The PR BlogPublic RelationsCorporate CommunicationsWhy ROI and PR Mix Like Oil and Water

Why ROI and PR Mix Like Oil and Water

PR should measure attitudes and behaviours instead of returns.

Cover photo by Jerry Silfwer (Instagram)

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:

Stakeholders in Public Relations

In PR, we often discuss stakeholders. And most PR specialisations are grouped based on which stakeholders they’re responsible for managing. 1The stakeholder model is far from perfect. There are plenty of overlaps, especially when it comes to media relations. Also, the corporate communications function is often regarded as an umbrella … Continue reading

A few examples:

  • External and internal publics, business journalists, regulatory institutions, partners, suppliers, vendors etc. (Corporate Communications)
  • Shareholders, financial markets, market analysts, financial institutions, trade journalists etc. (Investor Relations)
  • Journalists, editors, influencers etc. (Media Relations)
  • Inbound web traffic, brand communities, subscribers, fans, followers, influencers, social networks etc. (Digital PR)
  • Voters, political journalists, political analysts, columnists, interest groups etc. (Public Affairs)
  • Politicians, legislators, government officials, committees influencers etc. (Lobbying)
  • Coworkers, potential recruits etc. (Internal Communications)
  • Crisis victims, worried publics, the general public, coworkers, journalists, influencers, customers, shareholders etc. (Crisis Communications)
  • Potential customers, existing customers, trade journalists, members, affiliates etc. (Marketing Communications)
  • Trade journalists, trade organisations, niche influencers etc. (Industry PR)

A common misconception is that the PR function only deals with journalists, editors, and influencers (Media Relations) within the scope of attracting new customers (Marketing PR). But such work represents only a small percentage of all the stakeholder relationships PR professionals must manage daily.

Read also: How To Classify 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 (beforet0 and aftert1 the PR investment)?

Like this:

ROI = (net incomet1 — net incomet0) / 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 = (valuationt1 — valuationt0) / 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.

Highly detailed visual art of oil and water - ROI in PR
AI art. Prompt: Highly detailed visual art of oil and water.

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 and 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, then 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 that has 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:

  • The value of PR (regardless of initial investment costs) equals the value of an organisation’s relationships.
  • An organisation can establish the state of a relationship (before and after) through scientifically valid questionnaires for groups and semi-structured interviews of individuals.
  • Measured relationship states can be valued based on desired outcomes for strategically chosen objectives, established best practices, or both.
  • PR value should be benchmarked as a fluctuating market asset, never a fixed net profit.

Measuring Attitudes and Behaviours

How To Measure Attitudes

How do you measure attitudes? There are a few things to think about to get your measurement right. 2The Handbook of Research for Communication and Technology, 34.5 Measuring Attitudes.

An attitude measurement should meet the following criteria:

  • Valid
  • Reliable
  • Simple to Administer, Explain, and Understand
  • Replicable

There are four main types of measuring approaches:

  • Self-Reporting
  • Reports of Others
  • Internal Reporting (Sociometric Reporting)
  • Records

There are four main types of measuring methods:

  • Questionnaires and Rating Scales
  • Interviews
  • Reports (Logs, Journals, Diaries etc.)
  • Observations

I’m a big fan of using questionnaires and standardised interviews for PR measurements:

Validity—Attitudes are psychological, so I strive to clarify what I want to measure, nothing more, nothing less. And I never add any unnecessary complexity.

Reliability—People experience the world differently. But even if attitude measurements aren’t exact, their usefulness for PR more than makes up for it.

Read also: How To Measure Public Relations

Still not convinced? I accept that.

As noted above, I’m not naive 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.

Thank you for reading this article. Please consider supporting my work by sharing it with other PR- and communication professionals. For questions or PR support, contact me via [email protected].

ANNOTATIONS
ANNOTATIONS
1 The stakeholder model is far from perfect. There are plenty of overlaps, especially when it comes to media relations. Also, the corporate communications function is often regarded as an umbrella category for the other disciplines.
2 The Handbook of Research for Communication and Technology, 34.5 Measuring Attitudes.
Jerry Silfwer
Jerry Silfwerhttps://www.doctorspin.net/
Jerry Silfwer, alias Doctor Spin, is an awarded senior adviser specialising in public relations and digital strategy. Currently CEO at KIX Index and Spin Factory. Before that, he worked at Kaufmann, Whispr Group, Springtime PR, and Spotlight PR. Based in Stockholm, Sweden.

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