Advertising value: meaningless, misused and misleading

A man I know was recently up in front of his Board.  Along with all the divisional managers of the business, this PR guru had been asked to report on the value to the organisation of his team’s activities over the past year.

Our hero was initially a little nonplussed by the request. But, having thought it through, he went ahead and compiled an impressive dossier full of media coverage featuring the business and its brands. After a few quick pokes at a calculator he determined that the coverage had an advertising value of more than $5 million.

Five million bucks! Full of the joys of Spring, he trotted along to the meeting and presented his findings.  And then his world turned bleak.

Because his Board directors weren’t born yesterday.

One wanted to know whether the advertising rates he’d used as the basis for his calculation were the published rates (which no reputable advertising agency would pay anyway) or negotiated ones. The chief bean-counter pointed out that ‘cost’ rarely equates to ‘value’ and wanted to know why our hero was basing the value of his work on the cost of placing ads. Were advertising campaigns judged a success or failure by the cost of the ads?

This was hairy, but worse was to come. His CEO pitched in to enquire to what extent this coverage had changed the way people thought about the organisation. Had it actually created customer loyalty? Had it encouraged anyone to buy their brands? How much of it had delivered the organisation’s key messages and how much of it had just been generic coverage of the company? What do you mean ‘you don’t know’?

OK – time to stop the charade. This Board meeting is a figment of my imagination.  But it illustrates the fact that Advertising Value Equivalents (or AVEs) are a nonsense measure of public relations.

AVEs reduce PR to just the media dimension. And only ‘old’ media, at that!

Apart from anything else, AVEs just don’t address the value of several important areas of public relations including direct communication, crisis response, ‘grassroots’, viral or blogging campaigns, or public affairs.  In other words, AVEs reduce PR to just the media dimension. And only ‘old’ media, at that!

I was privileged to hear world-renowned PR measurement and evaluation guru Prof Jim Macnamara speak at the PRINZ 2010 conference in Auckland. He effectively debunked AVEs, describing them as a measure of output if anything at all. But definitely not a measure of what really counts: outcomes. And, as he said, PR is just a cost centre until it actually delivers outcomes.

In PR terms, of course, that means reinforcing or changing perceptions, attitudes or behaviour, increasing awareness of a product or issue, and creating two-way communication and mutual understanding between an organisation and the groups or individuals important to it.

It’s these outcomes that our fictional hero should have been evaluating. Not the outputs. And they are indeed measurable.  All of them.

AVEs have been distorting and misleading for a very long time.  They’ve proved a remarkably resilient hang-over from the days when PR was just an added-value offering bolted onto the core service offered by advertising folk. But thankfully there’s now a global movement towards defining the effective measurement and evaluation of public relations.

That can only be good. Anything that improves the way PR is measured, and therefore enhances the credibility of what we do, has to be welcomed.

Yes, AVEs are easy to measure.  Yes, they’re easy to understand.  And yes, they’re a flawed and completely meaningless metric.  In a world where corporate governance is increasingly under the spotlight do you really want to be staking your reputation on misleading measurements from a bygone era?

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6 Responses to Advertising value: meaningless, misused and misleading

  1. Thanks for the rap. Good article. It is strange that AVEs continue to be used by PR people while management is recognising the value of ‘relational wealth’ as well as other intangibles such as brand value and reputation. PR is a primary contributor to relationship building (relational wealth) – advertising cannot build relationships – yet PR goes back and compares itself to 1980s big bang advertising. On top of that, many organisations are seriously questioning mass media advertising – haven’t PRs noticed that traditional advertising is in decline in all media. Why would you want to compare yourself to advertising in the current environment? Things like AVEs are exactly why PRs are often not in the boardroom and why PR still grapples with the reputation is has.

  2. Marty says:

    Good to see this debate on AVE’s, hopefully it will produce some standardised measures that gain benchmark credibility – in saying that we’ve been searching for years and still nothing, I fear we may all need to become statisticians. More to my point, for stakeholders to value evaluation methods there need to be consistent measures that allow benchmarking and – who are we kidding – the generation of pretty graphs! While the specific criteria may vary the ultimate measures need to be standardised. Accurate measurement must compare apples with apples, which is why AVEs are so flawed if this can’t be done how can a manager allocate a $$ value, because, even if they get PR, they’re ultimately trying to appease bean counters who can’t do anything without a number.

  3. Peter says:

    @ Marty

    Perhaps the reason that we haven’t yet arrived at ‘standardised measures’ for PR evaluation is because it’s impossible to impose a standard set of values. No two PR programmes are the same – your PR programme will always be trying to deliver a different set of outcomes to mine.

    And while my outcomes might be worth, say, a million bucks to my organisation – your outcomes might be worth two million bucks to yours.

    So, who on earth in their right minds would try, or even want, to measure their PR programmes against the criteria of somebody else’s?

    Having said that, it’s totally possible to measure the way your programme is succeeding (or failing) in achieving the outcomes you set at the start of it all. And to place a dollar value against it all. You just gotta know how!! (And it’s a disgrace how many PR practitioners don’t, and so default instead to the AVE cop-out!!)

    In the case of PR measurement and evaluation, I don’t agree that accuracy depends on being able to compare my apples with your apples. My PR programme is going to be different to yours. Full stop. With different aims and objectives, different stakeholders, different everything.

    So instead of dreaming the impossible dream (for a simplistic comparative apples to apples measurement and evaluation system), I’d suggest that PR practitioners measure and evaluate by a more realistic analogy – ‘horses for courses’.

  4. The Oracle says:

    Lies, damn lies — and statistics.

    The real issues here are metrics and costs.

    As Macnamara says, it is the outcomes that count — but how to measure all the subjective things he is talking about and at what cost? Consultancies and others sell companies a lot of different kinds of metrics. What they are really doing is appealing to a belief system that posits that if you just have the right numbers God is With You. Sorry, God is not an accountant.

    Common sense is helpful and the ability to think outside the box. Too often metrics are mystification. And they divert resources from the genuine soulsearching that is really needed. Otherwise, we get such wonders as Sony’s new branding campaign. “Make$%^& Believe.

    • Peter Heath says:

      For anyone who still believes it has to be either difficult or costly to measure KPIs and outcomes (I’m looking at you, ‘Oracle’!), take a look at this piece from the Queen of Comms Measurement and Evaluation, KD Paine:

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