The media is dying, does PR have cancer?

I have been thinking about the eerie parallel between the newspaper and PR industries. Whilst the PR industry has stood on the sidelines and wrung its hands about the state of the media (mainly because there is less space for editorial coverage to influence), but it has largely failed to face similar challenges in its own future. PR and many traditional mar.coms disciplines arguably aren’t an industry per se but a wrapper around the media and entertainment industry.

The newspaper industry has been in decline from the dawn of commercial television, but this decline seems to have been accelerated over the past couple of years. A combination of factors have led to this state including mismanagement, a misunderstanding of their market and changes in consumer behaviour, a poor return on marketing investment in comparison to other media have all had an impact. In fact, the question should be, how have they lasted so long given that the seeds of their destruction seem to have been sewn far longer than the internet?

  •  They understood the benefits of niches. Newspapers pretty much dominated the markets for personal ads and hyper-local content in a way that radio and television, never did and never could. Though the local paper for my Uncle, The Connacht Tribune apparently started suffering financially when the local radio station started reading out obituaries
  • Marketing vehicles were about both reach and engagement. You could measure the engagement by looking at the number of shopping coupons returned whether it was discount at the supermarket or buying that bargain sets of pots and pans in the back of the Sunday supplement with the cut-out application form
  • Measurement for reach with circulation figures was trusted as it was audited (by the ABC in the UK)

This has given me some food for thought about PR, as an industry we:

  • No longer have a niche that is the exclusive domain of the PR industry. The success by the likes of VCCP, wearesocial and Nixon McInnes show that the PR industry no longer have exclusivity on public relations
  • Kind of have measurement of reach sorted by looking at publication circulation and unique visitors of major online sites. Return on marketing investment is usually measured by looking at equivalent advertising spend. Although this is in a particularly dangerous place at the moment as the price on print advertising revenue declines in current economic conditions
  • Don’t have reach measurements on the longer tail sites and don’t have an idea of what the advertising equivalent would be
  • Don’t have a good grasp of engagement metrics. We don’t have a good grasp of the return on engagement. We make talk a good game on driving sales but try drilling a PR agency on the data to back it up. Can they separate out the degree of help that they provided: how much was that worth, what about other factors like point of purchase / placement and sales promotions?

So on the face of it, the PR industry is in potentially worse shape than the newspaper industry was. There is a few aspects to dealing with this challenge:

  • PR is about selling services. We may call ourselves public relations/communications/creative/online media/social media consultancies yet we give our advice away for free and sell people by the hour. Structurally it is not a strategic offering, but glorified outsourcing / manpower model. The industry is starting to worry periodically about fringe aspects of this structural flaw such as the idea theft mentioned in Matt Cartmell’s article PRCA asked to stop the thought thieves – PR Week UK (March 18, 2009). It is no coincidence that Next Fifteen have a Text 100-branded outsource facility for many PR tasks in India and as far back as 1999 industry pioneer Larry Weber was talking about the potential for off-shoring whole chunks of the PR function
  • Structurally PR agencies are about activity rather than results, this is an extension of the billing per hour pricing model. Though some agencies like The SPA Way and Buffalo have gone to a payment by results model, however how their models extend into the online world and engagement with non-major media influencers remains to be seen
  • Campaigns are usually built back to front. PR campaigns are usually built from here is a clients budget, what activity can we provide and then later on how on earth do we measure it with 2.50GBP and a bag of chips? In comparison advertising whilst being idea driven has support from econometrics measures built-in, other marketing disciplines start from a customer data structure and then build the creative. Measurement is an intrinsic part of the programme: allowing both the return on reach and the return on engagement to be captured
  • Measurement-driven campaigns cost money and this isn’t being championed by the professional or industry bodies the way it should be. Measurement is pushed around like the red-headed step-child that no one wants and it is instead left up to grassroots programmes like the Will McInnes-led MeasurementCamp and Philip Sheldrake’s Influence Scorecard initiative. When clients purchase a campaign they need to make allowances for this or set expectations in their organisation in terms of outcomes
  • Public relations does not relate to measurement, its practitioners are deeply afraid of the math. Ok, if this last one sounds a bit familiar its because its a spoof of thesis number 26 of the cluetrain manifesto: Public Relations does not relate to the public. Companies are deeply afraid of their markets. As an industry we often don’t understand the measurement data, one of my friends used to joke that PR people are marketers who can’t add up. I am happy to hold my hand up and say that math is not my strongest suit. I scraped a pass at A’Level and can’t remember any of what I was taught. However I recognise the power of that data and there are third parties and visualisation tools that can help, as an industry we must get over our fear/disdain of math

If these structural issues are addressed then PR will gain the trust of marketers and will be able to claim its place at the table in the face of increased competition.

