What KPIs matter in PR?
20th February 2014
Imagine a multifunctional device which can compute, stream data as well make voice calls. Now compare this with the device with only voice calls. It is normal to expect the former, having higher capabilities, to be pricier. However if one applies the same analogy to Public Relations functions compared with Advertising, the reverse is true. Let me elaborate.
For the sake of simplicity let’s divide advertising broadly as creative and media buying. Public Relation professionals on the other hand do – creative (strategy, content, key messaging, communication objectives…), media delivery and ‘free’ media space. Yet, unlike the multifunctional device, by most benchmarks PR is lesser paid and is probably lesser in stature when compared with Advertisement. Why so?
PR vs. Advertising measures
To a large extent stature and premium depends on the amount of budget being handled. Since PR and advertising compete for the same marketing budget, it is important to understand what helps advertising to garner the lion’s share. One of the things advertising professionals do is showcase their efforts better, the other is they rely on commonly acceptable practices to get budget sanctions. Let’s take the case of TV Ratings. Billions of rupees are spent by advertisers on buying media space on the basis of the TV ratings or circulation figures. However flawed these figures may be they help the CXOs, who finally sanction the budgets, in making spending decisions.
The PR team, on the other hand, finds it extremely difficult to justify sanction even for a couple of lakhs for a press conference. The problem is not with the budgets, but understanding the mindset of the person controlling it- the CXO.
The PR fraternity is so passionate about their profession that they believe the CXO will be or has to be as passionate. While communication is an important role of CXO and the organisation, how do you think it is placed in their hierarchy of importance or priority? Challenges for them related to finance, sales and strategic business do take priority over public relations or communications.
This is where the advertising professionals score. A comparison of different advertising campaigns with the average spend in rupee value helps the CXO to make a decision. At the end of the day even the CXO has to justify spends. While this may be a simple representation for sanctioning advertising budgets, the bottom line is its ability to justify the budgets. However in the case of PR, the CXO seldom finds similar justification, hence the reluctance for big budgetary considerations.
The argument in favor of PR, and correctly so, is the unpredictable nature of delivery. While the delivery of advertising campaigns is almost guaranteed, PR relies on the thankless job of pushing for the coverage. What makes it worse for them is that the top 100-200 companies take away 60% of the available print ink space, leaving others to fight for the remaining.
Having said this, media delivery is not the only KPI for PR. The underlying effort of PR is to change, sustain or improve reputation of the entity, organisation, person or brand. This involves media and non-media. To prove their case PR relies on measurements which are ‘inferred’, that is- derived by reasoning and based on judgment on premises or evidence.
The measurement puzzle
There is a spurt of agencies in India in recent times with good expertise providing measurement of share of voice, visibility, perception mapping, thought leadership, etc. These measurements no doubt map the outcomes to the deliverables; however very few provide rupee value to the measurement. Also with the industry average PR retainer at Rs 1.5 Lakh per month, how many can afford a detailed analysis which can cost them 25- 50% of their budget. As a rule of thumb, organisations having PR retainer budgets of Rs 5 Lakh and above per month can truly afford these measurements, that’s less than 5% organisations.
That leaves the rest (95%) with the chicken and egg problem:
- Not having enough budget for PR and hence inability to spend on measurement to determine success.
- Not spending on measurement to showcase the effort and hence facing constraints on PR budget.
Planning effective KPIs
But all this may be post script, the first challenge is to present the CXO with a rationale to open the purse strings more in favor of PR, remember – delivery is directly proportional to the budget in hand. So what are the options?
- When pitching for PR budgets fix the key deliverables, like change in perception of target stakeholders, then map it with the ROI – sales figures, stock price, etc. For software and IT, it could be related to employee retention or new hires.
Challenges – For this, periodic primary research and surveys need to be done which is comparatively expensive. Secondly, distinguishing the role of PR in the ROI is difficult as there will be many claimants to increase in sales or stock prices within the organisation.
- The other pitch for budgets can be to fix parameters like SOV, perception and reputation score, thought leadership, etc. and do qualitative measurement from secondary research (news analysis).
Challenges – This is undoubtedly a good way to measure outcomes, but it does not have a rupee value and therefore does not correlate directly with ROI. Why is rupee value measurement important? – Because the CXOs find it easier to compare, decide and justify.
Why AVEs still matter
While this is not an exhaustive list, there is at least one other option which is much battered and vilified in the recent past – measuring AVE (Media Value, PR Value). Amongst all the options this is probably the only one which can give a direct correlation between PR budgets and delivery targets to achieve in terms of rupee value. No wonder it has been a favourite, especially for the CEOs and CFOs (the primary holders of purse strings).
AVE has several criticisms against it, some of it justified. Like for example – AVE gives a bloated ROI figure, which even the CEOs and CFOs may find offensive. Unless qualitative parameters are not attached, AVE gives a quantitative output which does not give a true picture.
Some of the anti-AVE also stems from the fact that the primary calculus is based on advertising rate. PR people loathe to be compared with Advertising function. In spite of being multifunctional and probably delivering better outcomes while working under uncertain conditions, PR work is still underrated and routinely overlooked in favor of Advertising function. So it is natural for PR not wanting to be measured with anything connected with advertising.
But then AVE has its own unique advantage:
- When analysed for effective size, tonality etc., AVE can give a qualitative value just like other measurements.
- The advertising rate used for calculating AVE subsumes the importance of publication and its readership.
Let’s look at this with an example by comparing two similarly sized articles appearing in say – Dainik Bhaskar and Economic Times: The calculation for 'Perception' is based on Circulation/Readership of the publication. In this sense the coverage in DB will be more valuable in PR terms. But if you calculate AVE, the coverage in ET will have more value. FYI, to reach 1,000 readers, the advertising rate of ET is 5.79 times more than DB.
There is a direct correlation between higher advertising rate and readership profile. Publications like Economic Times cater to opinion makers and influencers, is it any wonder that CXOs insist, though irrationally, for a front page story in ET.
The phenomenon of such a huge difference between publications’ circulation and their ability to command commensurate advertising rates is unique to India due to its diversity of regional languages and readership profile. So there is a case for modifying the best international measurement practices while applying standards in our country. A more detailed study on AVE matrix is also warranted to reduce the gap between exorbitant values and more acceptable figures.
In conclusion, AVE should be part of the process while pitching for PR budgets as it helps the CXOs to compare marketing spends and justify the same in terms of rupee value. Measuring AVE is also relatively easier and probably less expensive. For measuring ongoing performance it can be clubbed with measurement of perception, though leadership, etc. wherever budgets permit.
Performance basis AVE creates anxiety for PR professionals since the opportunity to get ink space is limited. Digital and online media with limitless ‘ink space’ is becoming increasing respectable as source of credible information. This opens new avenues for PR to promise delivery on the basis of AVE and other benchmarks.
Piyush Jain, Head- Media Research and Analysis at Adfactors PR. The opinion expressed are personal.