Taxes aren’t the only thing getting done in the first quarter of the new year. As a marketer, we’re also busy working to finish up our year-end reporting, including measuring the previous year’s efforts and setting benchmarks for the new yea.
Measuring the effectiveness of an ad campaign is fairly simple — we know how much we paid to have the ad created, we know how much we paid to have the ad placed and we know how many leads the ad generated during its campaign. The ROI (Return on Investment = Ad Value ÷ Investment) is a quick equation to compute.
Measuring the effectiveness of a PR campaign is a bit more difficult to calculate — we know how much we paid to have the content created, but we do not know the value of the editorial (i.e. how much it “cost” us to place) nor do we have a good idea of how many people were spurred into action by reading the editorial. What we do know is our outputs (articles, releases and questions/answer opportunities) for the year and our outcomes (editorial placements — i.e. press clippings). We also know how much a page of advertising costs, along with a publication’s circulation (i.e. subscriber base).
So, what can we do with that information?
Ad Equivalency Value
Every PR practitioner has their method of calculating their PR efforts ROI. Some use Ad Equivalency Value, which consists of multiplying the average cost of a paid advertising of similar size as the article with the number of such articles, to define an editorial placement’s value.
The ROI equation in this instance would be: Ad Equivalency Value ÷ Investment = Return on Investment.
How do you report that?
- Company XYZ earned 100 editorial placements in 2015
- Using the Ad Equivalency values of $10,000 per page of editorial, you would calculate that the company earned $1 million editorial coverage in trade industry publications in 2015
- Meaning that if Company XYZ had to pay for the equivalent of these editorial placements, the company would have to increase their advertising budget nearly $1 million
- Company XYZ employs a full-time PR person who earns a salary of $65,000 per year
- The ROI equation would be $1,000,000 ÷ $65,000 = 15.4 to 1 ROI
- This means that for every $1 Company XYZ spent to produce their PR effort, they received $15.4 in coverage
PR Equivalency Value
Some PR professionals feel that an editorial placement holds great value when compared to a page of advertising. Many believe that articles and press releases have more impact than paid advertising as they attract more interest from readers and are considered more authentic. This increased effectiveness gets translated into a PR Equivalency Value to calculate the ROI. PR Equivalency Value is calculated with a multiplier constant which is multiplied by the Ad Equivalency value. Many PR practitioners utilize a multiplier of “3” or “5” to determine value of editorial results.
The ROI equation in this instance would be: Total PR Equivalency Value ÷ Investment = Return on Investment
- PR equivalency is a measurement that captures a reader’s value on seeing a company represented in a magazine’s editorial features
- Using a multiplier of 3 on the Ad Equivalency Value example above ($1 million), Company XYZ’s PR Equivalency Value would be $3 million
- By using a PR Equivalency Value, we are suggesting that if Company XYZ to pay for the equivalent of these editorial placements, they would need to increase their advertising budget by $3 million
- The outcome of the ROI equation changes slightly too. In this case, it would be $3,000,000 ÷ $65,000 =46 to 1
- This means that for every $1 Company XYZ spent to produce their PR effort, they received an equivalent of $46 dollars in coverage
While other PR folks calculated their PR effort’s effectiveness by considering the impact of editorial on the publication’s population of readers. In this case, the publication’s stated circulation is reported as Impressions. Each reader equals one impression. So if a magazine states that they have 20,000 readers, one editorial placement in the magazine is worth 20,000 impressions. If your PR efforts garner you two or more placements in the same magazine issue, impressions are multiplied by the number of placements. For instance, four editorial placements in the same publication with 20,000 readers equals 80,000 impressions.
So, which method is correct?
The answer is: Whatever method you chose. That comes with a caveat though. The key to effectively measuring your PR effort isn’t in the exact number you use. It is in the consistently applying these numbers to your efforts. For example, if you decide to report out your ROI using Ad Equivalency Value, then the only way to determine the success of your PR campaign is to use Ad Equivalency each time you calculate your results. Or if you use PR Equivalency Value, use the same multiplier every time — do not switch between “3” and “5” depending on which number makes your results look better.
At the end of the year, consistency is the only way to effectively measure the success and/or growth opportunities of your PR campaign.