the effect of pr) and tricky because it is not easy answered. However, you did not ask me to qualify your question so let me share my two pence with you.

As a starting point, I believe that organizational communication should serve a clear and measurable purpose. If it can't be measured, then by what means do you measure whether your efforts were success full i.e. worth your time and money?

What is crucial here is that you have to think about the parameters you want to measure before you start. Thinking in connecting input to outcome (instead of output) forces you to be sharp on the objectives as well. Traditionally the industry measures its success by 1) placement, 2) nature of the publication - but none of this indicate any business impact.

If you want to use PR strategically for example to support a campaign, make sure the objectives are linked to your PR efforts. The trick here is to define measurables on beforehand as well and isolate results from other communication efforts so you get a realistic picture of the contribution of PR to the success of your campaign.

I hope this sheds a bit of light. Feel welcome to contact me if you're interested to take it further or if you want me to elaborate.

Cheers,

Pat

posted 9 months ago

I see you are an expert in the field, and so you probably already know this... One resource is KD Paine, one of the foremost experts (for the past decade +) on PR measurement. Below is a link to her blog, and she has other resources linked from there.

To your point about whether the service provider should measure results... No, IMHO. On the buying side, I was never satisfied with what I saw from suppliers. Always pretty self serving and not tied in to overall business objectives.

Good luck!

Links:

• http://kdpaine.blogs.com/kdpaines_pr_m/

posted 9 months ago

Hi Richard,
May you need another metric for PR than the ROI calculation. I do not think that every activity in an organisation can be measured in financial terms. I think of things like attention received in the media, number of requests for information, number of new customers, relative performance, compared to major competitors, ...
ROI is ideal for evaluating projects and investments. For PR, you would need to do your calculation cum grano salis to be able to apply it. Seems rather artificial.

posted 9 months ago

PR is not well suited for ROI calculation in general. There is a misperception by sales and many manager that PR is much like demand generation. There is no direct traceable correlation between PR activity and demand or specific sales leads. There is, however, a correlation between quality of PR activity and perception measurement.

Using an unpopular analogy of war. PR is much like aircover. It is in advance of and prepare the battlefield for ground cover, which is, in our analogy, demand generation and sales. Done right PR will educate the market and influencer on PSO (Problem, solution, outcome/benefit) and build awareness of the brand name. So that when telesales calls or a demand generation piece arrives two things happen - some degree of positive name recognition and/or some level of problem awareness. Since PR is the new advertising, it should be 6 month's ahead of demand generation. Again, air cover preparing the battlefield in advance of ground cover (the troops).

Measuring PR is about benchmarking against your own prior qtr and year performance and to your competition. For my team I've set annual and quarterly metrics - # press releases/week; the spread of releases/qtr across product, customer, company and trends; tone of coverage; breadth of coverage across target markets and customer tiers; # of interviews; breadth of coverage by medium (TV, print, blog, etc.); perception by audience segment (WSJ does some great work here); % of reporters that view us as a trusted source; and # of issues we successfully drive into general media.

The agency metrics as set by my team and are a component of my team's MBOs, which are also based on the above metrics. The agency reports their metrics but we also measure them as part of our monthly and qtrly management dashboards. There are a number of tools out there that can help in automating the data collection. And we measure these metrics globally and regionally.

The bottomline is measuring enables appropriate guidance and action. Sales wants to know about leads but once they find out that they can 'get into' new accounts easier because the target prospect actually read about us on a blog, magazine, etc. then PR has a new value. My field maketing team supports sales to begin leveraging PR reprints into personalized direct mail campaigns. And the higher the awareness and the 'right' perception, the easier it is for the sales guy (Mr. ground cover) to come in and do their job.

posted 9 months ago

It is the least silly to try to measure PR.

This is due to 'depths' that a program can reach and the results can appear much later.

Now, if we talking for specific PR actions, such as a press release, then yes, the client can ask you: In how many financial newspapers will I see my year's results published?

However, PR is not a measurable service, and like most of the services industry, are only paid for the actual job occured, and not for the results achieved.

ROI is measurable in the moment one client appoints a PR firm, meaning that the employer knows what their needs are, knows how to determine a firm's competitive edges, and therefore, as soon as they choose the service they should also have their own ways to measure the results.

You question dear Richard is confusing because you add an element that is a utopia: How can an independent consultancy assess results of a PR program while they have not participated in it, nor they are the employer?

And how the employer trust a third party, while they hardly do the PR firm they use?

PR is a window in a car, not the engine, therefore, no specifications can be put there and no measurable results can be expected to be determined by third parties. And here is a hard example: Say that a government grants me a black pr account against another. Who is going to 'measure' my work? That is a joke...

Realistically speaking, some of the services yes, they can be measurable in terms of ROI, but generally speaking, no, PR is an art together with others that help a business grow. Sooner, or later. Nobody can trace the moment of development. They all talk about results.

Having managed over 2 billions in PR programs all over, I see no way that an entity can measure results against PR. Unless an audit agency inspects me throughout the service, a case that would result in just another expense for the employer (an expense that they would never pay)

all the best
George

Links:

• http://www.eurorscg.com/h/s/nt_org.asp

posted 8 months ago

Great question with a host of good responses, Richard. I’ll add another vote in favor of ROI but putting more emphasis on ROI management than ROI measurement.

