Any time a company hires an outside vendor it wants to see a return on investment (ROI). Depending on your industry, this may be easy to show. In public relations, our work mostly creates new leads and warms up existing leads. For the most part, it’s up to the sales team to turn those into customers. So how do we show our value?
The traditional way is through advertising value equivalents (AVE). Basically, we look at how much it would have cost to purchase the same coverage we secured editorially as an ad. Public relations results — secured placements in print, online or TV media — are often called “earned media,” meaning the company received coverage based on our work, instead of paying for publication.
In the last few years, the PR industry started questioning AVE, and began the search for a better method. Many ideas have been thrown around, including using special links to track website visits or calculating a publication’s reach. Unfortunately, there is no way to know exactly how many people read an article. An outlet’s circulation and monthly unique visitors is valuable information, but it can’t show ROI.
No alternative has stuck because there isn’t a great way to show ROI for something as intangible as a media hit. Different companies have different dream publications so the value of one media outlet would vary by client. Yet, to maintain accurate records for our firm we need to value outlets at the same rate for each story. It’s complicated.
So, why are we sticking with AVE? In short, AVE gives us a monetary number. At the end of the day, the newer methods don’t really show ROI. Sure, they provide statistics about the news coverage a client received, but they don’t give a number for the value of the news coverage. Calculating AVE is tricky, but if we have a standard method, we can at least explain to a client how we determined the value and show trends on the ROI it gets throughout the relationship.
It also allows us to set goals and make sure clients get consistent coverage. If we only tracked the number of media hits, it would skew toward quantity over quality. One big story in the New York Times could have more value than 10 small blog hits.
There’s no easy way to show ROI for media relations. We’re sticking with AVE because if a client spends a certain amount each month on a retainer, it wants to know it is getting its money’s worth. AVE is the only way to assign a dollar amount to what we do.
As to how we calculate the value for each media hit, stay tuned. We’re fine-tuning our process now!