Evaluating PR opportunities & results

Many people ask: How do you evaluate the results of a PR program?

This is a very long answer, but I think you'll find it worth reading.

My best advice - and not as flip as it may sound - is, don't try.

When I headed PR at Radio Shack, management wanted to see a report with each PR clip given the valuation of an equivalent advertising purchase. (Result: while PR was budgeted at 10 cents for every $100.00 in the ad budget, we gained almost $10 worth of space for every $1's worth they bought - close to 10,000:1 more cost-effective by that silly measure). I would hate to tell you how much it cost in clipping services, analysis and research time, custom programming and staff time.

A friend of mine used to prepare very detailed effects-of-PR reports for Intel, and he trusted me enough to tell me that it was all pretty arbitrary.

PR agencies used to believe that if they got a client to set a goal and they exceeded it, they would be renewed. That has so little to do with any such decision, it's almost irrelevant. If the money to pay an agency is there, a particular agency will get selected or renewed or fired and increased or reduced depending entirely on how the person making the decision feels about the agency. The decision is always an emotionally driven one, with those quotas or results sometimes waved in evidence but never a terribly significant part of the decision. To put it another way, if an agency misses a quota but the client likes the agency, it stays; if the agency makes the quota but the client does not like the agency, it goes. The quota is not the watershed.

That belief in real or imagined quotas still drives a lot agency (and some client) PR activities. It makes one or the other buy clipping services, issue reports and spend altogether too much time, money and energy chasing phantoms.

(I would hate to disclose how much similar voodoo is in advertising media buying).

None of this will stop management from asking for justification for a PR expenditure. Everyone is sure they want results, but there isn't anybody who's sure of how to quantify them, which toes to count, what's meaningful or what isn't.

To compound the problem, there is no stated measure of PR performance that can't be cheated by somebody looking to inflate that result: not column inches, not clip count, not circulation/audience, not equivalent ad value, none of them.

I'll get into evaluating broad PR operational results in a minute (preview: "PR" should also stand for "Produces Revenue"), but let's take a second with individual PR opportunities.

So when is a PR opportunity NOT worth doing? The answer is: When it costs more than it can produce in revenue response.

There are two historically and empirically demonstrable factors that weigh in on determining short-term revenue expectations.

The first, called the "instant adopter hit", tells us that among all those people in the circulation/audience (let's call it "reach") of a particular bit of coverage who are capable of using a covered product or service, any significant coverage (more than 1/2 paragraph in print, more than 5-10 seconds of air time) will result in, nominally, 1.5% of them will buy it immediately, assuming there are no availability or access hurdles in the purchasing path.

The second, called the "nominal adoption response", tells us that approximately 20% of all persons who have been recently exposed to a product at least three times will consider that product for purchase when next shopping within its category.

Often, the instant-adopter revenue is enough to cost-justify a particular effort, depending on the scale of expense involved in securing the coverage, on the reach of the coverage, and on the margin return on new purchases. (Note that the margin return is usually closely related to the cost of coverage for those products that are left in the possession of a reviewer, for example). 

If the reach is only 200, of which 80 are capable of usage, that still implies one "instant" purchase; note that this is a typical circulation for a prestigious analyst newsletter, and that one purchaser may well be placing an OEM order for a company.

If the reach is typical for a mid-market newspaper column (actual readers of the column, not total circulation) or radio show (actual listeners), behavioral self-election criteria suggest a strong capable-of-using factor, of perhaps 30,000, meaning a projected 450 instant adopters. For a $10-retail item with a $1 profit margin, the PR program realizes a $450 revenue return, which covers the cost of delivering the item and part of the cost of the PR operation overall.

The purchase price of an item does not affect the instant-adopter factor but does affect the capable-of-use segment size. In the same 50,000-reach market, there may be only 10,000 who are capable of using a $1,000 product with a $50 profit margin, but that still suggests a $7,500 revenue return.

This leads us into the concept of viewing the PR operation as a revenue center with a balance sheet, not just a cost center. Staff and agency costs are among the most significant costs attributable to this revenue center, so how does management decide on worth?

There are two significant old sayings involving media coverage: "Today's news wraps tomorrow's garbage" and "No one piece of coverage once can help you enough or hurt you enough to make a damned bit of difference in the long run". Translation: Effective PR requires maintaining repeated efforts against multiple media targets.

Now let's throw revenue into that mix.

Which PR activities compel purchases?

Purchasing, of course, is a behavior, and thereby, largely driven by emotional factors. That's why subjective coverage - the opinions and interest expressed by reviewers and columnists and broadcasters - remains the most effective of all for producing sales.

A cost-effective, revenue-productive PR operation places a priority on that kind of coverage, maintains ongoing contact with the gatekeepers of such coverage, creates new coverage opportunities even more often than it responds to them, and pounds on these doors the most often. The columns in daily newspapers (which often create a small following avalanche of results through syndication), the syndicated radio shows, major market radio (which generally affords more air time than local TV), network radio, network TV, the cable channels and major national media are the most desirable of these targets, though not the only desirable targets.

Because of the enormous revenue production potential of these priority outlets, a smart PR operation will keep them supplied with products and materials even when there is no immediate coverage need; for a lot of these journalists, having that handy creates an unplanned coverage opportunity.

So how do you evaluate the results of a PR program?

The honest answer: in your gut.

The answer to management: by its demonstrated ability to recognize and persistently pursue opportunities that have a potential for producing revenue, plus enough occasional results to show that they are not merely accidental.

Such programs build relationships with the key media gatekeepers that turn into more frequent coverage from them. They also demonstrate an understanding of this turf that leads to at least modest ongoing growth in the number and variety of high-priority targets being reached.

During the first 6 months or so of a new agency relationship, look for requests involving these priority targets; actual coverage during this period is a nice bonus, but don't be misled by its presence or by its absence.

Companies are notoriously impatient with PR operations, and for good reason. Agencies seldom explain their activities in non-voodoo terms, often engage clients in activities that are more about agency revenues than about client revenues, and seldom do the work necessary in order to understand products, competition or distribution well enough to adjust their operations in any way that can optimize PR-engendered revenue returns.

You now have a number of criteria that can help you evaluate PR opportunities, efforts and results. Bottom line, like everything else in business: it's still all about the money, honey!