News Analysis: The quest for the Holy Grail of ROI

The issue of PR evaluation has always been a matter of contention, and last week the IPR released its latest research on the subject and called for traditional ROI methods to be scrapped. It is time for the public relations industry to stop having to jump through credibility hoops, according to IPR president Anne Gregory, who last week sent out a strong message to PROs about the way PR should be measured.

A report, 'Best Practice in the Measurement of Public Relations and ROI', was unveiled at the Communication Directors' Forum last week, urging PROs to shun return on investment methods in favour of evidence-based measurement.

The IPR and the Department of Trade and Industry teamed up to carry out research on the PR industry last October, and it was the DTI's recommendation that more research be carried out in the area of media evaluation. This report, compiled by Metrica Research, surveyed 100 senior PR practitioners, using website and desk-based research.

It concluded that ROI is a notion borrowed from the general business community that cannot be used as an effective measurement tool for PR because, according to Gregory, good-quality relationships and reputation cannot be gauged on a financial scale.

She says: 'ROI is something PR has appropriated because it is the language of business, but the way PR operates is different from other forms of business. How do you put ROI on a good relationship?'

Evidence-based research

Gregory says HR managers do not have to justify the cost of taking on an employee in terms of ROI and that PR professionals should not have to use ROI measurements either.

The Association of Media Evaluation Companies (AMEC) chair-elect, Giselle Bodie, supports the notion that evidence-based research is more beneficial than ROI methods.

'It is very difficult to put numbers on non-tangible factors and it is not just an issue for communications but for the business community at large,' she says.

'There is a big danger if you put a financial value on reputation and relations. It is better to monitor them with indicators such as establishing who your relationships are with and how important they are. Using numbers is just a quick fix,' she adds.

ROI is a ratio of how much profit or cost saving is made compared to the cost of a project and is expressed in a percentage. However, ROI is a term rarely used correctly, says the IPR, which recommends using the term 'evidence-based PR', defined as the difference made as a result of a PR activity.

Examples include increasing the number of telephone calls to a help-line, driving visitors to a website, increasing the number of direct sales enquires, increasing a message's reach and frequency, succeeding in influencing parliamentary decisions and legislation, and raising awareness among target audiences.

The IPR's report concludes that the PR industry should work closely with advertising and other marketing communications disciplines. But it should not allow itself to be compared with them through measurement systems such as advertising value equivalents (AVE), which fail to assess whether media coverage is positive or negative and to what extent, according to the IPR report. 'The coverage could be infinitely valuable with a crucial message, but that is meaningless if you do not put it into context,' says Gregory.

Although the IPR admits that AVE can be used to benchmark volume of media coverage against competitors, its more general dismissal of the measurement system is criticised by Thomson Intermedia business development director Jon Shepherd.

He says: 'There is a desire and need to measure ROI but no one standard method is appropriate and therefore efforts need to be made at the campaign outset to decide what constitutes success. AVE is a measure of media coverage - not PR ROI. It is described as "discredited" in the report, but this is not true. AVE is maligned by some of those who seek to sell more expensive forms of media measurement, but it has its place. It is the application of AVE by some that should be discredited.'

A missed opportunity?

Brian Moore, chairman of evaluation company Mantra International, criticises the IPR report as a missed opportunity to promote ROI and accuses it of unnecessarily repeating previous investigations into evaluation methods.

'While I am sure that we all agree with many of the findings, it is disappointing that this report seems simply to reiterate many of the points that have already been made, obviously to limited effect, over the past few years.

This should be regarded as a missed opportunity to move the industry forward,' he says.

Media evaluation and monitoring is still seen by some companies as an unnecessary additional spend, according to Euro PR managing director and PRCA international committee chairman Richard Price. Nonetheless, the media evaluation industry has grown in recent years.

'We have noticed over the last two years that in-house people are being asked increasingly what they are using an agency for and this has led to greater attention on evaluation and measurement,' he says.

While there continues to be discord in the industry over the most effective way of measuring PR and justifying its existence and spend, the IPR report is unequivocal in its criticism of traditional ROI measurements. Whether the industry will agree on applying a universal approach remains to be seen.

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