By: Tom Watson, Ansgar Zerfass and James Grunig
Measuring Return on Investment has been a hot topic, as public relations seeks to demonstrate its contribution to building organizational value. How can this managerial concept be applied to public relations? Professors Tom Watson, Ansgar Zerfass, and James Grunig add to the debate.
‘ROI’ IN PUBLIC RELATIONS: A DIALOGUE
Since publishing research (Watson & Zerfass 2011) on practitioners’ perceptions of the Return on Investment (ROI), Ansgar Zerfass (Germany) and Tom Watson (UK) have been engaged in an email dialogue with James E. Grunig (USA) about the application of this managerial concept within public relations. With the agreement of all three participants, an edited version of the dialogue is published with the inclusion of papers that were referred to. We hope that this short paper will make a contribution to the ROI debate.
James E. Grunig: In considering the literature on ROI, I’d like to refer to our work on the value of public relations in the IABC Excellence project ( Chapter 4 of Grunig, Grunig & Dozier, 2002). We had an extensive review of the concept of value in that chapter, which is summarized briefly in the Furnish the Edifice article (Grunig 2007, pp. 158-159). I also discussed ROI in my chapter of Public Relations Metrics (van Ruler et al, 2008) especially on pp. 108-111 where I discussed evaluation research at the organizational level. I can also commend my discussion with Mark Weiner – The Public Relations Debate – which appeared in Communication World (Grunig & Weiner, 2007)
Tom Watson & Ansgar Zerfass: Our thinking continues to look at non-financial value creation rather than forcing it into a financial mould. You might be interested in the British writer Philip Sheldrake’s comment on ROI in his recent book:
I dislike any attempt to hijack the term ROI. Accountants know what ROI means, and they can only view any softening or redirection or substitution of its meaning by marketers trying to validate their investment plans as smoke and mirrors. (Sheldrake 2011, p.117)
Although we don’t agree with all of Sheldrake’s thinking, we agree with this statement.
You may also be interested in an English-language booklet on the continental European concept of trying to identify value chains and measuring communication impacts with indicators (but not necessarily financial terms) which has been prepared by PR associations and researchers in Germany, Austria, etc. It is used by several large corporations already.
James E. Grunig: I’m very interested in looking at the value of public relations in terms of nonfinancial indicators or as intangible assets. Essentially, I argue that the value of public relations can be found in the relationships it cultivates with publics/stakeholders.
Relationships are intangible assets, but they can be measured. In addition, it is possible to conceptualize the financial returns to relationships; they reduce costs, reduce risk, and increase revenue.
However, it is difficult, if not impossible, to measure, or attribute these financial costs to specific relationships. They are long-term, lumpy, and often keep things from happening. Thus, we should measure relationships but explain their value conceptually to understand (but not measure) the ROI of public relations. Thanks for telling me about the Sheldrake book.
Tom Watson and Ansgar Zerfass: We agree with all of your statement, with one exception. We are rigorous about the problems of applying ROI out of its business context, as PR’s use (or abuse) of ROI does it no good with decision-making managers who have an accounting or financial management background.
Research has found these views in central Europe amongst business managers in charge of “controlling” (similar to audit) and it is beginning to be identified in the UK. These high-level managers simply don’t recognise ROI in the form that it is presented to them by PR staff or consultants with “PR metrics” or in the concept of ROI outside strictly financial parameters. Hence, we are encouraging PR folks to find their own language which is more accurate such a value creation or value links, etc. The ‘Outflow’ concept which came from Sweden in 1996 is more pertinent than ROI.
James E. Grunig: No disagreement here. I talk more about the value of public relations than about ROI. As I said, you can explain the value of relationships; but you really can’t measure a financial return to compare with the money invested in it. I tend to use the term ROI because PR people want to hear it used. I will now cease and desist from using it.
Tom Watson and Ansgar Zerfass: Glad to hear we are on the same track … this is really a big discussion over here and we feel that a sound position will be supported by those communication officers (often with a managerial background) who are now in charge, while some suppliers still have to do their homework. Understanding that cultivating relationships, listening and issues management is more important than talking and image building is of course difficult and it will take continuous efforts to explain.
Grunig, J. E. (2007). Furnishing the edifice: Ongoing research on public relations as a strategic management function. Journal of Public Relations Research, 18(2), 151–176.
Grunig, L. A., Grunig, J. E., & Dozier, D. M. (2002). Excellent public relations and effective organizations: A study of communication management in three countries. Mahwah, NJ: Lawrence Erlbaum Associates.
Grunig, J. E., & Weiner, M. (2007). The PR Debate. Communication World, May-June, 26-30.
Sheldrake, P. (2011). The business of influence. Chichester, UK: Wiley:
Van Ruler, B., Tkalac Vercic, A., & Vercic, D. (2008). Public relations metrics. London: Routledge.
Watson, T., & Zerfass, A. (2011). Return on investment in public relations: A critique of concepts used by practitioners from communication and management sciences perspectives. PRism 8(1): http://www.prismjournal.org/homepage.html