The Return on Investment in Public Relations | Challenges & Realities
Updated: Jan 25
"ROI is a wonderful thing. But it's not always possible to track every single effort down to a dollars-and-cents return. Often, it's not possible — or even the most desirable outcome." - Rebecca Lieb, Analyst
The Return on investment (ROI) in any business is defined as the ratio of profit achieved from an activity, against the cost of conducting the activity. However, when it comes to quantifying the returns on public relations (PR) campaigns, it can be fairly challenging. Owing to the concerns involved in putting a plausible monetary value to the results achieved through communication, the term ROI is often used very loosely on the PR front. While many brands still measure returns on their communication effort in financial terms, it may not be the most precise or effective means to evaluate PR. Return on investment in public relations can be articulated more appropriately in terms of realization of communication objectives - and quantifying such achievements is primarily where the challenge lies. Here's a list of concerns that make calculating ROI in public relations, a trying territory.
An Ocean of Metrics
In measuring returns from any PR campaign, a vast array of metrics - not all quantitative - may be required to be taken into consideration. The number of media impressions, for example, is a vital indicator of a brand's PR effort. But there's quality and impact associated with media impressions - metrics that cannot be expressed quantitatively, yet are fundamental in determining PR success. On the social media front, too, it's not merely the engagement or community growth that determine returns but also the quality of engagement within a brand's community on social media. Other parameters such as registrations, inquiries, recommendations and web traffic from media placements are precursors to growth and therefore, key indicators of PR success. Growth not only implies growth in revenue but also growth in brand loyalty. Such a broad spectrum of varied parameters make measuring returns in PR campaigns a tricky task.
The Limiting Nature of ROI
In many organizations, senior level management still focuses on numbers when it comes to calculating returns on investment in PR. This, in turn, leads to ignorance of valuable qualitative feedback that can be gathered from the media response. Many aspects of PR, especially in today's diverse market landscape, can only be measured qualitatively. For example, it is impossible to express in numbers, the returns generated from an effective crisis management communication program.
Excessively prioritizing numbers in ROI when calculating PR returns can urge top management executives to focus on short-term returns at the expense of long-term goals of the brand. The future is here, and it is becoming increasingly critical to look past the numbers. Today, public perception plays a major role in driving a brand to the next level and in establishing a company as a leader in its field. It is, therefore, very important now to listen to what the consumers have to say.
Lack of Scalability
Although return on investment can help identify the most lucrative strategy that may have been deployed, it may not be the best indicator of whether it will turn out fruitful or counter-productive if more resources are allocated to said approach. This is because ROI, from the fiscal standpoint in PR, is essentially a metric only useful to understand how reasonably various tactics have performed in the past. It does not always scale up. For example, actively posting brand-related content on social media may impact ROI positively but continuously bombarding news feeds of followers with content they may have already seen may bother them and perhaps even urge them to unsubscribe to the brand's community pages.
Many brands turn to qualitative reports only through crises and such information mostly does not make it past the marketing teams. Qualitative insights, however, have a lot to offer when it comes to measuring ROI in PR for it's not feasible to fully quantify returns on communication activities. Astutely constructed metrics that are in line with a campaign's objectives can better demonstrate the impact and significance of PR activities on corporate success.