MARKETING

Putting a Value on PR

Measuring the return on PR investment.
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A picture might be worth a thousand words, but how much is a profile in the hometown paper worth? Or a mention on national TV? Anyone who's hired a public-relations firm knows it's not easy to measure the return on PR. But many smart companies have found a way to do just that. Here's how some companies are measuring PR efforts:

• Target specific positioning. Tom Brandon, CEO of Tucson-based Work Recovery, sat down with his PR firm and put together a "top 10" list of media targets. The goal was to expose Work Recovery -- a $5-million manufacturer of a machine that measures a person's physical capacity to work -- to a broad audience of potential customers. The media hit list included national business publications, local newspapers, and local and national TV.

Brandon and his PR agency agreed up front on the tone they wanted to set. "We wanted a quiet dignity, not a big hoopla or circus-type atmosphere," says Brandon. Last year the PR agency scored with about half the target media on the top 10 list; that led to a record number of inquiries from potential customers who had read about the company, helping to fuel 32% sales growth in 1991.

 Calculate the value of various types of coverage. MathSoft, a $10-million Cambridge, Mass., software company, measures the return on its PR investment by the number of sales leads generated by stories that appear in the trade press. "We can usually justify the retainer fee based on leads alone, as long as there's a balance between corporate profiles and product stories," says Gordon Gossage, vice-president of sales and marketing.

"The company image can't be the only justification for spending the money," he adds, "but enough stories on our products will pay for the PR." And then some. MathSoft pays its PR firm a $10,000 monthly retainer. In the past year product stories placed in technical journals have brought the company an average of 714 leads a month, yielding $53,550 in revenues per month. That works out to a 17% conversion rate. By comparison, leads from advertising and direct mail carry a 12% to 14% conversion rate.

 Tie PR goals to sales goals. Companies with outside PR agencies aren't the only ones concerned about justifying the PR budget. Holly Hartz, director of PR at Electronic Arts, says her objectives are closely linked to the sales goals of the San Mateo, Calif., computer and video-game company for which she works. Electronic Arts puts a premium on the timing of coverage, factoring in the expected product life cycle and lifetime sales goal. Hartz has a quota to meet. She and her boss, Bing Gordon, cofounder of Electronic Arts, equate press coverage with advertising time and space. For example, a four-color ad in Computer Gaming World costs about $5,000, so a one-page review in the magazine would be worth $5,000 toward Hartz's 1992 quota of $3.5 million, up from the $2.9 million worth of press she attracted in 1991. Says Hartz: "Lofty sales goals mean a lofty PR quota." 

Last updated: Mar 1, 1992




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