Can PR use ROI as a form of measurement? Its harder than you think

This week three academics have presented challenges to the PR academic community.

Professor Tom Watson at Bournemouth, Richard Bailey at Leeds Metropolitan University and my co author Philip Young at Sunderland have all made interesting contributions to PR thinking ahead of the the CIPR’s new Research and Development Unit (R&DU)  meeting next week.

Before entering into the debate on Grunigian theory presented by Richard and Philip, I wanted to respond to Tom's point.

Tom makes a point: "I still have doubts as to whether ROI, other than in a strictly financial format, can be re-purposed into a more general expression of value creation or contribution to organisational efficiency.  Business managers understand what ROI is, so why would they accept a mixed-concept PR ROI."

It is important. As AMEC boldly goes for some form of measurement of PR providing a return on investment. There seems to be a belief that ROI is a simple idea.

It would seem there is a belief that ROI is a financial measure. Of course it is not. ROI is a profoundly Public Relations measure.

Lets have a look at what ROI is. It is defined in accounting terms as:

(Gain from Investment minus Cost of Investment) divided by (Cost of Investment)

Can we pause for a moment and explore what 'Investment' means. Investment requires that an organisation has cash flow, capital reserves or some other asset that can be deployed as an investment.

Organisations comprise three principle assets: capital, proprietary process and/or service and  relationships. The acquisition of capital, and development of process or service; 'vision, mission and corporate objectives' (Kaplan 2001) are a function of relationships.

It follows that to invest in anything, an organisation needs relationships of a nature that can be invested.

So lets re-draw what ROI means:

(Gain from Relationships minus Cost of Relationships) divided by (Cost of Relationships).

ROI is profoundly about relationships. In an industry called 'Public Relations', this could be of interest. In a sector called 'marketing communications' it will be pivotal because Marcoms depends on 'public relation' to optimise relationships to create capital and cash flow to pay for this, a special area of relationship management, namely marketing. In principle the same applies to the trade of 'Corporate Affairs' and other trades associated with 'Public Relations' in practice.

Which takes us back to Richard and Philip and the Grunigian excellence model coming from systems theory. We can, if we desire stay with the systems theory view because already have a grounded reserach into the nature of relationships in the work of Bruno Amaral (2009).

This, Amaral, hypothesis is that relationships  are formed at the nexus of values and using latenet semantic analysis was able to show that where there is a nexus of semantic values there is very strong evidence that they are central to the formation of convergent relationships.This empirical research supports conclusions as to the impact of public relations as relationship management offered, by  Ledingham and Bruning (2002).

Convergent values relationships have some resonance with the Grunigian position of Publics forming round issues but in the Amaral study, it was less issues as values that were key which is a broader construct.

What we have done is to extend and develop the ideas of Grunig and Ledingham and Bruning to identify an empirically based idea of what public relations can be which accommodates both theoretical perspectives.

Can we now re-draw ROI yet again.

(Gain from Nexus of Values minus Cost of Nexus of Values) divided by (Cost of Nexus of Values).

Of course, I have only taken one view as to the nature of relationships namely the empirical research of Bruno Amaral. There will be others drawn from Psychology to the Evolutionary Sciences.

What I hope to have shown is that the theoretical concepts of Public Relations have moved on and that we can, should we wish, pursue ROI but that it will require more than an AMEC Commission to come to any meaningful conclusion unless there is a great deal more by way of, notably academic, research.

And the there is the problem of getting such ideas into the heads of the PR industry's clients. But that is another story.









RS Kaplan  Nonprofit management and Leadership, 2001 - Wiley Online Library

Excellence in Public Relations and Communication Management, 1992  IABC Research Foundation Edited by James E. Grunig

Relationship management in public relations: dimensions of an organization-public relationship (1992) John A. Ledingham and Stephen D. Bruning Public Relations Review Volume 24, Issue 1, 1998, Pages 55-65

How can academia serve the emerging PR paradigm?

In Public Relations there is a tendency for academia to explore the nature of practice. We seldom become involved in broader blue sky research. As a consequence, this powerful and significant sector tends to respond to events with poor academic consideration of the much deeper fundamentals that drive future or even emerging practice.

We do have a present opportunity to look more deeply than ever before into the nature of relationships, reputation and the values that attach to tokens such as polity, brand and emerging social trends.

This paper will provide an approximation of the value of the internet economy across Europe. It will explore the extent to which social interaction is significant and will provide a view of the relationship value of social interactions online.

From this base,  the paper explores approaches for the PR sector to examine how it can identify the approaches to fundamental research into the nature of relationships as they pertain to the organisation with particular emphasis on the changing nature of online relationships

The value of the internet across Europe

Research commissioned by Google and undertaken by the Boston Consulting Group  (The Connected Kingdom 2010) suggested that, in the UK, internet activity contributed £100 billion per year (€ 650 bn) in 2009. This value is equivalent to approximately  7.2% of national GDP. Growth was estimated at 10% per year.

