Return on investment (“ROI”). This is something our industry continuously struggles to illustrate to clients. How do you put a financial value on work that doesn’t always immediately translate into sales, membership, change of behaviour, etc.?
There are several ways our industry measures ROI. While none are ideal, some are better than others.
Some PR firms track impression – which means calculating how many people were potentially exposed to your coverage (its reach). This is done by adding up the circulation for that day or the number of viewers during the time the story ran. Often PR firms multiply this number by three to account for papers being passed-on or multiple viewers. But if the readers/viewers aren’t all your target audience or if they were not impacted by the article/segment, is this really a proper calculation of ROI??
Calculating advertisement values is another way our industry tries to demonstrate its worth. Basically, media coverage is measured (literally) with a ruler, and then compared against the cost of advertising: how much would the coverage have cost if it was a paid advertisement. It is said that the value of third party endorsements is three to 10 times as valuable as advertising (essentially, the value of someone else saying you are great rather than you saying you are great). Based on this, PR firms are known to multiply the ad value figures by anywhere from three to 10 times. Most agree this system is lacking. You also can’t buy front page coverage!
The Canadian Public Relations Society has a new Media Relations Rating Points (MR2P) system that is executed by News Canada www.cprs.ca/membership/e_mrp.htm. In my opinion, this is the best tool on the market. While it has its limitations, it does have some great advantages. Criteria for judging a campaign is supposed to be worked out in advance with your client. Then you enter a list of coverage received in a designated period of time. An ROI is produced by the program that gives the cost per contact (this is the quantitative analysis which allows you to compare with advertising). Then a percentage figure is given base on overall tone and whether the predetermined criteria were met. This qualitative side is a great compliment to the quantitative analysis and shows the true value of PR versus advertising. This doesn’t provide a measure, however, for services like crisis management where perhaps you’re paid to keep clients out of the news. We have had clients say they hired us as ‘an insurance policy’ – how would this system calculate the value of that? Nonetheless, it is as good as it gets and it is great when, like me, you deal largely with financial services clients who actually understand the term ROI and how to calculate it.
It is also very helpful for organizations that report to boards of directors or middle management who have to report to superiors – they will love you for this tool that can prove, as best as possible, how dollars are being spent.