All marketing investments should be managed toward a financial return that exceeds the investment and meets business objectives. A good marketing ROI framework will help align marketing strategies and initiatives to customer influence that leads to sales activity and financial contribution. Research, analysis, and measurements can all provide better insight into how these all tie together.

In terms of measurements, it’s important to be realistic and prudent. It’s impossible to measure everything and PR is certainly more challenging than many other forms of marketing. Measuring ROI for the sake of justifying the PR spend does not make sense. However, measurements that provide insight into how PR can more effectively drive financial performance can be quite valuable.

When a comprehensive marketing ROI process is in place to assess and manage marketing profitability across diverse forms of marketing, it becomes much easier to overlay PR and measure the incremental impact a good PR program can have within the mix of these other marketing activities.

And the discipline of running ROI scenarios as part of strategic and tactical planning also improves marketing profitability. By quantifying your assumptions in the planning stage, you improve your targeting, concentrate on influencing the right behaviors, tighten integration with other tactics required to convert perceptions into action, and track those metrics identified as you mapped out the expected impact.

Bottom line is, as marketing executives, we need to be just as smart about measurements as we are with marketing investment. It’s all about prioritizing and managing our decisions with discipline aligned to business objectives. And generating more money than you spend is a fundamental part of that discipline.

Links:

• http://www.lenskold.com

posted 8 months ago

Agree with Mitch. You need more. With organisations - and in particular companies - under considerable public scrutiny, a lot of PR is making sure that that story DOESN'T appear inthe WSJ, rather than the other way around. This isn't about spin, or cover-ups, but the ability to provide good internal advice and effective influence to avoid the bad publicity. For many organisations zero visibility is what good feels like.

posted 8 months ago

Outcome based measurements, and measurements that link profitable behavior changes to the role communication activities in inspiring/facilitating them are far preferable than so-called 'objective measures' like ROI for PR and organisational communication activity.

ROI is problematic for two reasons--a fair amount of communication occurs to prevent things from happening (things which cannot be easily measured) and a fair amount of communication is about raising awareness (which may manifest itself as behavior after a given measurement period).

Communicators win when we develop real, pragmatic measures that show a line between what we do and the impacts we seek, and lose when we let ourselves be measured according to irrelevant if commercially attractive criteria.

posted 8 months ago

Great question, as always, Richard.

Firms and internal PR departments should measure their effectiveness before they try to measure the return on investment. The exposure that results from an effective public relations campaign and any increase in sales or market share may not be proportional and may be attributable to different factors.

Public-relations activity won’t solve some sales problems. Certainly, using material that PR efforts generate, like positive media clips or client references, ought to be used in the sales process. But if the sales or distribution pipeline is weak or the company doesn’t have a clear picture of the value proposition, then that’s a separate issue that needs to be addressed with different type of professional service.

This isn’t even mentioning organizations like law firms and hedge funds whose P&L depends on relatively unstable market conditions, not a product per se. For such firms compete on expertise, measuring their respective share of that expertise is quite different than measuring the ROI made on the PR investment.

More often than not, there are sensible ways to measure the effectiveness with PR efforts, but not so with ROI.

posted 8 months ago

Richard,

ROI in public relations, like all communication, is best measured in terms of intent of the communication vs. the outcomes related to that communication. That is the ROI.

While there are some less measurable benefits associated with an well-executed public relations plan, all communication that hopes to serve the organization has a fundamental purpose to change or reinforce behavior. And, as such, can be measured.

Understanding the purpose of communication and desired outcomes has a dramatic effect on how we approach communication. Unfortunately, not everyone defines the "R" before executing their plans, which ultimately traps them into measuring how many column inches, positive stories, etc.

For example, there are many stories inside companies that might make great fodder for the media, but not all of these stories have equal weight in meeting organizational (or individual) goals. Some, as we see everyday, have a negative impact on the organization because those stories are far removed from the intent of the communication (eg. FEMA faking a news conference).

That understood, if the purpose of the communication is defined in terms of what measurable outcomes are being pursued, then the outcomes become more apparent and the need for an independent assessment less necessary.

The same holds true for most communication. While the return in advertising is often linked to branding, store traffic, and/or sales (thus giving it more perceived weight), public relations and other communication strategies have varied returns that may include reinforcing the perceived value of a stock to, as mentioned above, demonstrating good will as a corporate citizen within the community (which is measurable). If companies made these measurements more apparent, I suspect that actual weight of public relations would be better understood.

I have included a link to a posting with some early work on a communication ROI equation that I have been working on; I anticipate having a revised equation draft to be complete within the next two weeks.

While the post skews toward social media, the equation is applicable in any communication. Several dual-accredited (ABC, APR) colleagues of mine have tested it using existing case studies from their own firms. They feel is promising, though need more evaluation.

If you are interested, I would be happy to notify you when the revised equation is released. Or, please do not hesitate to contact me with any thoughts you might have before then.

