I saw this article in The Times at the end of December revealing that advertising in print is twice as effective as TV. It got me thinking about the relevance of this to PR. According to the article, for every £1 spent on print advertising, £5 in revenue is returned.

I’d be interested to find out how this was calculated: this kind of information is invaluable to PRs when evaluating the effectiveness of their efforts.

Here at Metrica we’ve found that more and more clients are looking at ways to show the wider marketing disciplines the effect of PR on sales. We’ve been able to provide data which has then been run alongside other marketing outputs, directly proving the ratio of influencers on sales, giving a hugely valuable ROI.

Taking this report at face value, it looks as though PRs should focus all their attention on print (a strange conclusion given the decline of print sales) to improve PR’s effect on sales.

Joel Dawson, head of online marketing at Boots says in The Times article that “Print is very good for targeting specific audiences and getting eyeballs on key products”.

However, PR efforts on TV appear in the programme the vieweris watching rather than the ad breaks, which the viewer can increasingly turn off or ignore using their PVRs (Sky Plus / Tivo for example). This, many would argue, is why TV advertising is becoming less and less effective.

So perhaps taking the conclusions in this report and trying to match them with PR is inadvisable. I would argue that an individualistic approach – each campaign directed to the appropriate audience for that campaign– is the way forward. And, while you’re at it, feed your output into marketing modeling to prove the effectiveness of your work. 

This is part one of a six part series about measuring the return on investment of public relations.

As the recession has really taken a stranglehold over the last eight months or so, there has naturally been a renewed interest in public relations' return on investment.  The incentives for the PR industry are clear, as money has drained away from advertising at an alarming rate, there is a real opportunity to channel some of that budget towards forms of marketing that are more cost effective.  For example direct marketing did very well out of the last recession because it could demonstrate its effectiveness both in terms of targeting and in its response rates. But there is the rub, many of us anecdotally feel that PR is cost effective but how do you prove it. 

One of the problems with PR ROI is its very definition.  At its most basic level ROI is a ratio between the profit generated from an investment and the cost of the investment itself. 

As venerable London Business School Fellow Tim Ambler has demonstrated in his paper ‘ROI is dead, now bury it!’ this basic bit of maths leads to some big problems.  According to this definition the best way to maximise ROI is to spend no money since anything divided by zero is infinite.  It would therefore follow that we immediately cut all marketing budgets back to nothing, stand back and watch as the economy pulls sharply out of recession and grows at a phenomenal rate…or maybe not.

So maybe we should look to a more general definition of ROI as what to I get for the money that I invest.  That’s the easy bit, but how do we work out what the ‘R’ actually is. 

Over the next five posts we will look at some of the methods that are used to calculate PR return on investment. 

Next: Advertising Value Equivalents

The posts have been published in reverse order, contrary to blog protocol, so that they read as a consecutive series of articles as you scroll down the page

This is part two of a six part series about measuring the return on investment of public relations. 

Advertising Value Equivalents

The method of placing a value of editorial coverage based on what it would have cost if it were advertising is and old and increasingly discredited one.  However it remains the most popular method of demonstrating ROI.  A feature in last week’s PR Week demonstrated its continued widespread use while Metrica’s soon to be released ‘PR Measurement, Research and Planning in the UK’ research shows that the percentage of PR professionals who use AVEs has increased from 28% to 49% over the last decade.

The appeal of AVEs is that they are relatively easy to work out and they give a number with a pound sign in front of it.  The problem is that it is not showing any form of return, it is merely showing how much advertising would have cost if were in the same place (which it wouldn’t be) at rate-card value (which it wouldn’t be). 

The rise of online content makes life difficult because online advertising works in a very different way from print advertising.  In print the same ads appear in the same place in every copy of the newpaper or magazine.  Ad-servers mean that this is very much not the case for online sites.  As a good example, try refreshing The Sun’s homepage a number of times and see that different adverts are displayed while the content remains the same.

AVEs are also causing problems as the advertising industry is hit.  Trying to place a value based on something that is in sharp decline is probably not a good idea.  Plunging ad rates are leading to much lower AVE figures even though the quality of coverage may be just as good.  We recently had a client who, for historical reasons, used AVEs to report to their board.  Unfortunately their AVE totals fell by over 50% despite their volume of coverage more that trebling over the same time period.

The following four posts will show some credible alternatives to AVEs as a way of demonstrating the ROI of PR.

Next: Part 3 – Cost of Reach

Previous: Part 1 - Introduction

This is part three of a six part series about measuring the return on investment of public relations.

Cost of Reach

This is part four of a six part series about measuring the return on investment of PR.

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