North America

USA - New York

New York
New York
275 Seventh Ave, Suite 706
New York, NY 10001
P: +1.646.722.3041
newyork@prime-research.com

USA - Detroit/ Ann Arbor

Ann Arbor / Detroit
Ann Arbor/ Detroit
309 Maynard Street
Ann Arbor, MI 48104
+1 734 913 0348
annarbor@prime-research.com

Europe

Germany

Frankfurt / Mainz
Kaiserstrasse 22-24
55116 Mainz
+49 6131 2180 0
mainz@prime-research.com

United Kingdom

Oxford
58 St. Aldates
Oxford, OX1 1ST
+44 1865 324 911
oxford@prime-research.com

Switzerland

Zurich
Badenerstraße 549
8048 Zurich
+41 43 210 97 46
zurich@prime-research.com

South America

Brazil

Sao Paulo
Av. Roque Petroni Júnior, 1089
São Paulo, SP Brasil – 04707-900
+55 11 3033 5858
saopaulo@prime-research.com

Asia Pacific

China

Shanghai
Rm.306, Bldg. 2
Lujiazui Software Park No. 100, Lane 91, E'shan Rd. Pudong Shanghai 200127, China
+86 21 6859 2099
shanghai@prime-research.com

India

Office no. 3, 14th floor German Center
Building No. 9B -DLF Cyber City
Phase-III Gurgaon - INDIA
+91 124 463 6045
newdelhi@prime-research.com

PR ROI

Public Relations Return on Investment: Fact or Fiction?

Posted On August 24, 2016

Not a day goes by without solicitations offering the secret to generating a greater return on your public relations investment. Breaking through the media clutter. Generating buzz. Getting more media coverage. Preventing your competitors from generating media coverage…The list goes on. No wonder there’s so much confusion about Public Relations and its ability to quantify its Return on Investment (ROI).

Let us begin by examining the generally accepted definition of “ROI”

ROI is a financial measure, usually expressed as a percentage and typically used for decision-making, to compare a company’s profitability or to compare the efficiency of different investments. The return on investment formula is: ROI = (Net Profit / Cost of Investment)

In other words, public relations generates a return on investment when it directly and quantifiably contributes to an organization’s bottom line. While this may seem daunting, there are three ways by which public relations contributes a positive ROI:

  • The sexiest contribution to PR-ROI is revenue-generation. The difficulty is that PR (and every other form of marketing communication) operate simultaneously rather than independently. Data scientists apply advanced statistical modeling called Marketing Mix Modeling to isolate PR’s contribution relative to other channels. The good news is that PR is usually the most efficient source of revenue generation and tends to elevate every other form of marketing. The obstacle is that modeling is never led by PR and it can be an expensive proposition to buy in.

  • The most impactful contribution to PR-ROI is the avoidance of catastrophic cost. When companies find themselves in trouble, public relations professionals do their best to minimize the damage stemming from events usually beyond their control. The good news is that good PR can mitigate losses of billions of dollars in market capitalization. The challenge is that the only way to quantify PR’s contribution requires a potential catastrophe.

  • The most reasonable contribution to PR-ROI is efficiency. Every public relations professional has control over how they spend their budget. The goal is to do more with less and for less. Every day, PRs make strategic and tactical decisions which, in effect, are ROI decisions, when they decide to “do this and not do that.” The good news is that efficiency is accessible to every PR person. The downside is that PR’s contribution in this scenario is minimal since it’s only a small percentage of an already small budget.

“Generating a Return on PR Investment” is often – and wrongly – used in place of “Demonstrating PR’s Value.” While ROI is a strict financial measure, “value” is, for better or worse, subjective. Not only does the definition of value change from one company to another, it may change from one person to the next within the same company. Uncovering and specifying the PR value equation in your organization is more a matter of dialogue, negotiation, compromise and alignment among those who control your budgets and evaluate PR performance. The cost may be nil and, in pursuing this approach, one may discover that solving the PR-ROI equation is simpler than you believed: In many cases, executives don’t consider PR-ROI to be reasonable or measureable (even if they’d love to see it happen).

As wordsmiths, it’s important for public relations people to speak the language of business. By misusing the term “ROI,” we diminish the profession as well as ourselves. Yes, many claims are made but be sure they conform to the boardroom’s definition for return-on-investment and aren’t just jargon designed to make us feel good.

###

Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone
Share this to social

Author

Mark Weiner leads PRIME Research’s commitment to help clients demonstrate and generate positive returns on their investment in public relations. A thought leader on topics related to proving PR’s value, Mark can be reached at weiner@prime-research.com. Follow him on Twitter @weinermark.

You may also be interested in

The Big Deal About Big Data & PR

by Amanda Peterson Big data has become one of the most significant trends in modern technology. It’s no exaggeration to say that today’s society is generating massive amounts of information. In fact, studies have predicted that more than 90 percent of data in the world was created in the past two years. Such a wide scope of insight can be extremely useful across a range of industries, which is why many businesses are finding ways to take advantage of it. The field of public relations is no exception to the list of industries using big data to their advantage. Though PR is commonly recognized as a creative field, it is strongly supported by a backbone of research. Utilizing data is becoming increasingly important in PR because of its ability to improve campaign performance and generate ...

Learn more

Der CEO im politischen Spannungsfeld

In der anhaltenden Debatte um Zuwanderung und Integration halten sich die Manager der großen Unternehmen meist vornehm zurück. Wagt sich ein CEO aus der Deckung, kann er indes heftig in die Schusslinie geraten. Der Vorstandsvorsitzende der Siemens AG hat sich im vergangenen Frühjahr pointiert in die bis heute nicht abebbende Diskussion eingemischt. Er reagierte auf eine Äußerung der AfD-Vorsitzenden Alice Weidel, die im Deutschen Bundestag von "Kopftuchmädchen, Messermännern und anderen Nichtsnutzen" schwadronierte. Kaeser reagierte entschlossen und eindeutig in einem Tweet: "Lieber Kopftuchmädchen als Bund Deutscher Mädel." Für den Siemens-Chef war sein öffentlicher Beitrag eine "Herz- und Kopfentscheidung". Enorme Aufmerksamkeit Mit einigen wenigen Zeilen hat der Siemens-Chef ein ...

Learn more

Is the Influencer Marketing Bubble about to Crash Down to Earth?

It is a fair question. Recent news on the topic have caused quite a stir in the digital world so the value of influencer marketing is under scrutiny. I recently reviewed the matter in a Twitter chat with various practitioners. CIPR board and council member Ella Minty started the debate: Is the influencer marketing bubble actually about to burst? Let’s rewind a little bit. The influencer marketing discipline has been going through a lot recently. The recent Paul Logan case raised deep concerns towards ‘brand safety’. In the background, criticism about fake followers was rumbling while social media audiences have been asking for higher ethic standards and transparency from online ambassadors. In addition to this, a completely new form of influencers, Computer Generated Influencers (CGI), ...

Learn more