Why ROI and PR Mix Like Oil and Water

ROI and PR are like oil and water — they don’t mix well.

Having worked in the PR industry for many years, I know how inflam­mat­ory such a state­ment might be.

Many PR pro­fes­sion­als and aca­dem­ics dream of a future where our industry can show­case our worth by demon­strat­ing con­crete ROI results.

Maybe we’re wrong?

The Basic PR Model

To get us star­ted, let’s look at a basic stake­hold­er mod­el for pub­lic relations:

The Stakeholders in Public Relations

In pub­lic rela­tions (PR), we often dis­cuss ‘stake­hold­ers’:

Stakeholders = rep­res­ent­at­ives of vari­ous ves­ted interests dir­ectly or indir­ectly con­nec­ted to a brand. ¹Silfwer, J. (2021, January 5). The Stakeholders in Public Relations. Doctor Spin | The PR Blog. https://​doc​tor​spin​.net/​s​t​a​k​e​h​o​l​d​e​r​s​-​i​n​-​p​u​b​l​i​c​-​r​e​l​a​t​i​o​ns/

Establishing and sus­tain­ing rela­tion­ships with vari­ous stake­hold­ers is a sig­ni­fic­ant chal­lenge for PR pro­fes­sion­als since their inform­a­tion needs are typ­ic­ally very different. 

“Public rela­tions dis­tin­guishes itself from mar­ket­ing by focus­ing on the stake­hold­er-organ­iz­a­tion rela­tion­ship, which com­prises mutu­al ori­ent­a­tion around a com­mon interest point and a mul­ti­pli­city of stakes.”
Source: Public Relations Review ²Smith, B. (2012). Public rela­tions iden­tity and the stake­hold­er – organ­iz­a­tion rela­tion­ship: A revised the­or­et­ic­al pos­i­tion for pub­lic rela­tions schol­ar­ship. Public Relations Review, 38, 838 – 845. … Continue read­ing

The PR Stakeholder Model

PR pro­fes­sion­als have vari­ous spe­cial­isa­tions (based on the Stakeholder Model), includ­ing cor­por­ate com­mu­nic­a­tions, investor rela­tions (IR), media rela­tions, digit­al PR, pub­lic affairs (PA), lob­by­ing, intern­al com­mu­nic­a­tions (IC), crisis com­mu­nic­a­tions, mar­ket­ing PR, and industry PR (B2B).

“In a cor­por­a­tion, a stake­hold­er is a mem­ber of ‘groups without whose sup­port the organ­isa­tion would cease to exist’, as defined in the first usage of the word in a 1963 intern­al memor­andum at the Stanford Research Institute. The the­ory was later developed and cham­pioned by R. Edward Freeman in the 1980s. Since then it has gained wide accept­ance in busi­ness prac­tice and in the­or­ising relat­ing to stra­tegic man­age­ment, cor­por­ate gov­ernance, busi­ness pur­pose and cor­por­ate social respons­ib­il­ity (CSR).”
Source: Wikipedia ³Stakeholder (cor­por­ate). (2023, October 27). In Wikipedia. https://​en​.wiki​pe​dia​.org/​w​i​k​i​/​S​t​a​k​e​h​o​l​d​e​r​_​(​c​o​r​p​o​r​ate)

PR spe­cial­isa­tions are typ­ic­ally named based on which stake­hold­er type they manage:

Corporate com­mu­nic­a­tions = an organ­isa­tion’s stra­tegic use of mes­saging to shape its repu­ta­tion, artic­u­late its vis­ion, and engage with key audi­ences across intern­al and extern­al chan­nels.

Targets: External and intern­al pub­lics, busi­ness journ­al­ists, reg­u­lat­ory insti­tu­tions, part­ners, sup­pli­ers, vendors, etc.

Investor rela­tions (IR) = an organ­isa­tion’s delib­er­ate com­mu­nic­a­tion efforts to build trust and main­tain trans­par­ency with investors, ana­lysts, and the fin­an­cial com­munity.

Targets: Shareholders, investors, mar­ket hubs, mar­ket ana­lysts, fin­an­cial insti­tu­tions, trade journ­al­ists etc.

Media rela­tions = a brand’s tar­geted use of com­mu­nic­a­tion to foster pos­it­ive inter­ac­tions with journ­al­ists, edit­ors, and media out­lets and to gain favour­able cov­er­age.

Targets: Journalists, edit­ors, influ­en­cers, etc.

