This piece originally appeared as a free article in the Early September edition of The Measurement Advisor.
After Googling “Social Media ROI” and “PR ROI” and getting 1.8 million citations, I’ve spent much of the last day going through them trying to find any organization that accurately measures actual ROI. I haven’t been able to find a single one.
I particularly loathe the firms that put ROI in a headline and then spend the next 10 paragraphs not talking about ROI at all. I’d kill for an app that pops up a warning whenever ROI appears that says:
Take TrendKite, which clearly pays a fortune for Google Ad words around the term “ROI.” This is what their website says about ROI:
PR ROI for Media Placements
It is possible to measure the reach and quality of your message for many media campaigns. Most traditional and on-line publications reveal the numbers and some demographics of their audience. Understanding this data will give you an idea of the reach of each channel and the type of consumer they are likely to attract. This measurement will help you assess your programs and track your results over time.
Website analytics can provide more detail about how effective your PR campaign is at getting people to visit your website. You can analyze referring sites to determine which press releases, mentions and articles are driving traffic. For many companies, website traffic is a leading indicator of revenue. If this is the case, the return on investment for PR can be revealed by the analytics.
What they describe, of course, has nothing to do with actual ROI. But then it gets better:
PR ROI vs. Advertising ROI
One excellent way to demonstrate publications ROI is to compare earned media to advertisements. Determine how much it would have cost to place an advertisement of similar size to the coverage you received. This works for online, print, TV or even radio. Whatever the ad cost would have been, that’s the minimum value of your earned media. This editorial content has a much higher value than advertisements because people tend to trust information that has been vetted by a journalist and reported on more than messages coming directly from a company. In many cases, even considering only the minimum value, PR professionals can demonstrate a much higher ROI than could be achieved with advertising.
Speculating on what something “might have cost,” especially when no one would have actually paid for it anyway, is the sort of thing that makes CFOs want to fire PR people, and with good cause.
But while TrendKite’s terminology is particularly egregious, it is by no means the only guilty party. Any vendor that uses ROI inaccurately to generate clicks deserves our loathing.
Even better, they deserve our total disregard. Literally. Pay no attention. You have been warned. Maybe if they stop getting those oh-so valuable clicks, they’ll go away. ∞
(Thanks to Gliffy for the Venn diagram.)
