by Katie Delahaye PaineThe Great PR Measurement Debate: The Truth about AVE, Clip Counts and the Barcelona Principles.” The premise for the webinar was to delve into the seeming contradiction that 33% of PR people admit to using Ad Value Equivalencies (AVEs), even though the Barcelona Principles specifically state that they are not a measure of PR effectiveness. As it turned out, the title was a bit of a misnomer, because all but one of the presenters were either using or advocating for the best practices advocated in the Barcelona Principles.
Alyson Dutch, CEO of Brown + Dutch Public Relations, was the sole holdout; she's an advocate for the use of AVEs. For her bravery (albeit misguided) we thought we’d take her through a measurement makeover.
The clients she referenced were all consumer product companies. She presented the following example of a value calculation she produces for thinkThin weight loss and energy bars:
As anyone who has read these pages in the past will know, there are just a few things wrong with this calculation.
1. First of all, the "Total Impressions" figure of over 900 million, at about three times the population of the U.S., is suspiciously large.
While one could argue that everyone in America should try thinkThin products, in reality, not everyone in is on a diet or can afford to spend $2 on an energy bar. So if we discount those people, we probably get down to a target audience of about 25% of all Americans.
Yes, it is theoretically possible that in six months a consumer PR campaign could actually make this many impressions, but it is somewhat implausible. Unfortunately, while her Total Impressions calculation is designed to impress the CMO, most CMOs today are savvy enough to raise an eyebrow at such a huge number.
2. The "Ad Equivalency" and "multiply by five" multiplier techniques are discredited and without empirical evidence to support their usefulness.
There has been plenty written about the fraudulent nature of AVEs and multipliers. They continue to be popular among less sophisticated or informed PR people because they are very easy to calculate and they attribute a hugely inflated monetary value to PR results.
3. Return On Investment (ROI) cannot be calculated with AVE numbers.
Even those who argue in favor of AVEs admit that the "money" value they provide is not related to real money. An ROI calculation requires a defined financial return, and there isn’t a CFO in America that would equate Ad Value Equivalency with any actual finances.
The Makeover Solutions
1. Provide more accurate and transparent impressions numbers.
Our first recommendation would be to provide a more realistic impressions number, and include some explanation of where it comes from:
- If it includes TV and radio, who has provided the audience figures? Nielsen, ComScore, or some other service?
- If it includes online audiences, are those provided by Compete? Alexa?
- Does it include blogs? If so, where do those figures come from?
- Does it include the pick up of press releases on content farms and Pay Per Click sites? Our evidence shows that up to 40% of impressions might come from such bogus sources.
By the way, transparency in content sources is built into the proposed Sources and Methods Transparency Table from #SMMStandards. Brown + Dutch might find this table useful for future reports to clients.
2. Express the value of PR in a more accurate and useful way.
There are several alternatives to AVEs for expressing the value of PR. First of all, let's assume that the goal is to sell more products, since that’s what Dutch suggests in her presentation. Secondly let's assume that there is a specific target audience of potential buyers and/or distributors of thinkThin products.
How would you know if you reached them and if they bought anything?
- The first step would be to run a correlation between earned media impressions and traffic to the order page(s) of the website. For future efforts, we recommend attaching a unique URL to all the earned media efforts so thinkThin will know exactly which effort drove what traffic.
- Presumably, thinkThin would have specific PR campaigns targeted at new distributors. Again using unique URLs thinkThin could track the results to measure increasing the distribution network. They could also use measures of increased engagement from social media as a tool to convince new distributors to join.
- Ultimately, thinkThin could do a survey to measure the health of relationships with retailers and test their inclination to order new product. If they were existing retailers they could use their historic buying patterns to project future sales. If they were new they could use historic data to estimate how much a new retailer would sell in its first year.
3. Calculate Return On Investment (ROI)
Dutch stresses the necessity of proving ROI to the client. Here’s one way to do it in a way that won’t make your CFO ROTFLOL: Express the return on the PR effort in terms of profit from online sales. (To make this calculation you must have unique URLs that you route responses to the PR efforts of interest through.)
Define Return as: (Net profit on each thinkThin product sold) x (average sales per person) x (% web traffic coming from the PR URLs)
Then ROI = (Return - Investment)/Investment
In the above case, Investment equals amount spend on PR = $150,000
ROI = (Return - $150,000)/$150,000
Just plug in the Return figure and do the math and that's the ROI.
So for instance, if Return was $200,000, you'd have:
(200,000 - 150,000)/150,000 = 50,000/150,000 = 1/3.
Or 33%, as ROI is usually expressed as a percentage.###
Katie Delahaye Paine is Chairman, KDPaine & Partners, (a Salience Insight company), and Chief Marketing Officer of News Group International. KDP&P delivers custom research to measure brand image, public relationships, and engagement. Katie Paine is a dynamic and experienced speaker on public relations and social media measurement. Click here for the schedule of Katie’s upcoming speaking engagements. Katie and Beth Kanter are authors of the book “Measuring the Networked Nonprofit,” published last year by Wiley.
The Measurement Standard is a publication of KDPaine & Partners, a company that delivers custom research to measure brand image, public relationships, and engagement. Katie Paine, Chairman of KDPaine & Partners, will be glad to talk with you about measurement for your organization.