Friday, May 13, 2011

Advertising Equivalency Measurement and Why it Shouldn’t Matter

Communications professionals are not infrequently asked by clients to provide Advertising Value Equivalent (AVE) numbers as one means to evaluate the effectiveness of a public relations program. Most commonly, AVEs are tied to the measurement of publicity campaigns that support larger marketing communications efforts.

The thinking behind AVEs is to show management how much value is received by publicity. While the AVE has become more sophisticated over the years, it is basically a process where the PR firm calculates the volume of media space or time and compares it to that media outlet’s advertising rates and/or its market share.

Numbers crunchers then estimate that a certain amount of media placements are equivalent to a certain amount of ad dollars and audience reach.

For example, if the ACME software company is prominently featured in a Daily Gazette article that takes up an entire full page of the newspaper, the PR firm would then find out how much it would cost to actually purchase a full-page ad. It would then make an assumption what the article about ACME is worth in advertising dollars. Further, if the publication has a circulation of say 250,000, then the PR firm might tell the ACME software company that the publicity generated 250,000 “impressions.”

That’s pretty simplistic. I’ve seen PR firms throw in other factors that gin up the numbers even further. “Pass along rate,” is one. This is where the PR firm tells ACME software company that not only did the Daily Gazette’s original 250,000 subscribers see the article, but it is likely that about 15 percent of the newspapers were “passed along” to others who also saw the favorable publicity. This then serves to reinforce the PR agency’s claim that the publicity actually generated 250,000 plus 15 percent favorable impressions, or 287,500 gross impressions.

As an aside, it appears that the PR firm does not usually take into account that of the original 250,000 subscribers to the Daily Gazette, some may not have read or cared about the full page article, and of those who did read the piece, how many may have gained a favorable impression of ACME software company. I’m absolutely sure the actual numbers are much less.

Over the years, I’ve been in meetings or seen AVE reports where it was said that a particular campaign generated millions of media impressions in towns with fewer than 250,000 residents. Even with the Internet and SEO, I don’t know how this is likely.

There are many other bells and whistles that to some extent further refine the AVE approach to measurement, but since the whole process is based on what I believe is a flawed assumption – that publicity is in effect free advertising – I just think it all serves to further confound anyone who wants a true picture of the effectiveness of the PR campaign.

Because public relations is as its name states is a relationship business, it really cannot be effectively measured according to the AVE system, which is now largely considered archaic in communications measurement circles. Rather, it is best measured by finding out what targeted audiences perceive, comprehend, remember and act upon. This often requires both quantitative and qualitative research of the actual targeted audience. Tactics include primarily surveys and focus groups, but of course, there are many other ways.

What I like best about how far the communications business has come is that it no longer sees itself only as a publicity machine that can be measure according to the same standards as advertising. Instead, its focus is on the building and preservation of reputations, creating awareness among broad swaths of stakeholders, not just the media, and at the end of the day, making sure that everything it does is designed to build stronger relationships with key audiences.

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