Now I realise that PR is more than marketing communications and people may say its about influence and reputation, viewing my comments as a crude simplification, but think about this: what’s the point of doing corporate communications if it doesn’t have a positive impact on the reputation and brand sentiment in stakeholder communities?

You can have a great deal of coverage in the business media but if this media reputation doesn’t result in a change in community sentiment? Your reputational change isn’t reflected in a company’s share price or the viewpoint of regulators? How do you measure that reputational change because a clippings book and a coverage sentiment measurement report isn’t the way to go.

If you want proof, a classic example is Microsoft.

 

MSFT share price

The chart above came from Yahoo! Finance. Here, you have one of the largest companies in the world, huge profit margins, successful products and dominant market positions in multiple categories. It is arguably the most financially responsible company in the world with fiscally conservative accounting practices and tens of billions of dollars cash in hand; yet its share price has sat in a narrow boundary (roughly 20 to 40 USD) prior to the current recession that tracks a similar gradient to the S&P 500 and Dow Jones index since 2000.

Yet from January 1, 2004 to March 23, 2009 the Financial Times alone wrote 8,267 articles featuring Microsoft. If you apply the truism that 70 per cent of newspaper stories are influenced by PR people that means that some 5,787 stories have been influenced, yet this activity hasn’t resulted in a decisive change in share price.

You could argue that Vista may have played a role in this, but if you look at the company’s history it faced similar challenges in the past when the promise of the Cairo project didn’t deliver in the mid-to-late 90s, Microsoft Bob was DOA and Windows 95 had a number of teething problems on launch (including issues with performance and reliability) like Vista, yet went on to become one of the company’s most successful products.

There is a strong case to argue that Microsoft’s true value is not reflected in its current share price and past performance since 2000 and that this is a good proxy for stakeholder reputation and brand sentiment: the company’s brand sentiment has largely risen in step with corporate America at large rather than reflecting the company’s unique position.

A New Crop of Job Hunters (With Microsoft Résumés) (March 29, 2009) by Julie Bick in The New York Times highlights the shareholder impact of this share price stagnation:

Leaving the company has not always been so traumatic. Microsoft has a long history of making employees part-owners of the company, by granting them stock and stock options.

From executive to secretary, many employees received thousands of stock options. Microsoft’s stock price rose from about $2.50 a share in 1992 to almost $60 in 1999, and roughly 10,000 of those employees became millionaires.

…With Microsoft’s stock price now below $20 a share, any stock options granted in the last 10 years have little to no value, and the outright stock grants have lost value.

These personal stories to me show the requirement for a return on engagement metric in both marketing communications and non-marketing communications aspects of public relations.

The recent adverts that show whatever computing needs you have; Microsoft (not Windows) is your evoked set – seems to be a small tentative step to try and push the value back into the share price? It’s also interesting that this appears to be advertising not PR-led.

5 Replies to “The media is dying, does PR have cancer?”

  1. Really interesting article. Thanks.

    But your proof of the need for better measurement here only serves to indicate in itself the real nature of the problem. You could argue on the Microsoft example that it was the 5000 PR driven articles that kept their share price stable – it may have tanked without them for all we know.

    Much as with linking PR to sales, linking PR to share price is impossibly complex – any links cannot distinguish cause from effect and a myriad of inextricable variables exist outside of press articles that make it (for now at least) impracticable to isolate the impact of PR. Indicative correlations, such as the one you make in the case study, are the best we can do. And thereing lies the problem with measurement – it really isn’t that simple.

    I fully agree though that a more accurate form of measurement through better econometric modelling and properly planned as opposed to post-rationalised budgets would do us a world of good. I just wish I could work out how we could do it.