Digital PR = the stra­tegic use of online com­mu­nic­a­tion to build brand com­munit­ies, foster engage­ment, and man­age repu­ta­tion in the digit­al space. ⁴Silfwer, J. (2017, November 20). What is Digital PR? Doctor Spin | The PR Blog. https://​doc​tor​spin​.net/​w​h​a​t​-​i​s​-​d​i​g​i​t​a​l​-​pr/

Targets: Inbound web traffic, brand com­munit­ies, sub­scribers, fans, fol­low­ers, influ­en­cers, social net­works, etc.

Public affairs (PA) = a brand’s inten­tion­al use of com­mu­nic­a­tion to engage with gov­ern­ments, poli­cy­makers, and com­munit­ies to influ­ence pub­lic policy and social impact.

Targets: Voters, polit­ic­al journ­al­ists, polit­ic­al ana­lysts, colum­nists, interest groups, etc.

Lobbying = the focused use of advocacy and com­mu­nic­a­tion to dir­ectly influ­ence legis­lat­ive and reg­u­lat­ory decisions in favour of spe­cif­ic interests or causes.

Targets: Politicians, legis­lat­ors, gov­ern­ment offi­cials, com­mit­tees, influ­en­cers, etc.

Internal com­mu­nic­a­tions (IC) = an organ­isa­tion’s delib­er­ate use of mes­saging to align, inform, and motiv­ate employ­ees while fos­ter­ing a pro­duct­ive work­place cul­ture.

Targets: Coworkers, poten­tial recruits, etc.

Crisis com­mu­nic­a­tions = a brand’s rap­id, stra­tegic deploy­ment of com­mu­nic­a­tion to mit­ig­ate repu­ta­tion­al dam­age, address urgent chal­lenges, and restore pub­lic trust dur­ing crit­ic­al situ­ations.

Targets: Crisis vic­tims, wor­ried pub­lics, the gen­er­al pub­lic, cowork­ers, journ­al­ists, influ­en­cers, cus­tom­ers, share­hold­ers, etc.

Marketing PR = a brand’s tac­tic­al integ­ra­tion of com­mu­nic­a­tion and pro­mo­tion­al efforts to enhance product aware­ness, drive sales, and sup­port mar­ket­ing object­ives.

Targets: Potential cus­tom­ers, exist­ing cus­tom­ers, trade journ­al­ists, mem­bers, affil­i­ates, etc.

Industry PR (B2B) = a busi­ness’s pur­pose­ful use of com­mu­nic­a­tion to build cred­ib­il­ity, foster trust, and estab­lish thought lead­er­ship with­in its pro­fes­sion­al sec­tor.

Targets: B2B cli­ents, B2B pro­spects, trade journ­al­ists, trade organ­isa­tions, niche influ­en­cers, etc.

Learn more: Stakeholders in Public Relations

Without get­ting too hung up on estab­lish­ing an exact defin­i­tion of PR, the value of PR can be seen as the total value of all the rela­tion­ships men­tioned above.

ROI in Marketing vs PR

With the basic PR mod­el in mind, let me make a dis­tinct point:

If an organ­isa­tion invests noth­ing in mar­ket­ing, there’s no mar­ket­ing.

If an organ­isa­tion invests noth­ing in PR, there’s still PR.

Or anoth­er way to put it:

No invest­ments in mar­ket­ing = the return on mar­ket­ing is zero.

No invest­ments in PR = the return of PR is still a number.

So, does PR work for the ROI definition?

ROI = net income/​cost of investment

It should be evid­ent that the basic ROI mod­el lacks fun­da­ment­al vari­ables to be use­ful for PR.

Need more con­vin­cing? Let’s keep going.

Two Unsolvable Problems

Can’t we make the ROI mod­el work anyway? 

Perhaps we can bal­ance the net incomes (before^t0 and after^t1 the PR investment)?

Like this:

ROI = (net income^t1 — net income^t0) /​ cost of investment

There are severe prob­lems with this approach:

One prob­lem is that the return on the PR invest­ment is a fluc­tu­at­ing valu­ation rather than a net income; it’s not “money in the bank.”

This cre­ates an imbal­ance in the formula:

ROI = (valu­ation^t1 — valu­ation^t0) /​ cash loss

The next prob­lem is estab­lish­ing valid­ity; how could we ever cal­cu­late the value of t=1 if the organ­isa­tion nev­er made those PR investments?