Some 60% of the UK internet economy consists of consumption with consumer e-commerce  at about £50 billion,  £10 billion contributed by  internet service providers and device access and 40% being government and private investment in internet related technology.

Using data from Internet World Stats (http://www.internetworldstats.com/stats4.htm ),it is possible to offer a Europe wide perspective. Using the data of the UK’s 51 million people online (82.5% of the population) and assuming that every person online across Europe is as active online (rounding down the data and ignoring European wide growth in 18 months since publication) it is not pretentious to estimate a European internet economy at € 1.5 trillion.

Of this figure consumer e-commerce would represent some € 750 billion.

The nature of social interactions

Robin Dunbar (1996) , writes: “Primates in general differ from other species of animals in respect of their social skills and there is now considerable evidence to suggest that primates owe their large brains to the need to manage and manipulate large quantities of information about social partners.

“Some of the evidence for this is provided by the fact that, in primates, group size correlates directly with neocortex size: living in larger groups requires proportionally more ‘computing power’ to keep track of what is going on. In contrast, purely ecological variables do not correlate with neocortex size once the effects of group size have been statistically removed. The primate brain is a social brain.”

Humans are genetically programmed to be social.

For humans with brains designed to communicate most effectively in, relatively large,  groups of about 100-150, there is a need for more brain power than is available to do what other primate do. They use grooming.  People use a more energy consuming capability, namely, language.  If language evolved to allow us to gossip, we ought to see evidence of this in what people talk about in informal conversations with friends and acquaintances. And, indeed, Dunbar’s studies of natural conversations reveal that, for both sexes, around 70 per cent of all conversation time is taken up with matters directly related to personal experiences and social relationships. ‘Work, philosophy, politics, culture, instructions, ethics, religion, even sport - all these are crammed into the remaining 30 per cent. Even highbrow newspapers devote up to half their column inches to what they loosely describe as "human interest" stories and features’.

In internet terms online shopping, news consumption, finding out what and where to shop, book holidays, download music, trade on eBay as well as computer and mobile information access  can be attributed to what Dunbar might ascribed to ‘Work, philosophy, politics, culture, instructions, ethics, religion, and even sport’ and be of the 30% ‘online work’ element of human lives.

What of the remaining 70%?

The rise and rise of social media can well be a symptom of people in Europe using time ‘directly related to personal experiences and social relationships’.

There is considerable evidence to provide a view of the time people in the UK spend online. Research by uSwitch.com, a price comparison and switching service in 2009 showed internet use extending to 30 hours per week (Hooked Online 2009).  The 2009 findings showed that at work the average person spent  5 hours online - 2 hours for professional  or work  purposes and  3 hours  for  pleasure and leisure. In addition a further 2.7 hours is spent during weekends or a ratio of 2:4.7 between ‘work, philosophy, politics, culture, instructions, ethics, religion, and even sport’ and related to ‘personal experiences and social relationships’.  Such an assumption would suggest that 56.53%. of time spent  online is devoted to personal experiences and social relationships. As Dunbar notes, such time consuming activities are in the nature of humankind. They are driven by our DNA.

The value of social activity online

From such data, it is not unreasonable to identify that a very high proportion of online time is spent in social activities unrelated to the need to work (or be a modern hunter gatherer).  Perhaps not 70% but, even without the internet delivered interactions like mobile phone calls, or sharing pulse rate data at the gym with sporting buddies, not unrealistically, fifty per cent.

From such evidence one might ascribe 30% of activity of online users is in the realm of day to day e-commerce and other modern survival needs and perhaps 50% is spent in building and sustaining relationships in one form or another online.

If the former, based on the  Boston Consulting Group findings, is worth € 750 billion, then a measure of European online social activity might be valued at € 1250 billion. This will lead us to a conclusion that online social interaction is a € 1 trillion  activity every year and growing at a rate of perhaps 10% per year!

Such analysis is not provided as perfect data or the actuality but is offered as an indicative indicator of the relevance and importance of online relationship activity.

It is not that being social online has come out of the blue.

In A Cooperative Species, Samuel Bowles and Herbert Gintis (Bowles & Gintis 2011) show that the central issue is not why selfish people act generously, but instead how genetic and cultural evolution has produced the human species in which substantial numbers make sacrifices to uphold ethical norms and to help even total strangers.

Is it that we have evolved to share information.?

Are embedded hyperlinks and Bitly.com an evolutionary necessity? Do they satisfy a need buried in our DNA? Is this why humans are attracted to forums, blogs and social networks where there is room “make sacrifices to uphold ethical norms and to help even total strangers”. Are such activities no more than technically enhanced evolution of being a human?

