Public relations is more important than making money
By Craig on Jun 15, 2011 in Advertising, Blog guests & critiques, interviews, Marketing, Public relations, Strategic communication | View Comments
A perfect storm has erupted over the issue of whether PR should, partially at least, be measured on its ability to drive sales and/or generate profits. Public relations is about building mutually beneficial relationships between an organisation and its stakeholders. Its contribution to business-related outcomes is significant. Better: stakeholder relationships, organisational reputation, awareness of and trust towards or of the organisation and/or its products/services.
But I’ve posed this question: are public relations’ firms and their in-house sisters’ fixation with this approach hindering their ability to generate credibility for itself and not sufficiently pragmatic when being used by profit-driven organisations?
Well, through numerous public relations marketing LinkedIn groups, and in personal emails to me, the differences and caveats and justifications have been coming in thick and fast. Some of the fallout has been generated by me asking why isn’t making money a KPI for public relations jobs?
This question was prompted by insights from The Annual Insight Into The Communication Profession 2011, undertaken by the only Australian recruitment consultancy specialising in corporate affairs and communication executives, Salt & Shein. The survey identifies that profit-related KPIs are barely visible for those in Australian public relations jobs.
Why PR is should not be measured on turning a buck
Professor Jim Macnamara*, Professor of Public Communication at the University of Technology, Sydney, leads the teaching of PR at Australia’s leading public relations education university. He is virulently opposed to the notion of PR being measured on its profit or sales-generating outcomes.
“While some marketing PR likes to, or would like to, show how it drives sales and profits, and it is important to have objectives related to the overall goals and objectives of the organisation, the reality is that sales/profits are the outcome of multiple influences and activities,” says Professor Macnamara.
“This includes distribution strategy and effectiveness; the sales channel and its work; pricing; competition, product/service quality etc. And this is even before you get to marketing comms.
Any one of these factors, or a combination of them, can significantly affect and determine sales and profits. Then within communication, there are the influences of advertising, promotions, online, etc that are all intermingled and combined in consumers’ minds.
“It is very difficult to show direct causation by PR in sales and/or profits because of this fusion of multiple influences, information sources and experiences.
“The same is true of advertising – although the advertising industry typically has failed to acknowledge this and misled management. The high cost and lack of proof of advertising’s impact has come home to roost and resulted in many organisations turning away from big budget advertising.
“I don’t get why PR is obsessed by, or is expected to generate, sales and show direct correlations to profits. Many other specialist functions in organisations are not judged this way. For example, we don’t expect HR, or the legal department, or the production department, or even the CEO to generate sales and profits. We recognise that they contribute to ultimate success – but they do so through specialised functions.”
But then again, who’s paying the PR bills?
Increasing the quality of stakeholder relationships, encouraging them to buy into an organisation’s vision, along with getting stakeholders’ perspectives so that an organisation can evolve, are all vitally important elements of public relations. That’s why PR is so much more important to an organisation than marketing.
But can we balance these seeming potentially oppositional, or certainly tension-rife, dimensions? Can we undertake best practice (and some may say, idealistic) public relations whilst still doing what some organisations say we must do – undertake activity to help make money?
- “I teach this to students at Notre Dame. PR is about the triple bottom line, sure. But when it boils down to business, it’s about making money and keeping shareholders satisfied (just the bottom line).” – Dr. Greg Smith, Senior Media and Communications Officer, Department of Training and Workforce Development, Western Australia
- Not having a profit or sales-generating focus is one of the reasons why PR is relegated to a back row in business says an an international branding and communications expert from Germany
- “I think we’re deficient if we don’t include a financial component in any plan we propose. [The difficulty] should not deter us from reflecting or having an explicit financial objective as part of that program.” – Alan Smith, corporate communication consultant
- Another PR and marketing professional says that good PR should drive sales as that is what the client wants.
These are just a few recent perspectives taking a divergent approach to Professor Macnamara. Clearly some head clearing dialogue going on here.
Professor Macnamara wonders, however, in response to those who say PR can and should be measured in terms of sales and profits – how do they actually measure and prove that?
“I would be very surprised if they have any rigorous valid method of proving what they claim,” says Professor Macnamara. “The reality is that most marketing PRs who claim to deliver to the bottom line measure their efforts in terms of advertising value equivalents – a totally invalid correlation of hypothetical cost and value that bears no relationship to sales or profits or even effectiveness.”
If we are putting out a media release, or holding a launch event which thousands attend or initiating a Facebook promotion – all about a product or service…surely we are trying to make a sale, turn a buck et al. If this is the case, and despite PR at a higher level being more important than making money (maybe don’t’ tell your CFO this, though, okay?), then why the hell don’t we have financial KPIs as part of this program?
And if we have them as part of this program, why not embedded into certain PR roles at a deeper level?
Public relations is about building relationships
“A further key factor is that public relations is largely directed at other [non-profit relevant] objectives,” takes up Professor Macnamara again. “In most conceptualisations and models, the primary raison d’être of PR is building and maintaining relationships with key stakeholders such as employees, shareholders, investors, communities, etc. Thus, PR has a longer-term focus and a different strategy in most cases.
“Turning all relationship building and maintenance activities into money-making opportunities, or making this a key objective of public relations, is not authentic (we don’t really care or want to support communities, etc, we just want to make money) and is effectively a retreat to the early industrial era of Vanderbilt and Friedman. They said the only objective of business was making money and the only loyalty was to shareholders.”
Let’s define public relations
“As long as PR people think they can be sales and marketing people, they will struggle,” points out Professor Macnamara. “Publicity creates awareness, but it does not sell things. Nor do events, newsletters, community sponsorships etc. You need distribution channels, good pricing strategies, quality products and services and sales people to sell. Sales and profits are their KPIs.
“I actually think it is quite dangerous for PR to try to tie itself to sales KPIs. It will inevitably fail to show clear evidence of direct causation and, thus, will be seen as failing, relegating us to being a second or distant third or fourth cousin to advertising, sales promotion and marketing.
“KPIs and objectives have to be functionally relevant and directly causal. That’s not to say that PR cannot CONTRIBUTE to sales and profits. What does it contribute?
- Relationships
- Reputation
- Awareness
- Trust.
“Then let’s measure those.”
What did you think of the perspectives in this post? Do you support PR sticking to its predominantly relationship management and reputation enhancement imperatives? Or are there other aspects that you think PR should strive to achieve? What is your professional experience in the context of these dimensions?
*Jim Macnamara, PhD, FPRIA, FAMI, CPM, FAMEC became Professor of Public Communication at the University of Technology Sydney in 2007 after a 30-year career working in journalism, public relations and media research, which culminated in selling the CARMA Asia Pacific media analysis firm which he founded to Media Monitors in 2006. His most recently published text is ‘Public Relations; theories, practices, critiques’. Jim can be networked with on his LinkedIn profile and on Twitter @jimmacnamara.
