Let’s Stop Focusing on the ROI of Public Relations


Gordon G. Andrew

There are several reasons why PR practitioners should stop trying to focus on return on investment for the services they perform for their companies or clients. Here are my top three reasons why:

  1. ROI Is a Fuzzy Concept – Unlike return on equity or other more precise formulas for measuring value, the “investment” part of ROI is defined and calculated in many different ways. Similar to focus group conclusions, the ROI deck can be stacked in favor of a desired outcome.

  2. PR Is a Fuzzy Business – For better or worse, PR is a soft science. That’s why bean counters don’t understand PR. Marketing technologies will never make public relations a hard science, and the art of our craft is typically where most of its value lies.

  3. Most PR Pros Stink at Math – The PR profession is populated with people who designed their entire college curriculum with the intention of not taking a single math course. If you’re that rare PR pro who enjoys quadratic equations, here’s a math challenge for you: Calculate the odds of keeping your job (or client) if you’re consistently challenging the CFO on the ROI of what you do.

To validate my point about PR’s math skills, here’s a fourth reason: When PR does deliver tangible ROI, the propeller heads often reject it. For reasons deeply rooted in left/right brain configuration, many financial executives are unwilling to accept the notion that public relations can be anything other than an SG&A expense item on the balance sheet.

It’s time for the PR profession to move to Plan B: Stop spitting into the wind, abandon ROI as a relevant measure and establish a new playing field where PR professionals can win battles on an undisputed basis, increase their sense of self-worth and stand a much better chance of maintaining their livelihoods. PR’s Plan B means replacing ROI with KPIs as our performance and value yardstick.

Replacing ROI with Key Performance Indicators

If KPI is not part of your PR vocabulary, it needs to be. KPIs are tangible benchmarks, agreed upon up front by an organization, that measure progress toward specific goals. 

Unlike the fuzzy ROI concept, KPIs provide PR practitioners with clear, concise performance metrics that are linked to business objectives. KPIs enable a PR department or agency to:

  • Focus on strategic business outcomes rather than PR activity

  • Establish and manage internal expectations

  • Demonstrate their expertise, contributions and “value”

  • Avoid pointless ROI discussions with bean counters

Here are a few examples of the type of KPIs that make sense for PR pros:

Market Exposure Merchandising Value – The PR profession has long abandoned advertising value equivalents (AVEs) as a basis for demonstrating what earned media placements are worth. However, the PR industry still clings to press clipping volume as a measure of ROI. To focus on impact rather than quantity, and to connect the dots between publicity and business outcomes, consider a KPI that’s calculated on the merchandising value of media exposure. This means seeking and scoring highly those placements with strong masthead value, that yield a powerful sales tool and a long shelf-life; not a one-off quote in coverage that also mentions competitors, or on a topic that quickly becomes old news.

Search Engine Page Rankings – If your company or client makes widgets, and if lead generation is driven to any extent by online searches for key terms such as “widget companies,” “widget experts” or “my widget is broken," shouldn’t one of the KPIs of the PR department or agency be related to search engine page rankings under relevant terms that will drive Web traffic and phone calls? A page one ranking on Google represents tangible and credible market visibility that the CFO can’t dispute, and it takes PR skills to get there and stay there.

Sales Cycle Duration
– If the cumulative impact of an effective public relations strategy is greater brand recognition and positioning of the company as a safe choice, won’t that effort be made tangible by some measurable decrease in the length of the company’s sales cycle? If a KPI based on a sales cycle metric is too much of a stretch, how about using the volume of RFPs or RFIs that a company receives? What CMO will dispute PR’s value if it’s related to a KPI based on increasing the number of new business opportunities? 

By seeking to measure PR’s performance through tangible KPIs, rather than its value through fuzzy ROI, practitioners are more likely to earn the coveted “place at the table,” along with finance, operations, legal and other “quantitative” corporate disciplines. Perhaps more importantly, armed with a healthy list of meaningful KPIs, the profession will no longer be required to drive the discussion regarding its ROI. Senior management will begin to connect PR with ROI without any prompting.  


Gordon G. Andrew is managing partner of Princeton, NJ-based
Highlander Consulting, and blogs at marketingcraftsmanship.com. You can e-mail him at gordon@highlanderconsulting.com

 

 




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