Why ROI and PR Mix Like Oil and Water

PR should measure attitudes and behaviours instead of returns.

Cover photo: @jerrysilfwer

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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 Stakeholder Model - Doctor Spin - The PR Blog
The stake­hold­er mod­el in pub­lic relations.
Spin Academy | Online PR Courses

The Stakeholders in Public Relations

In pub­lic rela­tions (PR), we often dis­cuss stakeholders. 

Stakeholders = rep­res­ent­at­ives of vari­ous ves­ted interests dir­ectly or indir­ectly con­nec­ted to the organ­isa­tion. 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/

Developing and main­tain­ing rela­tion­ships with vari­ous stake­hold­ers is a sig­ni­fic­ant chal­lenge for PR pro­fes­sion­als since their inform­a­tion needs are typ­ic­ally very dif­fer­ent. 2A wide­spread mis­con­cep­tion is that the PR func­tion only deals with journ­al­ists and pub­li­city (Media Relations) and product/​service pro­mo­tion (Marketing PR). However, such work rep­res­ents only a tiny … Continue read­ing

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)

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 4Smith, 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

Our PR spe­cial­isa­tions are named based on which PR stake­hold­er group we manage.

  • Corporate Communications = External and intern­al pub­lics, busi­ness journ­al­ists, reg­u­lat­ory insti­tu­tions, part­ners, sup­pli­ers, vendors, etc.
  • Investor Relations (IR) = Shareholders, fin­an­cial mar­kets, mar­ket ana­lysts, fin­an­cial insti­tu­tions, trade journ­al­ists etc.
  • Media Relations = Journalists, edit­ors, influ­en­cers, etc.
  • Digital PR = Inbound web traffic, brand com­munit­ies, sub­scribers, fans, fol­low­ers, influ­en­cers, social net­works, etc.
  • Public Affairs (PA) = Voters, polit­ic­al journ­al­ists, polit­ic­al ana­lysts, colum­nists, interest groups, etc.
  • Lobbying = Politicians, legis­lat­ors, gov­ern­ment offi­cials, com­mit­tees, influ­en­cers, etc.
  • Internal Communications = Coworkers, poten­tial recruits, etc.
  • Crisis Communications = Crisis vic­tims, wor­ried pub­lics, the gen­er­al pub­lic, cowork­ers, journ­al­ists, influ­en­cers, cus­tom­ers, share­hold­ers, etc.
  • Marketing PR = Potential cus­tom­ers, exist­ing cus­tom­ers, trade journ­al­ists, mem­bers, affil­i­ates, etc.
  • Industry PR (B2B) = B2B cli­ents, B2B pro­spects, trade journ­al­ists, trade organ­isa­tions, niche influ­en­cers, etc.

Learn more: Stakeholders in Public Relations

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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.

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:

  • 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 Public Relations - Doctor Spin
How to meas­ure pub­lic relations.
Spin Academy | Online PR Courses

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.

My recom­mend­a­tion: 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/

There are a few things to think about to meas­ure 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

Attitude Measurements in PR

An atti­tude meas­ure­ment should meet the fol­low­ing criteria:

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

There are four main types of atti­tude meas­ure­ment approaches:

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

There are four main types of atti­tude meas­ure­ment methods:

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

I recom­mend using ques­tion­naires and stand­ard­ised inter­views for pub­lic rela­tions 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.

Learn more: How To Measure Public Relations

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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.

Signature - Jerry Silfwer - Doctor Spin

Thanks for read­ing. Please sup­port my blog by shar­ing art­icles with oth­er com­mu­nic­a­tions and mar­ket­ing pro­fes­sion­als. You might also con­sider my PR ser­vices or speak­ing engage­ments.

ANNOTATIONS
ANNOTATIONS
1 Silfwer, 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/
2 A wide­spread mis­con­cep­tion is that the PR func­tion only deals with journ­al­ists and pub­li­city (Media Relations) and product/​service pro­mo­tion (Marketing PR). However, such work rep­res­ents only a tiny frac­tion of all the stake­hold­er rela­tion­ships PR pro­fes­sion­als must man­age daily.
3 Stakeholder (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)
4 Smith, B. (2012). Public rela­tions iden­tity and the stake­hold­er – organ­iz­a­tion rela­tion­ship: A revised the­or­et­ic­al pos­i­tion for pub­lic rela­tions schol­ar­ship. Public Relations Review, 38, 838 – 845. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​P​U​B​R​E​V​.​2​0​1​2​.​0​6​.​011
5 Silfwer, 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/
6 Educational Communications and Technology. (2001, August 3). 34.5 Measuring Attitudes. The Handbook of Research for Educational Communications and Technology. https://​mem​bers​.aect​.org/​e​d​t​e​c​h​/​e​d​1​/​3​4​/34 – 05.html
Jerry Silfwer
Jerry Silfwerhttps://doctorspin.net/
Jerry Silfwer, alias Doctor Spin, is an awarded senior adviser specialising in public relations and digital strategy. Currently CEO at Spin Factory and KIX Communication Index. Before that, he worked at Kaufmann, Whispr Group, Springtime PR, and Spotlight PR. Based in Stockholm, Sweden.
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The Cover Photo

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The cover photo has

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