In his Saturday Essay in Wall Street Journal in May 2010, Mat Ridley (Ridley 2010) encapsulated the whole process rather well. He wrote:

“Trade is to culture as sex is to biology.”

 “The rate of cultural and economic progress depends on the rate at which ideas are having sex”.

There is a lot more in this research, but suffice to say that the value of online activity from both social and evolutionary perspectives is driven, it seems, by deep needs buried in humanity’s genetic makeup.

Within Europeans online is a deeper need to interact and combined with e-commerce this exceeds a nominal value of 2.250 trillion euros!

Public relations and internet activity

Public relations, and that growing element of public relations dealing with online work has a role to play in facilitation of online interactions associated with organisations.

It has a role in satisfying these deep needs buried in humanity’s genetic makeup.

On the one hand we have the practice of public relations at work engaged in facilitating management practice,  governance, organisational values, marketing communication, applied ethics, and religion.

On the other hand we have pure play public relations engaged in relationship facilitation.

These then  are the two sides of the PR coin, evidenced online, exposing our very humanity, the nature of our species.

Granted that the measures identified here are crude; granted that this approach uses the currency metaphor which many will find hard to come to terms with. It shows a need for more detailed research but, for the purposes of this essay, it suffices to say, that online social activity across Europe can be estimated even in financial terms that run to hundreds of billions of €s.

Using the financial metaphor also allows us to get some idea of the public relations opportunity for contribution to these astonishingly high numbers.

Equally, such an approach opens up a much wider, largely unexplored and exciting realm for research and PR practice.

What is the new realm of online public relations?

Now that we have some form of measure for online activity, we can examine what role might be assumed by the online practitioner.

There may be a role for the practitioner looking inside and organisation to aid in identifying the organisation’s view of its corporate, product and service ‘brands’.

The online practitioners may want to take a different view from the traditional marketer who might regards a brands as ‘a name, term, sign, symbol, or design or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them those competitors’ (Kotler 1991 pp 442).  

In online public relations, there would be a view that the convergence of brand values and constituent values are more significant. We have already seen evidence of this from the extensive empirical research by Bruno Amaral (Amaral 2009). Online PR research has already taken us beyond the rather superficial marketers view to the view of a practice based on the nexus of human values as may be relevant from time to time.

There is a role in finding values that can be encapsulated in brand identities. One possibility is in using the  semantic  rule  to  relate  the  compatibilities  between words and values as  a  composite  linguistic  value (Zadeh, 1975). 

These are significant matters. Online they help identify the webpage metatags, keywords for client and competitor search and monitoring, concepts for semantic attribution in on-the-fly evaluation and more detailed strategic and tactical activities. Better than that, they help identify those values that are convergent as between and organisation and its constituencies. For the future Kotler-style brand differentiators will be about values of all descriptions and mediated by a range of constituents because they satisfy the selfless attributes of humans described by Bowles and  Gintis (ibid).

A role for Public Relations describes a view by the client of its values to a range of constituents. It is these values implicit and observable in relationships and in relationship building that describe the tokens (brands) that are the corporate or product /brand identity (Phillips 2005) and, once again, we can see the need for convergent values that emerge as between brand and constituencies.

The marketing communications role for PR is in in supporting organisational activities to manage constituencies’ expectations of the brand. Today, that is, the values constituents'  attach to the brand on  Twitter, Facebook and  Wikipedia. In addition now that much media is reliant on social media for intelligence and background, media relations.

This level of practice is described in current practitioner advisories and books such as the CIPR book ‘Online Public Relations’ (Phillips &Young 2009).

Uniquely, PR has the role of managing the expectations and relationships in which the brand’s values are spread between constituencies and, on occasion, with the client in an environment that is not dominated by mass (or any other single) media. It is described by Clay Shirky as cognitive surplus (Shirky 2010) and is manifest among  the 1 in 10 Europeans who are ‘Multi-Screeners’ – watching TV, using the internet on a PC or laptop and using the internet on a mobile phone or PDA at the same time (European Interactive Advertising Association 2011).

Kline and Boyd (2011) suggest that much human adaptation depends on the gradual accumulation of culturally transmitted knowledge and technology. Recent models of this process predict that large, well-connected populations will have more diverse and complex tool kits than small, isolated populations.

Because the internet offers excellent population connection on a scale humanity has never seen before and with the evolution of cognitive surplus, we have seen the effect on availability of ever more ‘diverse and complex tool kits’.

With the exchange of values between actors across the globe, this layering effect can gain traction very fast.

From Twitter to Skype and leavened by Slideshare and YouTube, we can see these effects in our everyday lives.

Being aware, involved with and sometimes of the values in conversation is not a role for any other discipline other than PR. 

Offering the organisation’s brand values in its offline and online social context is the largest part of successful social and commercial activity. It is the essence of communicative organisation.

What part does public relations play

How much of the € 2 trillion online ‘economy’ should be engaging PR academia?

