This is part one of a six part series about measuring the return on investment of public relations.
As the recession has really taken a stranglehold over the last eight months or so, there has naturally been a renewed interest in public relations’ return on investment. The incentives for the PR industry are clear, as money has drained away from advertising at an alarming rate, there is a real opportunity to channel some of that budget towards forms of marketing that are more cost effective. For example direct marketing did very well out of the last recession because it could demonstrate its effectiveness both in terms of targeting and in its response rates. But there is the rub, many of us anecdotally feel that PR is cost effective but how do you prove it.
One of the problems with PR ROI is its very definition. At its most basic level ROI is a ratio between the profit generated from an investment and the cost of the investment itself.
As venerable London Business School Fellow Tim Ambler has demonstrated in his paper ‘ROI is dead, now bury it!’ this basic bit of maths leads to some big problems. According to this definition the best way to maximise ROI is to spend no money since anything divided by zero is infinite. It would therefore follow that we immediately cut all marketing budgets back to nothing, stand back and watch as the economy pulls sharply out of recession and grows at a phenomenal rate…or maybe not.
So maybe we should look to a more general definition of ROI as what to I get for the money that I invest. That’s the easy bit, but how do we work out what the ‘R’ actually is.
Over the next five posts we will look at some of the methods that are used to calculate PR return on investment.
Next: Advertising Value Equivalents
Part 2: Advertising Value Equivalents
Part 5: Correlation with Business Outcomes
The posts have been published in reverse order, contrary to blog protocol, so that they read as a consecutive series of articles as you scroll down the page
