Two things converged to create this post: a weekend course in “Managing Intangible Assets” and the ongoing debate about rate-card equivalency at www.strategic.ro (that I’ll read only after I write this post, to keep my ideas untainted by those of others).
The one thing that most intangibles (whether they are human capital, brand, or reputation) have in common is the difficulty in measurement (and, not incidentally, valuation). And since the end product is difficult to measure, the organizational functions used to generate these, similarly struggle with determining their own ROI. But because measurement and metrics are the mantras of the modern management milieu (hey, this is a fun involuntary alliteration), various metrics must be created, some recording transactions, some based on surveys or evaluations, and some based on benchmarking.
PR is in a particularly precarious position (yet another involuntary alliteration) because most of its activity is related to generating and managing intangibles (trust, reputation, goodwill). In times of crisis, these apparently “fuzzy”, hard-to-monetize activities are most threatened by budget cuts or redundancies.
The defense is measurement, and one of the metrics PR uses for that purpose is the ad value equivalency, or AVE. It is applied to the print, TV or radio editorial coverage, whose value is estimated using a combination of the costs of purchasing advertising of a similar size, positioning or length.
It has some positive aspects:
- compares PR output with a type of cost that is intelligible upper management
- it’s valuable when doing comparative analysis with your competition, because instead of comparing different outlets and different sizes of coverage, you compare the overall value of their and your earned news
But here are the negatives:
- the impact of news and stories is demonstrably higher than that of paid advertising (hence the rise of the advertorial)
- dilution or distortion of the message occurs in PR, while advertising guarantees the accuracy, because it does not change your message for publication purposes
- the rate card is used to estimate the value of the PR coverage, while in real circumstances advertisers would seldom pay rate-card values. Thus it appears that PR grants higher values, whereas in fact, it does not.
- AVEs treat all media equally, regardless of the prominence and credibility of one outlet over another (for Romanians, think being disussed on OTV, rather than ProTV), and also regardless of the preference of your audience (you may get high AVE values, but on publications that your target group doesn’t read).
- There is no repetition. The impact of advertising is amplified by frequency and spread, and indeed that is part of how a media plan is designed. For earned news, even syndicated, there is no frequency amplification. Using a measurement designed for a tool that builds explicit awareness over a limited time, for a tool that generates implicit trust on the long-term is confusing, rather than helpful.
- there’s no measure for lack of coverage, meaning problems that aren’t exposed, difficulties that aren’t covered, in other words, what the PR has managed to keep out of the press for the good of the company.
I don’t think AVEs are thoroughly wrong. When you balance PR investment with advertising investments, there is the need for a tool that allows you to decide or allocate between the two. But advertisers themselves don’t measure solely the cost of inserting an ad, but instead the sales resulting from it, the leads, the comments etc. so PR needs to find a measurement that treats earned editorial coverage similarly. And yes, they can borrow some of these metrics from marketing.
Now I’m going to read the debate on Strategic, and see if others agree with me. I suggest you do the same
Posted under PRealities