This year in the UK more computer games were bought and downloaded online than were sold in retail outlets.

More newspaper articles were read on line than in print. 

Electronic Kindle books outsell both hard and paperbacks on Amazon.com

The total online retail sales across Europe is a tiny fraction of European GDP. It was worth £145,600 million (€ 173 billion) in 2010. Online retailers in the UK, Germany and France accounted for 71% of European online sales. In 2011 online sales in Europe are forecast to grow by 18.7% to a new total of £171.8 billion or €202.9 billion (Centre for Retail Research 2010).

There is a case for looking to PR academic community’s involvement in identifying such trends to identify potential opportunities for PR practice.

Knowing that for the 54% of the European population which is online and that more than 10% of their purchasing will be via the internet in the near future would suggest that the part of the PR industry serving the retail sector would be representative in practice and growing faster than its current 10% per year organic growth.

With most of the publically quoted PR companies reporting turnover growth at best of no more than 10% for the last three years, despite many proclamations of digital credentials and online advertising spend up by only 7.6 per cent in 2010  (European Interactive Advertising Association EIAA 2011), it would seem there is a disconnect between growth in online retail activity and its retail marketing communication and advertising and PR partners.

In the UK, France and Germany, it would seem that here is an opportunity that has, so far, been missed and for the rest of Europe it is an opportunity to be grasped.

Such an opportunity suggests forms of online PR practice that are an extension of current practice.

Meantime, there does not seem to be much involvement by the PR industry in the rate of cultural and economic progress that depends on “the rate at which ideas are having sex.”

Evolution is never linear – some indicative examples

There is an assumption that internet evolution will be linear. This would be impossible.  There is far too much evidence of new and evolved forms of communication and transactions made possible by internet technologies.

One example will suffice for many. The Microsoft Xbox Kinect, a computer game, enables the computer to recognise individuals and their movements. In addition it is able to translate such data to provide imagery of interactions between one of more humans and inanimate and animated real and virtual objects. This is a new form of communication. As such it offers practitioners in communication a wider palette of communications methodologies .

In such circumstances one might expect European PR  research to be exploring the opportunities for such technologies in the practice of public relations. Instead, there are schools of practice in universities developing things like internet mobile applications beyond the PR context.

Intel announced its Light Peak product in 2011. It is significantly faster than USB 3.0, carrying data at 10 gigabits per second in both directions simultaneously. Connection speeds will not be affected by the transition to copper. Future, Light Peak may scale to 100 gigabits per second. The ability to run multiple protocols simultaneously over a single cable, enabling the technology to connect devices such as peripherals, displays, disk drives, docking stations, the whole paraphernalia of communication and more is significant.

Embedding the internet into devices is now simpler.  In the Spring of 2011, the protocols will be agreed for embedded SIM technology. It is not meant to replace the removable SIM cards used in today's mobile phones, but used in various consumer electronics devices to connect them to the Internet. It's the another step to building an "Internet of Things."

One simple example of the “internet of things” will suffice to explain the potential. Researchers from UCL (UCL 2011) have developed a digital tool that allows people to attach memories to objects in the form of text, audio or video by simply using a bar code. They see this as a means to provide historical values to objects. In PR, there are many more applications. Attaching news, information brand values, contact information and many other content tokens requires no great leap of imagination. The communicative organisation (see Stockholm Accords ibid) may soon be able to deploy communicative objects to further serve PR practice.

This month Zabaware announced its artificial intelligence technology known as Ultra Hal for Twitter (Zebaware 2011). It comes alongside  Klea Global (the author’s company) which is developing auto learning/teachable software for online monitoring and evaluation. The extent to which teachable (‘thinking’) software will and can be used in development of online social relationships and traditional PR evaluation is out of the lab and in beta testing.


It is already used by online music stores like LastFM to focus the right content to individuals.

These non-linear developments take PR into completely new media and applications many of which are already available.

It is not that such media will not develop without PR. They will. The key here is what kind of academic will spot the opportunities, the communication opportunities for relationship building and potential applications in practice.

If some universities can develop and harness new science and technologies, drugs and treatments for the medical profession, why can they not do the same for Public Relations? The social and economic advantages are just as important.

The value of knowing value

The internet in its many manifestations is, for many, becoming ubiquitous.

Populations are not, nor need to know whether the train timetable on their smart phone is delivered via internet technologies. In the midst of a personal exchange on Skype or Facebook, the internet and its manifestations are not part of the user’s conscious thought processes. The value of such social interactions is singular.

The internet and even social media is now of much less concern to the consumer that the facility it provides. Online PR should not be an expression used by PR people. Online is as significant to PR as ink. It's just there!

On the other hand, a financial view is helpful for PR academia. It offers a dimension, a metaphor for our activities couched in a currency most understand.

