Public relations is the hot potato of the marketing budget.
Chief Financial Officers hate it, while salespeople and business development executives love it. Every year, when the budget is drawn, this is typically how the conversation goes:
CFO: What’s the return on the PR budget?
Marketing Director: I don’t know.
CFO: Well, how much revenue does it bring in?
Sales Manager: I don’t know.
CFO: How many sales does it account for?
Sales Manager: I don’t know.
CFO: Well, I need to make some cuts, so I’m going to recommend we cut the PR budget next year.
Marketing Director and Sales Manager: NOOOOOO!!!! You can’t do that, sales will crash!
Describing the relationship between PR and sales reminds me of a line taken from Joni Mitchell’s hit song in 1970, “Big Yellow Taxi”:
Don’t it always seem to go
That you don’t know what you’ve got
Till it’s gone
The truth is, the ROI of PR is very different than the ROI of advertising and no less valuable.
But, because of the differences, it requires an altogether different yardstick than advertising’s traditional cost-benefit analysis.
When I speak to clients about the ROI of PR, I explain that it’s really twofold: first is the immense power of the implicit endorsement you receive when you appear as a guest on a radio or TV show, or when journalists write about you in their newspapers and magazines.
Second is what you do with the publicity you’ve gained. It’s great to have coverage in The New York Times, but that story or quote is here today and gone tomorrow. To get the maximum benefit from media exposure you’ve gained requires that you incorporate the coverage in all your marketing materials and advertising campaigns to ensure that the positive press gets seen by your customers and anyone with an interest in your company or products.
Salespeople love public relations because it gives them an on-the-record, tacit endorsement of the product or service from someone unconnected to the company and more importantly, someone from the media. The effectiveness of salespeople is greatly increased when they can demonstrate the quality of what they’re selling by pointing out that their company and its products or services are making news.
We see these examples in our daily lives, one of the most common of which is movie advertisements. In many cases, movie ads are sprinkled with positive reviews from popular film critics. The positive reviews from well-known movie critics can help make a film a box-office hit.
So, how do you apply this concept to your business? Simply put, when you get good press, you need to make sure your marketing and sales team is armed with the information. Consumers and corporate decision makers recognize the power of that third-party validation – it increases the respect with which your company and products or services are viewed and that is a key ingredient in making sales.
Is it possible to boil down that impact into some numeric formula for your CFO? Not so much. But like the song says, your marketing and sales people will absolutely miss it when it’s gone.