By Mark Weiner
In the financial world, "Return On Investment" (ROI) and "Value" are terms that are commonly understood and measured, but not so in the world of public relations, where "ROI"
and "Value" are infrequently measured and where the words can have vastly different meanings to a variety of people. In our last installment, we wrote about the importance of
"proving value," but how the subjective nature of "value" must often be defined on an organization-by-organization - or for an agency, on an account-by-account - basis. "Value"
is defined in all sorts of ways, some of which have nothing to do with PR per se (one SVP at a Fortune 10 company once said he knew when he'd succeeded in delivering value because
other corporate officers complimented the company's news coverage during executive luncheons). But there is only one measure for ROI, and that is the ability to generate more
money than you spend by achieving meaningful business results.
The process for uncovering PR's ROI is derived from the science of public relations, an approach that is based on the application of sound research and evaluation methods. A
PR approach which is quantifiable (and actually quantified) offers much more than recognition in the executive dining room: It offers guidance to achieve significant and true
business outcomes that can help to either attract, retain or avoid spending millions - or billions - of dollars. A methodical approach to public relations can lead to meaningful
business results by documenting how PR makes a measurable contribution to the organization through generating revenue, lowering costs while achieving superior performance, or
protecting against expensive threats to the company. During upcoming issues, we'll explore each ROI-producing element in greater detail, but let's start with the one that's
causing so much excitement (and concern) within the PR profession.
How much money was brought into the organization through PR?
The key to making a correlation between PR and sales is the application of advanced analytics. These techniques apply statistical and other mathematical algorithms to data
relating to the brand's marketing and sales processes. The end goal of these procedures is to develop links between marketing activities and key business results such as sales,
profit, leads, customer acquisition and retention.
One such advanced analytic is marketing mix model (MMM). Marketing mix modeling is an analytical approach which identifies and quantifies the marketing and non-marketing
factors that impact customer behavior. Models are typically built using a multivariate analysis that relates changes in marketing mix elements to changes in key business results
(e.g. sales, account acquisition/retention, leads, traffic/visitors, profit). This technique has the advantage of being able to read all marketing simultaneously while
controlling and measuring other "outside" influences on volume.
What's required for marketing mix modeling is data...tons of it: advertising, direct marketing, price promotion and other expenditure data. In terms of PR data, simple
tabulations of clip volume, circulation/audience and tone won't suffice. The most successful models we know are those that accurately represent the factors that make PR within
the marketing mix, such elements as prominence, exclusivity, presence of brand or company name in the headline or the appearance of a graphic or photo. Most important of all, the
model requires sales data showing results by marketing over time...week by week is the preferred frequency.
As companies become aware of the power of marketing mix modeling, they have begun to accept it as a central piece of their research and planning process simply because the
results are too powerful to ignore. Even if your organization is unable to perform marketing mix modeling because it is too expensive, because you don't have sales data or because
there isn't enough data to drive the model, it is important for every PR professional to know that PR's ROI is proven true by objective, third-party analysis.
Clearly, people who invest in PR campaigns do so for the purpose of achieving a means to an end. "Value" can take hundreds of forms, but when the objective is ROI, one of the
most compelling measures of success is PR's ability to drive sales.
Contact: Mark Weiner is the president of Delahaye. He can be reached at 203.663.2446 or mweiner@delahaye.com.