Proctor & Gamble proves PR produces strong consumer brand ROI

published August - September 2006 

“In recent years, more companies in industries ranging from auto manufacturing to financial services and consumer packaged goods to entertainment have reached the same unexpected conclusion: PR works.  And at times, PR works better than other forms of marketing and at a small fraction of the cost.”

This is the opening paragraph of a new book entitled “Unleashing the Power in PR: a Contrarian’s Guide to Marketing and Communication” by Mark Weiner, president of Delayhe, a US-based research and analysis firm.

This new book has the potential to shake conventional marketing thinking - much as Al Ries did in 2002 with his book 'The fall of advertising and the rise of public relations'. In his book, and in pre-launch publicity, Weiner has used Proctor & Gamble’s research to show how one of the world’s great marketers successfully evaluated PR as a short-term tactical consumer brand marketing tool.

 P&G is said to have:

• Set out to quantify the extent to which PR is capable of contributing to sales by brand, by product, by campaign and by media type over time and across regions
• It did this by undertaking intensive marketing mix modelling for six brands over a one to three year period
• Print, broadcast and internet coverage was evaluated by frequency, reach, tone and key message delivery
• The model compared PR performance with other marketing tactics (advertising, direct promotions etc)
• All the data was related back to actual sales data

The results were as follows:

• PR provides a halo effect over other marketing tactics
• PR can be directly related to driving sales
• PR was an efficient deliverer of ROI - often surpassing mass-market advertising, price promotion and trade activity
• Three of the six products showed PR with the highest ROI of any marketing tactic
• Overall PR delivered a 275% ROI
• PR delivers a high ROI on relatively low levels of spending (eg v advertising)

The work that P&G did is not unique - other consumer marketers are reported to have employed similar modelling measures. However, P&G is the first to publicly share their experience.

Weiner also quotes how telecommunications company AT&T discovered the power of PR.

“The first documented case of this form of PR-ROI analysis came during the course of an extensive and sophisticated statistical analysis of marketing performance in 1999, when telecommunications giant AT&T discovered an amazing fact: public relations, in the form of media relations, generated just as many long-distance customers as advertising, even though the company invested substantially more resources in advertising than PR.

“What’s more, the analysis showed that public relations regularly provided a boost to other forms of marketing: when news about AT&T was positive, prominent and highly visible, advertising was more successful, out bound telemarketing was more productive and inbound telemarketing was more effective. The discovery changed the way AT&T marketers worked with PR professionals to plan for and evaluate overall marketing effectiveness”.

As with the P&G work, AT&T was able to prove that PR was capable of delivering the best ROI from many marketing tools - just $15 compared to $63 per cost of acquisition via outbound telemarketing and $95 per acquisition via advertising.

Weiner said that as a result of AT&T’s work, it could never again be said that PR was “soft” when it comes to making a measurable contribution toward and organisation’s achievement of meaningful business outcomes. The release of P&G’s experience only strengthens that premise.

Weiner, in a section entitled “The Decline of Traditional Mass Marketing” gives an example of how Kraft chose not to use traditional advertising or in-store promotion at the time it lowered the cost of a product range by eliminating coupon promotions. Instead it delivered the information to consumers by way of PR. It resulted in significant news coverage throughout the US and the brand’s market share jumped by several points. The cost was minimal - the impact was significant.

 “Unleashing the Power in PR: a Contrarian’s Guide to Marketing and Communication” is filled with other quantified examples of how PR is working in the marketing arena.

Most Australian companies will be unable to apply the range and depth of quantifiable measurement tools used in P&G’s sophisticated model.  However, measurement and reporting of PR’s delivery as a media tool in the marketing mix should be mandatory for all PR agencies as shown in this example.

The author of this article - Grant Common - is a Sydney-based independent advisor who helps PR Managers build evaluation and ROI measurements into PR department plans. He regularly blogs on this and related topics.