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 our PR specialisations are named based on which stakeholders we’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
Here’s the stakeholder model in PR:
A widespread 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 tiny percentage of all the stakeholder relationships PR professionals must manage daily.
Learn more: Stakeholders in Public Relations
💡 Subscribe and get a free ebook on how to get better PR ideas!
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 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, 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 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. In AECT.
An attitude measurement should meet the following criteria:
There are four main types of measuring approaches:
There are four main types of measuring methods:
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.
Learn more: How To Measure Public Relations
💡 Subscribe and get a free ebook on how to get better PR ideas!
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.
Please support my blog by sharing it with other PR- and communication professionals. For questions or PR support, contact me via jerry@spinfactory.com.
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. In AECT. |