Too often PR gets lost in its own process, taking little stock of where the articles and content it creates fit in with the rest of the sales funnel. Hence the "thud factor" that most agencies use to justify their budgets.
For the uninitiated, the "thud factor" refers to the sound a thick book of clips makes when it lands on the CEO's desk. Usually it's put there by a smiling VP of Marketing who received it as a "gift" from the expensive PR firm they hired a few months back.
But what did all those clips do for the company?
While at the very well done Highland Capital Partners Sales 2.0 event*, one former CEO (whose company is now a part of a much larger group) responded to my question of how you measure PR by saying "you don't, you just allocate a percent."
Well, he's close. After listening to Gail Goodman, CEO of Constant Contact and Mike McDerment, CEO of FreshBooks talk about cost per acquisition it became apparent that, to a degree, the PR budget is actually set by attrition. That is, if you know what a customer should cost and you know the cost of all your various acquisition channels (Google, advertising, partnerships, email programs, contests, etc.) then what's left goes, at least in part, to PR.
All of the presenters gave a great view of their sales funnels, the most substantial coming from Goodman, but the bottom line is this: if you aren't sharing this kind of information with the folks managing your PR process, you can't get the most out of your program.
Goodman showed a wonderful graphic of the Constant Contact sales funnel and there at the top are a number of marketing functions that drive prospects. Among the various arrows is PR, though it quickly became apparent that it's the most difficult of the bunch to measure.
To put it in the blunt terms of the presenters: who cares how many hits you get to the site or how many leads you get, the only thing that matters is how many customers ultimately sign. From them you can learn what programs work and what don't.
One great case study came from Constant Contact, which is constantly testing, measuring, listening to customers and tweaking marketing programs to determine what works. Of course, the other side of this is experimentation. As an example, to get a good read about how radio advertising drives customers, Goodman and her team invested in ads in a number of cities while also maintaining a series of control groups. They then ran those ads for a number of months, measured the results, compared them with the control groups to ultimately understand the true effectiveness of the campaigns. The goal was not only to measure how the previous ad buys did, but to figure out how to better target future marketing programs.
I'm not sure how many smaller companies have the stomach, time and budget for this, but it is certainly a lesson in doing things right.
Coming back to the executive above who just allocates some toward PR, his flip answer has a little more science behind it. Assuming that 10 percent of his budget goes to marketing (his estimation) he takes that budget, runs through some rough calculations regarding customer acquisition, personnel, etc. and came to a final figure for PR.
Then the big question is: what are you getting for your money? Sure, you know you need PR, but what kind of PR?
Capping the event was Brian Halligan, CEO of HubSpot who talked mostly about content but also talked a bit about his "PR is dead" meme. While he says that, I'm not sure even he entirely believes it, as he changed his phrase over the next few sentences to point out that PR needs to change. Or, as so many have said on his blog, media relations is on life support, but PR itself still has value.
The thing is, I agree with Brian. Traditional media relations is dead, and if you're paying just for that then you need to rethink. Frankly, if you're working with a big agency they probably told you they do more, but all you see are media clips. Why? Because it's what they do. They do it well. There's a place for media placement, but it must fit into a much larger PR program that includes content creation and community relations.
Otherwise, your sales funnel may slow to a drip.
*I'll post more thoughts from this event over the next few days.