Knowing that digital consumer activity is growing at a rate in excess of 10% across Europe alerts the informed commentator that the PR sector has failed to keep up.

The sector may like to put 30% of online activity down to marketing communications and news distribution and the remaining 70% to being able to understand the nature and opportunity for being engaged in personal experiences and social relationships.

For the communicative organisation as outlined by the Global Alliance in the Stockholm Accords (2010) these are significant ideas. The potential to build relations with the whole person is a very exciting prospect.

An easily wasted opportunity, robust research and development would be very helpful in this area. .

Most certainly research funding covering such important elements of economies will be rewarding.

In addition, the extent to which exploration of the €1.250 trillion  internet related personal experiences and social relationships has a much more tangible feel to it when it is compared to the lesser € 750 billion marketing communication and information activities such as work, philosophy, politics, culture, instructions, ethics, religion, and sport!

This allows us to think well beyond the present consideration which comprises academic rationalisation of PR practice to look at new paradigms. It opens up huge challenges.

Social Media and the Challenges to Academia

First of all, a little context.

Of course, internet mediated civilisation is not the be all and end all of all human activity or public relations. But its very pervasive existence affects all PR practice.

Equally, without fundamental research into internet mediate relationships, the PR industry has nothing but a reactive, technically antiquated, narrow and desultory future.

Soon, the PR industry will not be able to sustain a PR practice led academia.  Without internet engagement at a much deeper level PR, as practised today just cannot survive. Is it already the case that there are more PR press agents than employed journalists?

With such a weak PR industry, both theory development and the sustaining in-house and agency careers for students will be found wanting.

As media titles fall or attach to electronic devices beyond electronic paper,  iPlayer and Kindle and as the evolution of internet mediation creates new ways of living, much of current practice just won’t exist.

How common, for example, is the practice of writing letters among practitioners and academics? When last was the first port of call to find a newspaper article the local library?  Who now has to offer a journalist a telephone at a press conference to call in copy? When last did practitioners lick stamps?

Ordinary life is changing very fast.

There remain, even in academia, those who do not consider that the internet mediates their speciality. They may like to ponder that the number of people online in the third most populous nation in Africa, Egypt, has fewer internet users than Europe’s third smallest country, Luxemburg - and yet the internet had a role to play in bringing down the long established regime. A 21% internet penetration of the population (compared to 85% in the UK) was affective.

 I described the first phase challenge of the internet for public relations in 1995 at the IPR annual conference (Phillips, D. 2001) with these words:

The new media will enfranchise the individual with more one-to-one, one-to-many and many-to-many communication which will be easy by personal ‘phones, E-mail and video conferencing.

Person-to-person-to-machine and database communication will be more important, electronically managed and more global. Increasingly this broth threatens brands and corporate reputation and needs professionalism to immunise or doctor the effects of the brew.

In its most perfect form, reputation management sustains relationships with publics in a state of equilibrium during both evolution and in crisis. This enhances corporate goodwill (a tradable asset).

The big change is that many-to-many global communication brings with it loss of ‘ownership’ of language, culture and knowledge and that there is a breakdown in intellectual property rights, copyright and much plagiarism. This is already a major problem.

News now travels further and faster and is mixed with history, fantasy and technology. Reputation in crisis is even more vulnerable. At a growing rate, the new media uses reputation as ‘merchandise’, stripped from the foundations which created it, then traded for pieces of silver - and at a discount.

That phase of internet mediated public relations is past. If universities are not teaching and practitioners are not practicing PR to cater for this, older form of online PR, they will face hard times sooner rather than later. It is time, even late, to move forward.

The internet is now a functioning sub-strata. It is mediating all human endeavour in Europe.  For the consumer internet technology is almost as irrelevant as making your own ink. The internet is all but invisible in delivering a huge range of benefits.

I have given some insight into my best guess as to a value we can place on the present potential for PR in the context of online economic activity of some €750 billion and have assessed an online  relationship ‘economy’ with an annual ‘value’ of  €1.250 trillion. Both such figures are growing at more than 10% per annum which makes them commercially attractive to academia and private practice.

The extent to which the PR industry can service these activities cannot be assessed in terms of existing online PR practice, research or teaching because the industry and academia has been so very slow to respond to the opportunity.

 It is extremely unlikely that current market facing online PR is engaged in even 0.1% of online commercial relationship services. Online PR across Europe is by no means a €750,million a year practice and will not even approach this number any time soon. In the wider (more valuable) social activity of the online relationship ‘economy’ activity has hardly begun.

In the next phase, even basic knowledge is hard to come by from PR academics and there is even less academic interest in finding out what it entails.

The semantic web, the internet of things, and the internet of intelligent software are big challenges.

Even bigger is the area of relationship interactions. They are even more important. They affect the very foundations of democracy and the survival of The Enterprise as we know it. The nexus of contracts (Coase 1937) gives way to the nexus of relationships (Phillips 2006) in order that the organisation can survive and prosper.