All my best,
Rich

Links:

• http://copywriteink.blogspot.com/2007/11/revisiting-metrics-social-media.ht...

posted 8 months ago

Ten years of my life was spent analysing the impact of marketing and advertising on product sales and for me, Christine Crandell’s air-cover analogy is an interesting one.

Fact: Unless you have extraordinary data collection and analysis capabilities, you can’t even begin to isolate the impact of PR from all other marketing options in use at the same time.

In a retail environment where you can measure the direct impact of events on unit (product) sales, minute by minute, hour by hour, and day by day, you can measure the direct impact of your daily media on product sales and forecast it with significant accuracy. We forecast unit sales months in advance of running our ads, and therefore calculate an ROI (Direct Product Profitability) to some degree.

There are however, so many other variables that come into play that you can never be 100% accurate. The Parado Principle applies even with this absolute method.

There are so many elements that come into play you can’t ignore them, but as you add more and more data to regression and correlation analysis things can get foggier, rather than clearer.

PR is generally a long term, cumulative effect method, and it does more to influence attitude and acceptance of the whole, and less to drive a direct product sales. The air cover analogy is good and suggests that we should measure attitude and opinion rather than direct ROI.

I would suggest that measuring public opinion, attitude, perception and awareness against your vision, mission and values statements makes more sense than a Direct ROI calculation.

posted 7 months ago

1. All marketing activities should be measured
2. Keep it simple yet effective
3. The best solution I have found for PR placements is to measure as you do your media placements
4. If you're not talking media placements but possibly product placements in select schools, etc as part of your PR campaign, measure as you would if you were doing product demos as part of your sales tools/presentations
5. There are numerous activities that can be conducted as part of your PR campaign, find the next closest sales tool and measure as the sales team would do so for justification of activity and ROI.

Regarding your question on who should assess ROI, I don't believe either the PR agency nor a 3rd party independent consultant should do so. The company and the PR agency should share in this responsibility for accountability and accuracy.

How else should PR activities by justified? There are intangibles and tangibles to consider. ROI is tangible. The intangibles that tie into your corporate goals and objectives should not be ignored and need to be factored in separately but equally. Some of these may prove to be more important to senior management than the ROI.

Richard, I would be very interested in hearing your views and brainstorming with you. I've had a long-history of doing so with members of GE and other major consumer-package goods companies.

Good luck and Happy New Year!

Debbie

posted 7 months ago

Hi Richard,

You have asked a lot of questions, I am attempting to answer as many possible:

My Definition on ROI in marketing context:

If I invest $X in marketing, I should be able to get $5X over and above the regular sales, without marketing.

Does my definition changes in terms of PR?

For offline PR – Maybe I would put $2X as measurement becomes a challenge. Though there are methods, however, accuracy is blurred.

Online PR - For me the PR has changed its role from just offline PR to Online PR. The moment “online” word creeps in, its measurable and your ROI question gets answered and my definition remains same. (Web analytics, CRM, Database marketing and PR integration – Leads Source Interest identification to actual sales)

How do I use ROI calculations?

If I am spending more $$s in PR than other marketing activities, and my ROI is lesser than other media, I might want to re-look at the effectiveness, I might want to alter media spend etc or even just optimize my media spend.

If you were the senior executive engaged in the PR activities for a client or within the department, how important would a standardized ROI for PR be to you? Do you think it could save you money? Do you think it would shape your PR decisions?

It would be very important for me as I will be able to project PR as the part of business growth strategy and not a “StandAlone” activity which no one understands, how affects the revenue of organization. Shaping PR decisions would definitely get affected though it depends on the company’s stage of PR requirements.
A new company might need an extra dollar than a mid-level company. So, financial analysis, definitely impacts the potential to alter marketing decisions

Would an ROI calculation allow you to monitor the effects of business decision-making inside PR program modeling? Would it improve your PR effectiveness?

This is a tricky question. It may help improve the PR program effectiveness or it may even deter or elongate the time frame for PR effectiveness or impact. So let’s say a higher ROI allows me to increase budget, then I might be looking at 2 yrs for serious business impact of PR. However, if I have lower ROI, lower budget, I might have to be flexible to look at 3+ years of business impact. (With online PR its anyways more effective in short time)

How else would you justify PR activities? If you are using a PR agency, do you think you would prefer ROI to be assessed by the service provider or by an independent consultancy within the public relations industry?

Sometimes PR activities are reactive, situational or suo moto. These cases wouldn’t ask for justifications. In terms of PR agencies being measured, I would say, subtly mention that you are building a new framework of assessment. Really work towards it and you would need more support from them. Though I believe it’s more internal status, as the final sales closure data is available with you.

I await your opinions, comments and thoughts about the questions surrounding an ROI for PR activities?

Ending notes- Sharing some important results from my previous experience:-
--Annual spends on Magazine Ads was reduced 80% and we still saw revenue increase in the branch office.
--Annual spends on paid print advertorials were reduced and we still didn’t see any aberration in revenue.

In marketing they say – Test than going by heuristics and trust me testing scales over heuristics.

posted 7 months ago