  2. I don’t think it is that hard to measure the effects of PR. The industry just seems to suffer from long-term Learned Helplessness. It appears acceptable to be in PR and constantly reiterate the mantra, “yeah but you can’t measure it”.
    There are a number of econometric models that account for the relative impact of PR – primarily by basing the analysis on relative reach per £££ spent. The answer, typically, is that PR is very efficient (it is cheaper) but rather less effective (it hits lower numbers of people) than Advertising. So what? Even if PRs had this on every client I am not sure it would significantly impact attitudes to PR.
    The other point to bear in mind is that no marketing or communications discipline owns a perfectly explanatory and predictive metric. This is a Holy Grail (…or a fools errand?).
    Those outside PR are also using indicative intermediate and imperfect measures to try and prove the effects of their work. Admen use Consideration or Disposition. DM’ers use Response Rates and ROI (can we really believe that the behavioural change was solely driven by the landing of a letter on the doormat?)
    The truth is that now more than ever PR has the opportunity to establish some good benchmarks, some common standards of measurement, that will act as PR’s accepted intermediate metrics.
    Personally I would suggest a) Google Search volumes, b) volume of social web commentary / share of conversation, c)levels of brand recommendation / NPS.
    Rabbit rabbit rabbit… Sorry.

  3. Thank you for an excellent, incisive piece.

    I think your analysis of why PR has often had to get budget crumbs off the table is important for the future of the industry. The idea that the decline of print started sooner than assumed is also interesting.

    It is also true that advertising and related disciplines at their best are well planned from reams of data, analysis and testing. However, in my experience it is all too easy for flash creative directors to see a nifty bit of UGC on YouTube et al, or creative for another territory, and decide they would like an analogue for their CV. The account team is then compelled effectively just to find a brand to sponsor the enterprise. A biweekly read of Private Eye’s excellent Ad Nauseum column reveals the commonality of this practice – as well as uncomfortable facts like that Cadbury’s ‘Gorilla’ might be entertaining but shifted no chocolate compared to Galaxy’s boring old sponsorship, POS, competitions and PR. There can be lots of numbers, but plenty of hide-and-seek about real results too. Traditional above the line is working less well than ever, however, and needs to rethink its models urgently. Just as we do.

    I would rather be measured against sales than share prices (the latter being based on herd instincts and p/e more than spin success), but there are other things to consider. Microsoft and other big brands with serious, entrenched image problems measure long-term perceptions in influencer groups/target consumers and this can be (and often is) fed into the PR measurement mix. I doubt coverage in the FT turns the heads of sensible fund managers – they have their own, equally flawed, sources of info. Many coverage targets are driven by client ego and a fear of being seen to be absent rather than real understanding of where customers are and how they make decisions. If we had better access to the media planning function and used online influencer measuring (if and where it works) better than we could target campaigns more incisively.

    I think that brands have a price expectation about PR that is affected by more than measurement, however. It is presentational. The offices, staff and even stationary in most big ATL firms are spectacular compared to even the best PR agencies. Compare the customer experience of going to BMW’s dealership in Mayfair rather than Vauxhall of Bromley. You are buying a more expensive solution, so you get a much more involved and reassuring experience. It is like one of the reasons Bernie Madoff was able to make off with so much cash – he looked, felt, sounded and seemed like one of the biggest financial brains in town. To question this seemed almost rude. We can only shift price expectation upward by providing more accountable, ideas driven solutions and digital is a big part of that.

    As media outlets shrink and audiences fragment further into niches the basic PR promise of a third party brand endorsement could have an even greater value than today. However, this can only be the case if PR agencies sell themselves on the basis of excellent ideas and consider themselves peers of other marcomms disciplines, rather than just the blokes in the Press Office. Is not a successful viral execution a form of third party endorsement, for example? With all that design/build capability out there PRs could become the first port of call for many digital campaigns – selling ideas and management rather than pure man-hours.

    That would be a move up the value chain but will require a smaller, smarter, faster and prouder industry than we have today that is more interested in ideas than the media where they appear. Third party endorsements and what Frank PR calls Talkability are crucial here. If we don’t do it then cleverer folk with ATL or digital roots will eat our lunch while we scramble to make sure we get a mention in yet another strategically irrelevant print feature. Before we get shouted at about it.

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