PR Versus Advertising

The Public Relations industry naturally has a vested interest in proving that a decent media placement provides substantially more bang for the buck than an equivalent amount of money devoted to advertising. And my own experience with clients bears that out: In the niche in which I usually operate, a decent public relations effort, on a retainer basis, requires a monthly investment roughly equivalent to taking out a full-page ad in just one trade daily, while typically providing a number of media placements each month in a variety of (mostly trade) outlets.

Meanwhile, although it's impossible to predict success rates in advance, we do get the occasional mass market coup, with a placement in a major daily, CNN, or AOL News ... the equivalent advertising investment to reach the same audience with similar prominence in just this one placement would equate to several month's worth of public relations retainers alone.

The experience, of course, varies with the product, niche, timeliness, and sheer luck. But without putting in a regular and disciplined effort to reach the media, you don't get to manufacture luck, and any press generated is as likely to be unfavorable as favorable.

The notion that editorial trumps advertising is further implicitly endorsed whenever a company, with a limited advertising budget, seeks to gear its advertising strategy towards the editorial calendars of specific magazines, targeting specific issues. For example, a manufacturer of digital media servers we work with is only interested in advertising in AV trade pubs and high-end AV enthusiast magazines with specific editorial plans to feature digital media servers.

This is a perfectly rational way to allocate advertising dollars when overall budgets don't support a blanket advertising approach (but it is certainly not the only rational way to allocate dollars either).

Nevertheless, the underlying assumption is that it is the editorial coverage that pulls in the audience - not the audience driving the editorial coverage.

This white paper, from the Institute for Public Relations, attempts to examine and quantify the comparative effectiveness between advertising and a media placement.

The results should make PR advocates happy, though not ecstatically so. After a discussion of the literature and what 'multiples' to assign the expected effectiveness of a media placement versus an equally prominent advertisement, the paper concludes that while public relations tended to score higher across all variables studied, the difference was not large. From the study:

What we found was that both the editorial and the advertisement were equally effective in promoting the product, but no statistically significant differences existed between the editorial and the advertisement across measures of awareness, information, intent to purchase, and product credibility.
After exposure to the test advertisement and the test editorial, Zip Chips brand
recognition was significantly higher than five competitors that were all major national brands.2 However, there was no statistically significant difference between the advertisement and the editorial for brand awareness (see Figure 3). There was significantly greater awareness than in the control group, thereby confirming the experimental manipulation of the research design...

We also found there was no statistically significant difference in purchase interest or brand preference between those exposed to the advertising and those exposed to the
editorial (see Figure 5). However, those reading the editorial showed less variance in overall purchase interest (see Figure 6).

I would quibble with their findings in this regard: The study found that participants exposed to the test product (Zip chips) via media placement was 92%, versus 84% for those exposed to the test product via advertising. In other words, the "return" on a media placement was 9.5% better than the advertising placement alone ([92-84]/84). While that 9.5% difference is little more than statistical noise in the short run, over a period of years the difference compounds to a significant - even overwhelming margin.

Does marketing pay off compared to no marketing? The control group's brand familiarity rating was 12%. You do the math.

The study found an even greater difference between the two methods in establishing the believeability of message: 71% of those exposed to the brand via media placement found the message either very believeable or somewhat believeable, compared to 59% for those exposed only to advertising. 73% of the media placement group expressed a purchase interest, compared to 63% of the advertising group. Meanwhile, the percentage of participants expressing no purchasing interest was markedly superior for the media placement group: 10% versus 23%.

While I'm suspicious of any conclusions borne of a false confidence in precision, the difference does seem significant to me, particularly because the edge for media placement shows up consistently.

The study concluded thus:

Our view is that this study demonstrates that editorial placements have equality with advertising. The business implications of this are that public relations should be afforded significantly higher stature in the marketing communications mix by receiving the same support and financing as advertising, direct marketing and other marketing communications disciplines. The preliminary findings also offer support to proactively promote public relations position in the marketing mix at the least and, with more study, probably demonstrate increased effectiveness as we better understand how the multiplier works, if it truly exists.

That said, what can companies do to allocate promotional dollars more efficiently?

1.) Canvas your new customers and prospects. Find out where they got their most recent and most compelling information from that motivated them to contact you. Was it a news article? Or was it from your advertising?

The answer will tell you where to focus your efforts.

2.) Track these answers over time. At some point, you may reach a PR saturation point - particularly if your target audience is narrowly defined. The percentage of new sales driven by PR will plateau.

3.) At that point, you can either expand your PR efforts to reach new target audiences with a modified menu of products and services (which in most cases can be done fairly efficiently - and can be done in expanding and contracting economies), or you can increase your advertising investment.

4.) Few companies will ever reach the saturation point of advertising. As long as each marketing dollar invested in advertising generates one dollar and one cent in profits in return, you should keep the pedal to the metal. Why? Because as your overall volume increases, so does your leverage with suppliers and your economies of scale.

5.) Track sales figures against advertising expenditures and PR placements. Ask the local math whiz to do a "regression analysis" on an Excel spreadsheet. (If you don't know how, send me your numbers on a spreadsheet and drop me an email!) You should see a positive correlation coefficient with a time lag that varies based on your sales cycle. If you don't see that positive correlation, you need to make some adjustments. You're not reaching your audience.

--Jason Van Steenwyk