Finding the Return on Investment for Public Relations

The public relations industry is a behemoth. Estimates from the Holmes Report peg it at $12 billion in revenue and employing 80,000 people (as of 2013). This just includes agencies, not in-house communicators or solo entrepreneurs. As our media landscape becomes more fragmented and more specialists are needed, that number is expected to continue growing.

But how do we know that the $12 billion industry provides real value? When a PR firm has been hired to help your organization, how do you know whether or not you’re getting your money’s worth? The truth is, success and failure aren’t always cut and dry. Therefore, an organization must have a clear idea of what it wants to accomplish through its PR efforts and, from there, it can set up a plan to obtain and measure PR.

For starters, AVE is complete and utter garbage

There have been many attempts made by some PR firms and in-house communication teams to use a metric called Advertising Value Equivalency (AVE) — a formula that determines what your editorial coverage would cost if it were advertising space or time. AVE measures the space or time that an entity receives in a story, multiplied by the number of articles in a given time frame, multiplied by the ad rate of that particular publication.

If one were to believe that all public relations is good public relations (which we don’t), then a metric such as AVE would end up making more sense. But what about that lousy product review or that TV report about a lawsuit your company is embroiled in? AVE doesn’t take that into account.

Moreover, people perceive earned media to be more credible than advertising. So a very positive article about a company is likely going to carry a lot more weight than an advertisement located in the same space.

So lose the AVE mumbo jumbo — it won’t help you determine the return on investment for public relations.

Customization is key

Instead of providing a one-size-fits-all plan by using bogus metrics such as AVE, an organization or its PR firm needs to build out a customized set of tools that will help determine the value of public relations efforts. This first starts by determining needs.

Clients are looking for different things when they seek out public relations assistance. Startups may be looking to get their name out there to potential investors. A Fortune 500 consumer goods company may be looking to lessen the damage after a high-profile product recall. Only when you know what the main objective is can you go forward with a comprehensive PR strategy.

Know the key metrics

Before engaging in a PR campaign, you must know exactly what needs to be tracked and documented. Although different companies have different goals, some of the things you might want to track will stay constant. Here are a few:

  • Number of publications where company is mentioned
  • Number of articles where company is mentioned
  • Social media mentions
  • Total impressions
  • Total engagement (shares)
  • Sentiment analysis (whether article was positive, negative, or neutral)

Many PR measurement software programs allow you to measure this information not just for yourself but also for your competitors. Although it’s never healthy to worry about things not in your control, if you see your competitors knocking your socks off, you can adjust your plans accordingly.

Goal setting

Any successful businessperson understands the importance of goal setting. Unfortunately, goal setting frequently seems to go by the wayside when it comes to PR. Instead, the plan of attack is often to try to get as many hits as possible. But this lack of planning likely means that you’ll spend your time reaching out to anybody and everybody in hopes that something will stick. Which is a REALLY. BAD. STRATEGY.

Instead, one should come up with goals so that people will be held accountable. Set a goal to get X impressions, have Y% of those be positive stories and have Z number of articles shared that pertain to the company. By setting those goals, you can easily figure out who the best people are to target, and you can map out a far better plan of attack for public relations.

And it’s also important to set goals for not just the traditional outputs, but also for the effects of the organization (see next section).

Moving beyond traditional metrics

So a client has X number of impressions; Y% of those were positive stories, and Z number of articles were shared. Great job. Time to call it a day and go to happy hour, right?

Not so fast. It’s actually time for the more challenging task of determining how those numbers affect the overall organization. Did that front-page article in The Wall Street Journal actually lead to venture capital funding? Have sales improved following a positive PR blitz?

It’s pretty easy to determine things such as impressions, shares and the like — software can track that information. Occasionally it’s easy to get information about a campaign’s effect. A notable example is the ALS Ice Bucket Challenge. Coverage through both traditional and social media led to the organization raising more than $100 million, exponentially higher than their previous fundraising attempts.

But tracking the effects of PR is usually more difficult than this. For instance, how can you tell whether that increase in sales was attributable to positive public relations or whether other factors were at play?

There are ways to find out. One Elasticity client, Red e App, uses PR in order to generate business leads, and they are able to specifically ask these leads where they heard about the company. Other ways to measure the effects of PR include surveys (both online and in person), social media sentiment and QR scores.

It is also important for PR professionals to track basic business information about clients, such as:

  • top and bottom line;
  • market share;
  • valuation/stock price;
  • total leads/investment leads; and
  • investment deals.

While those numbers alone won’t help to determine the effectiveness of PR, they do allow professionals to put their work into the context of the overall business performance.

The success and failure of PR campaigns may never truly be black and white — there are just too many variables that come into play. However, by understanding organizational needs, setting goals and implementing the correct benchmarks, we can come closer to deriving the value of our efforts.

Interested in learning more about PR metrics and reporting? Check these out:

Understanding the Barcelona Principles

Measurement Standardization: Moving Toward Industry Agreement

5 Measurements for PR ROI

PR Measurement Made Simple

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