What Happens After “ROI?”
By Mark Weiner, CEO of PRIME Research-AmericasRoughly 15 years ago, a small group of leading brands scientifically isolated the economic benefits of marketing public relations against its associated costs relative to other forms of marketing and communication. Rather than following the conventional wisdom of the time to use tabulations and ad values, these innovators pursued new technologies and emerging statistical analyses known as marketing mix optimization and econometric modeling to reveal that what we’d always believed to be true was, in fact, true: PR has a positive effect on sales and, even better, PR’s ability to drive sales consistently outperforms alternatives within the marketing mix. While marketing PR may never be the biggest driver of sales volume, it is almost always the most efficient because the out-of-pocket costs are low and the decay rate of PR effectiveness is so slow. As such, PR delivers more for less and with less than other forms of marketing.The first experiments occurred at the turn of the century and marketing mix modeling is now routine. Even though relatively few brands integrate PR data into their models, it could it be that the “holy grail” to make the PR-to-sales connection is only the first step in an even more elusive process.Marketing mix models provide keen insights but they tend to focus on only short-term business results since most marketing dollars go towards price promotions and mass-market advertising. The models may lead one to wonder how to elevate short-term sales bursts in favor of sustained long-term success. In a time of globalization, commoditization, and changing media habits, PR just might be the secret weapon in the marketing and communication mix.If the ROI is good, what could be wrong?Marketing mix models only reveal sales-effects in the short-term, and in that context, sales volume can be a capricious measure. It’s easy to boost volume in the short-term using three-for-one offers but brand profitability suffers as a result. What’s more, price promotions stop working once the offer ends. Mass-market advertising isn’t much better: effectiveness declines dramatically after just two weeks.PR, on the other hand, affects sales for a relatively long time. But even if PR continues to impact sales for six-months after the campaign ends, it’s relatively short-term in the life of a brand. The problem is that while the best brands are reliable, people are not: In fact, we’re trained to compare; to “price-shop;” we are disloyal unless given reasons to act differently.
What Happens After PR-ROI?Now that corporate and marketing communication performance can be measured in terms of sales impact and ROI, it’s time to take it further. The good news is that no agent is better suited than PR.The fact that PR can drive business results is good but other forms of marketing and communication effectively drive results, too. PR, which is predicated on building meaningful, lasting relationships at the same time it delivers the best ROI, is uniquely positioned to drive the meaningful interaction that builds the world’s most successful organizations and brands.Public relations works particularly well because it delivers such high levels of involvement and credibility with an ROI that others envy. And as organizations look to invest their resources on the basis of “what works” rather than “how we’ve always done it,” PR is primed for explosive growth.While alluring, incremental revenues are only one ingredient to profitability and lasting brand equity. We communications professionals know that PR is indispensable for building reputation and we know how companies and brands with good reputations enjoy many benefits over those which are lacking: they enjoy premium pricing and are rarely discounted; they benefit from greater loyalty because they actually mean something to which people can relate; and they enjoy the benefit of doubt during difficult times because they have earned the public’s trust. These characteristics, when properly managed, are enduring: they are distinctive, they are involving and they build prosperity.
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[author]About the Author: Mark Weiner is CEO of PRIME Research Americas. PRIME is among the world’s largest PR research firm with 500 analysts and consultants employed in ten service centers around the globe. Mark is the author of “Unleashing the Power of PR” published by John Wiley & Sons. To learn more about PRIME, visit www.prime-research.com for additional information. [/author]
