What is Public Relations ROI?

According to James E. Grunig, “Today’s public relations professional is focusing a great deal of attention on showing that an investment in public relations has a positive financial return on investment (ROI).”

In truth, the pressing need to prove public relations ROI can be attributed to a variety of things, including: the lack of theoretical application in the practical realm, the lack of an industry standard for measurement, and the continued reliance upon related fields (marketing/advertising) to help define the worth of public relations activities.

Bob Batchelor suggests that such foundational disparities will allow other fields to continue to belittle public relations as a “less significant field” and undermine public relations’ ability to produce financial returns as a viable organizational function in the eyes of top management.

How do They See Public Relations?

According to R. K. Otterbourg, “when the average corporate executive discusses public relations, he actually is referring to its varied tools and methods” (outputs) rather than its outcomes.

In their 2011 article for the PRism Journal, Return on Investment in Public Relations, Tom Watson and Ansgar Zerfass highlight the fact that the Dictionary of PR Measurement and Research define ROI as “an outcome variable that equates profit from investment” and that the term is “often used very loosely in PR.”

Although it has traditionally been used in relation to capital and sales, it could be argued that public relations’ return on investment should not be measured by quantitative results alone, but should include qualitative outcomes.

While scoring charts, like those promoted by Ketchum, are positive means of measuring public relations outcomes, the majority of public relations practitioners are still utilizing ineffective measurement models that promote the dominant role of marketing and advertising.

In a survey conducted by Watson and Zerfass, in-house practitioners reported that their organization “did not have an ROI formula (78.3%), with only 21.7% using one.” Of those that did report ROI, the paper identifies advertising value equivalence-based formulas, “sales link to public relations activity, tonality of media coverage and a media ranking system” as the most popular methods used to show value.

Grunig’s survey suggests that public relations adds value when it uses symmetrical communications to develop and cultivate relationships with strategic publics. The article also suggests that public relations messages “increase cognitive concepts of brand image, reputation, or identity which increase organizational value beyond tangible results.”

This paper implies that public relations’ outputs create outcomes that “decrease the cost of litigation, regulatory legislation, and negative publicity” which solve the problems and satisfy the goals of stakeholders and management.

public relations roiEven though an empowered public relations function is supported by both Grunig and Otterbourg, explaining the value of public relations activities outside of marketing and advertising has become increasingly difficult for public relations practitioners in the small business and nonprofit environments.

On these levels, management wishes to see quantitative measures more than anything, since they commonly operate on the local or regional level and aren’t heavily influenced by federal legislation.

For public relations in the small business arena, Otterbourg suggests that value and success is directly dependent upon top management’s commitment to public relations activities and willingness to educate itself on the immediate versus long-term benefits of public relations.

While it is clear that not all public relations professionals understand how to show the value of their efforts in relation to business activities, a review of articles published on industry websites (PR News) and by associations (PRSA) shows that the academic research to identify and explain the correlation between public relations and business results is still in development.

It is my belief that this issue has been given a significant level of importance in the industry, especially since more clients are asking practitioners to prove the return on investment.  That being said, it is my expectation that the answer will be presented on the corporate level, first, and for small-to-medium sized businesses at a later date.

At first, this may appear to benefit the industry as a whole, but, as  Dr. Huang-Horowitz suggests, not all corporate models are suitable for small businesses and nonprofit organizations.  When the industry final decides on a means of measuring public relations ROI, will it be applicable to small-to-medium sized businesses or will it only cater to big budget corporations?

Will this new model hamper PR professionals from being able to effectively perform public relations tasks in these environments due to the fact that they are attempting to mimic big-budget case studies?

If you have an opinion on this matter, please feel free to leave a comment below.

Suggested Reading

  • Grunig, J. E. (2006). “Furnishing the edifice: ongoing research on public relations as a strategic management function.”
  • Otterbourg, R. K. (1966). “Public relations for smaller companies.”
  • Watson, T., & Zerfass, A. (2011). “Return on investment in public relations: A critique of concepts used by practitioners from communication and management sciences perspectives.”

Yasheaka Oakley Owens

Yasheaka Oakley Owens is the owner of YOakleyPR, a woman-owned small business that provides public relations, social media, and online marketing support services to small businesses and 501(c)(3) nonprofit organizations in Southeastern Pennsylvania, Southern New Jersey and Delaware.

More Posts - Website

Follow Me:
TwitterFacebookLinkedInPinterestGoogle PlusStumbleUponRedditDelicious

Tagged on: , , ,