Identifying the relevant evolution and its application to relationships between constituencies and organisation is a big task.

 Developing the means by which such research can cascade to the organisations that want or need better online public relations and education of  is another area for potential academic activity.

Finally there is the nature of practice as it is and can be. The steep learning curve for practitioners, engagement of the PR institutions and representative bodies alongside the professional courses is another big opportunity.

Bibliography

Amaral, B & Phillips, D. 2009 A proof of concept for automated discourse analysis in support of identification of relationship building in blogs. http://www.bledcom.com/home/knowledge accessed Feb 2011

Bowles, S. & Gintis, H. (forthcoming 2011) A Cooperative Species: Human Reciprocity and Its Evolution Princeton University Press

Centre for Retail Research 2011 http://www.hallam.biz/wp-content/uploads/2011/02/Online-Retailing-Statistics-Britain-€pe.pdf accessed Feb 2011

Coase, R. H. 1990  “The Nature of The Firm” Economica 4: 386-40

Dunbar, R. 1996 TES http://goo.gl/VvY1w  accessed  Jan 2011).

European Interactive Advertising Association http://www.eiaa.net/news/eiaa-articles-details.asp?id=224&lang=1 accessed Feb 2011

Hooked Online: Brits Spend 30 Hours a Week Online  uSwitch.com http://www.uswitch.com/press-room/press-releases/hooked-on-the-internet-brits-spend-30-hours-a-week-online--1160.pdf accessed Feb 2011

Internet World Stats http://www.internetworldstats.com/stats4.htm  accessed Feb 2011

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Phillips, D. 2006 Towards Relationship Management, Journal of Communications Management  Vol 10 No 2 pp 211-226

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Phillips D & Young P. 2009 Online Public Relations Kogan Page

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Shirky, C. 2010 Cognitive Surplus: Creativity and Generosity in a Connected Age Allen Lane

Stockholm Accords The Value of Public Relations and Communication Management 2010 http://www.wprf2010.se/draft-of-the-stockholm-accords/ accessed Feb 1011

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Zebaware http://www.zabaware.com/ accessed Feb 2011

Public Relations - define

For one minute, I would like all those people who do not believe that PR is about relationship management to suspend belief.

For some time I have been thinking about the role of the practitioner in a bank.

It re-defines Public Relations.

I suppose the role of the PR Manager (Public Affairs Chief, Top wogga with some similar title but responsible for PR, CSR, IR, and other acronyms that really mean Public Relations) is now forever changed.

This person really only has one role.

It is to be able to assure the executive, main Board and the regulators (all organisations bend a knee to one or more regulator)that the relationship in any proposed or actual transaction between actors who can affect the long term productivity of the organisation, is robust enough to survive the transaction.

It is really quite simple.

It is probably too rich for CIPR, PRCA and other such organisations.

It will be usurped by Charles Handy and the management guruship.

It is as good for all types of PR from press relations to so called social media relations and sponsorship of the local soccer club.

I just do not know why it has taken me so long to get it!

Content Is not King - discuss

Alice Marshall, Founder, Presto Vivace, wrote in Daily Dog

"Very few gold prospectors made money in the gold rush of 1849; the people who got rich were those who sold Levi's, buckets, shovels and related equipment.

During the dot-com boom, we repeatedly heard the call, "content is king." It was said that those who created compelling content would be the winners in the Internet economy, even while online publications were bleeding money. Even as news organizations were laying off reporters and offering others buy-outs, we were told that content was king.

Yet the people who made money from the dot-com boom were the manufacturers of router and network equipment, web servers and infrastructure related products and services. Those who built the Internet itself did well. The content creators took a bath....."

I agree that content is not the king it may once have been. I disagree with all the rest.

Press Agentry is not public relations.

The value of PR is not derived from content or from relationships derived through third parties (journalists, blogger.com or even Twitter).

The real value of PR is in the ability to understand the nature and value of relationships (of all kinds) to and within an organization and the ability to plan, manage and optimise the organization's ability to benefit from relationships.

Creating and selling-in content has its excitements but public relations, the planned management of organisational relationship optimisation, is a service upon which all organizations depend for survival.

No relationship—no organization.

Public relations provides the service that, among other things, offers a living to content creators.

The role of risk, opportunity and uncertainty management in relationship development has to be a highly developed management science.

Journalism and blogging, even communications, are not Public Relations they are just tools to be deployed.

"This is your audience you want to attack, fool"

There is no doubt that the entertainment moguls are have not yet understood that riding rogh shod over their customers is barbaric.

Apparently not happy with how negotiations are going with YouTube and MySpace, Universal CEO Doug Morris is threatening action over what he sees as copyright infringement of Universal's music videos illegally posted to sites. He told an investor conference:

We believe these new businesses are copyright infringers and owe us tens of millions of dollars. "How we deal with these companies will be revealed shortly.

