India and globally as well, despite knowing the benefits that PR delivers to a brand or product, spends on it are miniscule in comparison to advertising. PR budgets are a part of the advertising spend that a company plans and then only about 3% to 5% of the advertising budget is set aside for PR.
There are enough studies done to gauge the impact of PR on company’s products and services and more importantly their reputation. In fact, an InterBrand study found that 27 percent of a brand’s value is tied to how often the brand name appears in the press. In industries that involve more research before purchases are made, public relations can account for nearly half of the brand value. It is also a well established fact that good editorial coverage is considered 6x to 8x as influential as advertising. Despite these facts, budgets for PR remain abysmally low and no investments are made for measurement of PR either by companies or by PR Agencies.
To the best of my understanding, the challenges that remain for measuring the impact of PR are 2 fold and interrelated.
- Since the budgeted spends on PR are very low, the budgets for measuring PR either do not exist in the budgets allocated or are so low that nothing much can be done in that money besides, Advertising Value Equivalents (AVE) calculations.
- The problem is also compounded by the fact that other measurement techniques and services come at an exorbitant rate in comparison to measurement in advertising. For example, in advertising usually a company spends about less than 3% of their advertising budgets for measurement.
Sadly, in India specifically, Advertising Value Equivalents (AVE) method of measurement is quite prevalent with a lot of Corporate Communication professionals. AVEs are calculated by measuring the column inches of coverage and based on their placement (page) multiplying it with the publication’s advertising rates. The resulting number is what it would have cost to place an advertisement of that size in that publication.
Advertising Value Equivalents have no place in public relations or media measurement is a fact known by several measurement experts, public relations professionals and academicians, besides, this model has several inherent flaws too.
- Advertising and publicity have complementary but not same strengths: Generally speaking, advertising tends to command attention and create awareness. Public relation tends to build credibility. Normally a business needs both. However, AVE tends to cloud this issue by falsely equating advertising and public relations. This in turn reinforces the ancient but ever-popular fallacy that public relation is “free advertising”. In fact, it is not free and it is not advertising
- Advertising Rates & Calculation: The calculation of AVE itself has several problems. In many cases no advertising rates exist and in a few instances, publications don’t accept advertisements on their front pages. In recent times publications have further segmented their rates through cross-bundling (other publications & channels of the group), promotions, colour and other such variables. The measurement agencies are not reflecting this segmentation in their calculations
- Positive coverage: A highly positive article can be worth much more than a single advertisement in the same space. This is because readers consciously or sub-consciously think of an advertisement as an instance of a company boasting about itself. However an article is viewed as an implied endorsement by a presumably objective and knowledgeable third party. So, from this perspective, AVE underestimates the value of the editorial
- Negative Coverage: There is no advertising equivalent to a ‘negative’ or ‘unfavorable’ story. So how does AVE factor for this type of coverage that impacts perceptions? Most times, it is simply ignored, thus giving a biased measurement result
- Industry Coverage: Many articles are industry stories where several companies are quoted. There is no benchmark of calculating AVEs in such instances; is the entire article to be used or the portions where the client is quoted or mentioned to be used?
There has not been much investment by PR companies in developing proper tools, science and systems for measuring the work that they do and linking it to business performance of their clients. And unless we can develop a system of measurement linked to the business performance and show the impact of PR on that, investments will continue to be low on PR and even lower in measurement.
The leaders of the PR Industry need to make investments into developing measurement tools that are cost effective and showcase clearly the impact of PR on the company’s bottom and top line. They also need to come together as one and adopt a method of measurement as an industry standard instead of having multiple methods of measurement being recognised. There is much merit in learning from our richer cousins – the Advertising Industry.
Some of my more erudite clients asked me to provide them with an easy solution to measuring PR, they like me did not believe in AVE, however, needed a volume based system to be able to satisfy the accounts division who questioned ROI and others who were also looking to pull down the work that the corporate communications department was doing. We designed a metrics based system on readership, viewership and page views and it’s working well so far. Perhaps we as an industry can begin with this married to the message being delivered and the audience that we are reaching through the media vehicles we are using. This can be the first tiny step we take together.
Authored by Rafi Qadar Khan, Deputy Managing Consultant @Text100India (Delhi) – ace communications consultant, self-proclaimed amateur photographer, foodie and someone who talks for a living.