Example:

An organ­isa­tion faces a severe crisis, but the PR func­tion man­ages the situ­ation ideally and min­im­ises the loss of a) net income and b) brand value.

To cal­cu­late the value of the invest­ment, we must know how severely the crisis would’ve impacted the organ­isa­tion without the PR invest­ment. Unless you find a way to vis­it par­al­lel timelines, there’s no way of find­ing this out.

And even if we find a meth­od of approx­im­a­tion, there’s still an actu­al loss of value — which puts the ROI in the red.

The Oil and Water Analogy

So, what does all of this mean in a prac­tic­al sense?

It means that ROI and PR are like oil and water.
They don’t mix well.

Those who don’t appre­ci­ate my ini­tial logic may instead con­sider that we’ve been try­ing to estab­lish ROI for PR since the start of our pro­fes­sion — without success.

Our lack of pro­gress forces us to con­sider the alternatives:

Either ROI or PR don’t mix.
Or we’re just too stu­pid to make it work.

Or, we accept that PR requires a spe­cif­ic ROI mod­el that should­n’t be com­pared. This means, for instance, that an organ­isa­tion can­’t bench­mark the gen­er­al ROI mod­el of mar­ket­ing against the par­tic­u­lar ROI mod­el of PR because it’s… apples and pears.

ROI and PR: A Fork in the Road

“Insanity is doing the same thing over and over and expect­ing dif­fer­ent res­ults.”
— Albert Einstein

If my sug­ges­ted logic does not con­vince you, or if you think I’m mis­char­ac­ter­ising or over-sim­pli­fy­ing the prac­tice of estab­lish­ing ROI, that’s fine.

Regardless, we’re still left at a fork in the PR road:

a) If we’re all about apples and pears, we can keep dis­cuss­ing the ROI of PR aca­dem­ic­ally, but it’ll be use­less in practice.

b) If we’ve been too stu­pid this far, we’ll have to keep try­ing — and per­haps get more com­pet­ent people to join our ranks.

c) Or, we could decide that enough is enough, cut our losses and start focus­ing on some­thing with a bet­ter poten­tial of being useful.

How To Demonstrate PR Value

For my pre­ferred option c) above, I’d sug­gest the fol­low­ing prin­ciples for estab­lish­ing the value of invest­ing in PR activities:

Measuring Attitudes and Behaviours

How To Measure Public Relations

How do you meas­ure pub­lic rela­tions (PR)? I recom­mend meas­ur­ing atti­tudes and beha­viours using ques­tion­naires, rat­ing scales, inter­views, reports (logs, journ­als, diar­ies, etc.), and observations.

The gen­er­al recom­mend­a­tion for PR meas­ure­ment: I recom­mend the soci­olo­gic­al meth­od for get­ting valu­able and action­able res­ults from meas­ur­ing pub­lic rela­tions. This means meas­ur­ing atti­tudes and beha­viours. ⁵Silfwer, J. (2021, March 4). Methods of Measuring Public Relations. Doctor Spin | The PR Blog. https://​doc​tor​spin​.net/​m​e​a​s​u​r​i​n​g​-​p​u​b​l​i​c​-​r​e​l​a​t​i​o​ns/

Attitude Measurements in PR

There are a few things to con­sider when meas­ur­ing atti­tudes and beha­viours cor­rectly. ⁶Educational Communications and Technology. (2001, August 3). 34.5 Measuring Attitudes. The Handbook of Research for Educational Communications and Technology. … Continue read­ing

An atti­tude meas­ure­ment should meet the fol­low­ing criteria:

There are four main types of atti­tude meas­ure­ment approaches:

There are four main types of atti­tude meas­ure­ment methods:

Learn more: How To Measure Public Relations

Still not con­vinced? I accept that.

As noted above, I’m not naïve enough to believe that one short blog post could resolve one of our industry’s most chal­len­ging dilemmas.

However, I do want to close with this:

By cling­ing to the ROI mod­el, we rep­res­ent the PR func­tion at the C‑level by demon­strat­ing how much net income we gen­er­ate for organisations. 

Mark my words: This is a battle we’ll nev­er win.

Instead, we must demon­strate how we’re increas­ing share­hold­er value, cre­at­ing room for the organ­isa­tion to grow, mit­ig­at­ing poten­tial losses, and safe­guard­ing future revenue.

Any board­room would be mad not to invite such a PR function.