Them's fightin' words says Business2Blog. To which media critic/blogger Jeff Jarvis responds:

This is your audience you want to attack, fool. They are marketing and distributing your music for you. Don’t want them to? Fine. Plenty more where you came from.

Media executives are realizing that there is a lot of advertising money to be made from online videos and their attitude is to try to grab as much of it as they can. But the YouTubes of the world are saying, "Wait a second. Don't just slap ads on this. The videos are a form of marketing in and of themselves."

Stakeholders matter - Sir John Sunderland

Sir John Sunderland is one of those inductry leaders who makes sense and yet whose organisations seem not to heed his words. The woes of Cadbury, the company he heads up, seem to fly in the face of the corporate words of wisdom. But he has just acquired the Seven-Up Bottling Company of San Francisco and the chewing gum business is seing a revival. Like your truly and McKinsey, he too, is talking the relationship langauge and also has an interest in stakeholder management.

Last July, Sir John, currently President of the CBI, talked about the nature of Stakeholderism as it applies today to the Henley Parnership meeting where he gave the keynote address. I have extracted some interesting paragraphs.

What he said is realy the job description of the Corporate Public Relations Chief. Here are words that are wise for all companies and all practitioners in Public Relations in the 21st Century, even if now he may wish he had a public relations member of the Board to add professionally qualified strategy to Group corporate and external affairs.

The Stakeholder Paradox

"Today business is expected to engage with a vast crowd of poorly defined newcomers – its so-called stakeholders. And in the UK, for the first time, these newcomers are set to acquire formal rights over businesses if the Company Law Reform Bill becomes law. It will oblige directors not only to safeguard the financial interests of the companies they serve but also to have regard to their employees, customers and suppliers – and to nurture communities and the environment – in every decision they make.

"In complete contrast to its original meaning to a present-day business a stakeholder can be someone with no formal relationship to it and no obligations towards it - whatever.

"A stakeholder means anyone and any group affected by the activities of an organization.

"A few years ago the US Corps of Engineers found it necessary to define its stakeholders. It listed the Army, the Air Force the Administration, Congress employees, the environmental community, trade unions clients, the media, state and local governments professional organizations, architect-engineer firms, construction companies “and others.” Building bridges to these groups has become almost as important to the Corps as building real ones over rivers.

"Almost anyone can be a stakeholder: it is as easy as posting an entry on the Internet. I did a Google search recently on GM Foods and it produced 6.4 million hits. The entries ranged from governments and scientific bodies to NGOs, pressure groups and individuals. 6.4 million self-appointed stakeholders, and, through Google democracy, each gets the same weight. Even interests which cannot use the Internet – like endangered species – can become stakeholders if the media and pressure groups appoint themselves on their behalf. Through environmental pressure groups, the planet itself has been turned into a stakeholder.

"Essentially, these new stakeholders are claimants, who take no account of how their demands on business will be met. They are mostly unelected and unaccountable and think only of their own constituency.

"If the proposed UK Company Law Reform Bill is enacted, British businesses could face substantial new costs in routine administration and record-keeping to defend themselves from the prospect of litigation. It opens up new possibilities for directors to be sued for decisions which adversely affect stakeholders. Directors will have to prove that they acted in good faith towards those stakeholders and to demonstrate that they took their interests into account.

"Even without the complications of this Bill, the arrival of new stakeholders has dramatically complicated business strategy and relationships with traditional stakeholders, particularly consumers and owners.

"... even consumers and owners have become highly disparate groups of people with conflicting interests which modern business is often hard to put to identify, let alone reconcile.

"Consumer markets are increasingly segmented, not only in conventional ways (region, age, income, class, gender, family status and so on) but in their means of accessing goods and services (conventional shopping, or home delivery, or online). Consumers have also segmented themselves in more elusive ways – in their self-perception and their relationship to products and brands.

"Consumers have a limitless ability to re-invent themselves: one minute caring, the next selfish; one minute self-indulgent, the next self-improving; one minute proud of their origins, the next aspiring to be something new. It has always been a challenge for business to search for new consumers whilst retaining the loyalty of the old. The volatility of modern consumers makes this challenge even more acute and with it the penalties of failure.

"Moreover, this volatility has made consumers even more vulnerable to being got at by other stakeholders particularly government and pressure groups.

"The complexities of consumer relationships are matched by those of investor relationships. One is the sheer number of investors in any public company and the disparity in their power, status and interests. Every shareholder, across the world, is entitled to reports and communication – in itself a significant cost to business. Investors range in size from individuals with a few shares to massive institutions.

"Institutional and large-scale investors review these options every day even second by second in today’s instant, always-open global markets.

