Monday, November 07, 2005

Meaty, Marvelous, Magnificent Metrics

At last, validation!

I am not crazy!

PR's impact on Sales can be measured.

Of course, I've said as much for months. But hey, I am biased - both as a PR guy, and, as the principal at a firm that has already developed a credible, replicable methodology for tying PR to sales.

I daresay that Procter & Gamble Co. is not nearly as biased.

I was THRILLED to read the November 7, 2005 cover story in Advertising Age, in which P&G's Charlotte Otto, global external relations officer, discusses the company's newly-unveiled PREvaluate system, which "combines marketing-mix models with detailed data on media impressions..." (Not sure what that means, but it sounds cool!)

Hallelujah, Corporate America is getting the measurement religion. P&G has a long-standing reputation for being a savvy and metrics-driven, forward-thinking marketer. They are a bellwether. This is the beginning of the next stage of measurement, methinks.

My favorite quote by Otto: "This has been the age-old problem in the PR business: 'Fine, like your clips, but show me the bottom line' ... Now we can do it ... People's jaws dropped when we showed them this data ... We are at such low levels of the marketing mix [for PR], generally less than 1%, that there is definitely upside business potential."

I have to say that as excited as I am by this news item (and by its cover-story placement), there were some troubling bits.

Most notably, wherever the Ad Age journalist took a stab at describing PREvaluate, it sounded a whole lot like Media Content Analysis; how these results were tied back to P&G's sales was unclear.

Also, if many marketers hear about this - which they should - they'll no doubt expect it to be offered by agencies for free. And PR budgets being what they are (remember that 1% figure, above!?), that could represent a huge bite out of PR funding, if agencies handle the question poorly.

But, enough of that. By now you are no doubt wondering how PR did in P&G's test?

"For four (of the six brands tested), PR had a higher return on investment than any other medium or marketing tool, and for the other two, it came in second."

We should not fear Measurement, my friends. We should embrace it. The accurate measurement of PR's impact on Sales will be the salvation of the PR industry.

2 Comments:

Blogger Katie Delahaye Paine said...

I'm as enthusiastic as anyone about P&G's new measurement system. In fact I named it one of the "Products of the Year" in my newsletter. But I do need to add a note of caution. The type of measurement you need depends on the objectives you set for your program. If sales is your objective, then P&G's solution is great. But if you're trying to build support for your cause, or if you're trying to sell something that cost millions and takes years for a sale to close, trying to tie PR to sales is a waste of time. There are a number of measures of PR success and not all are tied to sales.

March 03, 2006  
Anonymous Mark Weiner said...

Todd,

The method that P&G used is called "marketing mix modeling" which ties multiple streams of marketing data -- including PR, advertising, price promotions, direct marketing, the Internet, sales in terms of dollars and units, and more -- through a multiple regression anaysis by date, market and campaign. By looking at sales results over time and from market to market along with the marketing activities present at that time, the statistical model identifies the extent to which each marketing agent contributes to sales.

Delahaye, the research-based consulting firm I lead (no longer affiliated with the previous commentator for years), has worked on dozens of similar analyses for a variety of companies. In each case, in categories as diverse as automobiles, telecom, entertainment, consumer package goods, financial services companies and more, we find the same result over and over again: PR works, delivering an ROI that is the best among all marketing agents. Whereas mass-market TV advertising delivers a return of roughly $1.25 for every dollar spent; and whereas price promotions lose a quarter for every dollar spent; PR delivers from $3.00 to $8.00. At the same time, PR in the form of marketing media relations lifts all boats: in a positive PR environment, the advertising is more effective, the telemarketing more efficient and so on.

Typical PR data won't work: simple tabulations of clips, ad value or impressions repeatedly fail. What's required is PR data which are both a) consistent and integratable with GRPs from the marketing world, and, b) representative of PR's unique role within the marketing mix (only semi-controllable at best).

The question is whether the PR profession is prepared to take advantage of the opportunity. As you rightly point out, the advertising trades have broken this story rather than the PR media. The Ad Age story ran months ago and it is only in this week's issue of PR Week that the P&G/Delahaye story appears. The Council of PR Firms published a booklet on the subject but the PRSA, IABC and other leading professional bodies haven't been touting this extraordinarily important development.

I'd love to hear what others are thinking. You can reach me at mweiner@delahaye.com

March 27, 2006  

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