There was a time when many public relations professionals considered the business to be counter cyclical. Public relations was cheaper and more cost-effective than advertising, the logic ran, so in difficult times, marketers would slash their ad budgets and turn to the PR to provide the same impact for less money. The problem with that theory—which conspicuously failed to translate into reality during the recent recession—was that PR people failed to prove its most important tenet to marketers.
The failure of public relations to come up with meaningful measurement metrics—results that go beyond press clippings—has led to considerable skepticism about PR’s ability to deliver things that matter: specifically, sales. (The fact that advertising metrics are not noticeably superior is irrelevant: advertising has greater credibility in this arena, if only because marketers need to believe the millions of dollars they spend on ads aren’t completely wasted.)
The quest for the Holy Grail continues, but some companies are edging closer to the answer to their questions about public relations ROI. Miller Brewing is one of them. Working with media measurement specialist Medialink Delahaye, Miller believes it has come up with an approach it believes can demonstrate the impact on actual product sales that PR has relative to other forms of marketing, including TV advertising and sales promotions.
“In this study we found out that PR was much more efficient than other promotions for the brand,” said Ranjit Choudhary, a strategic modeling specialist in Miller’s marketing department who has been leading an effort to make the marketer’s PR efforts measurable and accountable. In fact, Choudhary and his colleagues are so convinced that they have shifted considerable marketing dollars out of advertising and into public relations as a result.
Public relations, says Choudhary, is touted as more credible than other forms of communications. It is also considered more serious—advertising may be “funny” but PR can deliver serious messages; less expensive; more focused—it reaches “willing recipients” of information; and its impact lasts longer, with articles in top publications having a cascading effect.
Yet public relations is rarely included in the strategic brand planning process, is rarely perceived as a brand building tool, and is rarely given a goal tied to the company’s performance. For that reason, it rarely wins management attention for resources, Choudhary says. “Usually companies overspend on TV advertising and underspend on public relations,” he says, pointing to 2001 numbers that show $243 billion spent on ads, compared to $4.2 billion on PR.
There are several reasons for the neglect of PR, Choudhary says:
· There is no consistent metric to measure PR
· It’s often difficult to quantify the effectiveness and efficiencies of PR
· PR is isolated from strategy
· PR and strategy speak different languages
· PR is difficult to plan
Existing metrics—volume of clippings, gross impressions, cost per impression—all leave something to be desired, and public relations return on investment is difficult to measure. So working with Delahaye, Miller set out to develop its own metrics.
Miller decided that each clip had two important criteria: quality and reach. Quality was determined by a variety of factors, including the extent of the coverage; placement (a front page or cover story was deemed more important than one buried on an inside page); mention in the headline; visuals, including photographs, company logos, etc.); dominance (whether competitors were mentioned in the same article); initial mention (lead paragraph, for example); and editorial tone.
By examining the story for all those factors, Delahaye Medialink is able to come up with what it calls a positive net effect.
As an example, Delhaye Medialink director Amy Domeika points to a story about General Electric and its vice chairman Bob Wright that appeared in Electronic Media (now TelevisionWeek). After factoring the prominence and editorial tone of the story, Delahaye analysts concluded the story had a “positive net effect” of 65.7 based on a scale of plus or minus 100 points.
The researchers then multiplied that net effect times the magazine’s reported circulation (28,172) to come up with the story’s “weighted net effect,” the number of “positive potential impressions” (18,509) generated by the story.
While these numbers are not completely analogous to TV’s gross rating points, Choudhary said they are close enough to be factored into the company’s marketing mix model to determine the impact PR has compared to television.
“One of the reasons we came up with this is there has been no consistent metric in PR,” Choudhary says. “In the TV advertising world everyone talks about GRPs. So now there is an equivalent metric for PR.”
Next, Miller set out to learn how public relations compared to other disciplines in terms of its overall contribution (the percentage of total volume sales attributable to each discipline); its effectiveness (volume based on contribution divided by million TV/PR impressions); and its efficiency (incremental volume generated for every dollar spent).
The company looked at two-and-a-half years of campaigns on behalf of its Miller Lite brand, including five television ad campaigns and three PR campaigns. It found that public relations contributed 1.2 percent of total volume and 4 percent of incremental volume, which doesn’t sound like a lot until you compare it to television advertising, which contributed (with a far larger budget) 5.3 percent of total volume and 17.3 percent of incremental volume.
Moreover, public relations made that contribution at a cost per incremental volume much lower than advertising—and the impact of public relations activities tended to last longer than that of TV ads.
Says Choudhary, “One point two percent incremental volume warrants significant involvement in strategic brand planning.”
Both Miller and Medialink concede that more brands need to be analyzed, and that further study needs to be undertaken to assess the synergies between public relations and promotions and other marketing activity and to figure out how public relations works in a competitive environment, and how effectiveness varies by campaign.
But at a recent conference sponsored by Medialink and the International Association of Business Communicators, he indicated his belief that the findings so far will lead to a change in Miller’s marketing mix and that an increased emphasis on PR will probably come at the expense of TV advertising budgets.