"Adding to the complexity, we now have the twin phenomena of the ethical consumer and the ethical investor. These people select from the myriad of available goods and services and investments those which give them the greatest moral satisfaction. Some get professional advice, from ethical investment funds but many more take their information from pressure groups, through the Internet and from each other. The Company Law Reform Bill would give such investors new power without giving them any additional responsibility towards other investors or towards other stakeholders in business. There is nothing to stop such investors taking instructions from pressure groups even those who actually want to undermine the company in which they have bought shares.

"So much for consumers and investors. What of another traditional stakeholder – the employee? Employee relationships too are more complex than ever before. Most major companies have global workforces and every major company now has the possibility of acquiring a global workforce through outsourcing. With or without outsourcing operations, more and more companies are turning to more flexible employment patterns including part-time working and short-term contracts.

"Increasingly, companies survive or prosper because of the talent they command in their workforces, their accumulated knowledge and experience allied to their capacity to create new ideas and with them to conquer new markets.

"Joining ethical consumers and ethical investors are ethical employees – people able to choose an employer who gives them a sense of worth.

"All of these factors give business a huge task in managing relationships and many of them also apply to relationships with suppliers of intermediate goods and services. As with labour forces, global companies have to manage global supply chains with no common interest and subject to disparate laws, customs and practices. It is why our human rights and ethical trading initiatives are so important and followed so closely at Board level.

"Consumers, shareholders, employees, suppliers: all of these present challenges as stakeholders even though they have formal and defined links with business. But how much more complex is it to manage stakeholders without formal links who define their relationship with business in their own terms?

"Let’s examine these.

"The first is government. People still talk about “the government” – but government is not singular but multi-layered. If you do business in London you deal with no fewer than five layers: your local council, the Mayor and Assembly, the shadowy Government Office for London, central government, and the EU. None of these bodies have the same agenda and they are elected or appointed by different methods and on different timetables. And as well there is the plethora of quangos and other publicly-funded busybodies who have relationships with business.

"Within each layer of government different departments have different interests. Indeed a single department can sometimes harbour diametrically opposed interests.

"Now let us add to the stakeholder stew the media, pressure groups, NGOs and the law. All these groups have their own interests and priorities, but they feed off each other and of course off government and they all feed off the climate of suspicion which surrounds business in many countries.

"The law, especially in the United States, has become an independent stakeholder as a direct beneficiary of any stakeholder activity which results in legislation or litigation. Moreover, lawyers can now define their own relationship with business and other stakeholders. They can choose to defend business from the claims of other stakeholders or to offer them a means of pursuing those claims through the courts – a phenomenon vastly expanded by the arrival of contingency fees.

"The media, particularly the new flourishing Internet media, are more ready to circulate hostile stories about business.

"Through their relationships with government, media and the law pressure groups and NGOs have become powerful in their own right. Their claims to represent local communities and other interests are often unverified: all that matters is that government (or media or the law) accept them. From that moment on, the pressure group becomes automatically a stakeholder.

"Pressure groups and NGOs also benefit from an asymmetry between their reputations and that of business. If a pressure group plants an inaccurate story or launches a frivolous lawsuit the worst that can happen to it is to be thought misguided or misinformed. (It may even enjoy the halo of martyrdom if it goes down in court). For business, the inaccurate story or the frivolous lawsuit can damage a company or brand reputation which may have taken decades of investment and effort to establish.

"Stakeholder demands, especially from government, have also required major new governance processes and more importantly they have required the entire business organization to understand and commit itself to high standards of business conduct. Nothing wrong with that.

"There are no simple answers but I think that businesses will not go far wrong if they base their strategy on five simple elements.

"The first is self-confidence. Business should always believe that its core activities are worthwhile and represent a contribution to society.

"The second is consistency. Business process, values and statements should be constantly understood, constantly applied.

"The third is engagement with other stakeholders. Even at their most interfering and self-righteous other stakeholders can have a genuine interest in the decisions it makes and very often genuine new insights.

"Indeed, I believe that business itself should behave like a responsible stakeholder – a legitimate and necessary interest group in all the societies in which it operates. Business should display the same persistence and clarity in expressing its views – if not the same self-righteousness – as the pressure groups and NGOs with whom it has to contend. Indeed I believe that business is the natural defender of values which are deeply cherished in world society including the rule of law, protection against arbitrary power, freedom of thought and expression and social mobility. Let us act as stakeholders for those values wherever we operate.

"For the fourth I will paraphrase Abraham Lincoln: you cannot be loved by all of the people all of the time and business needs to recognize this.

"Fifthly, I believe that business must keep uppermost the vital importance of its and its brands reputation.

"Finally, we have to recognize that stakeholder proliferation and its management paradox is a permanent reality. There is no point grumbling about it. As a business grows its markets and activities, it inevitably engages with more interests in local, national and global society. The complexities this causes should be counted as part of the price of our success."

Picture: Sir John Sunderland President of the CBI