Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Monday, November 14, 2011

Dreaming into oblivion

Spurred by the responses to my enquiry into the attitudes of the CIPR presidential candidate's attitudes towards online public relations, I have been looking at the research and umpteen surveys (third party, good provenance,  UK centric, affecting online PR) available that could inform my thinking.

In the last year, there have been well over 100 items of research and surveys.

Many surveys would, in any other discipline be dismissed as fanciful.

For example, in an economy growing at less than 2% per annum:



  • The number of UK visits to internet video platforms in September rose by 36% year on year, to 785million[i]. 77% of marketers plan on increasing their use of YouTube and video marketing, making it the top area marketers will invest in for 2011[ii].
  • Debenhams unveiled a more than 70% rise in online sales during its latest financial year. Online value was up by 73.8% at £180.4m. Online now accounts for 7.4% of Debenhams’ total sales[iii].
  • Online grocery sales at Sainsbury’s grew in the order of 20% in the first half of its financial year.  Dairy Crest showed fast growth for its online grocery service. Sales are up  50% on its sales at the same time last year[iv].
  • Online retail in the UK will grow at a ten percent compound annual growth rate over the next five years[i].
  • Forrester projects that online retail across 17 of the largest EU markets in Western Europe will hit €114 billion by 2014
  • UK Internet use will be up by a factor of 3 in 5 years.
  • 190 million Europeans will shop online by 2014 (up from 141 million today).
  • Internet marketing budgets in the autumn of 2011 are up 16% and search marketing is up 9% four times more than all other marketing activity.
  • The console games sector remains the most lucrative platform. 
  • With an estimated £1.6bn spent on console gaming in 2011; £450m on PC/Mac games; £400m on casual games, £350m on MMOs and £330m on PC/Mac downloads with £300m on mobile gaming.
  • British gaming is big. We spend 43m hours gaming every day[i]
  • This is a huge sector and with Kinect being made available for PR applications, an interesting area for development[ii].
  • The cultural component of PR in areas like languages are also significant[i]
  • Human Resources and internal communication is now much predicated on the internet with some companies[i] creating social networks inside the firewall[ii]
  • recruitment today is mediated online[iii] with the UK lagging in international comparisons[iv].  Practitioners need the capability to manage corporate doubts and expectations to inculcate internet thinking as a culture[v].
  • Meantime 60% of organisations have not yet implemented internal social media training which is a serious internal communications issue[vi]
Fascinating stuff.

Then came the big story. 

The Connected Kingdom report of 2009 (PdF) revealed that the online commercial sector internet earnings is £360 billion. 

Now, as a very general rule of thumb if you add up the budgets of advertising, marketing and sales promotion of most companies you will find it is between 3-5%.  Is this £10 to £18 billion, I hear you ask.

Well the whole of the UK PR industry is worth £7.5 billion.

With a bit more calculation, I estimate that online PR is worth about £5 billion and is growing at the rate of 10% compound per year.

Is this reflected in the shape of the PR sector or are we dreaming that it might all go away and we can all go back to el Vino's.









    Thursday, October 20, 2011

    Dear Chief Executive


    http://bit.ly/q1JNTG 

    The internet is contributing 7.9% to the UK economy this year, about £11 billion.


    This is up 10% since last year. It is bigger as a contributor to GDP than health, construction and transport.


    The ONS report 10% of all retail sales are now conducted online. In September this amounted to  £5.5bn.


    Most managers recognise the economy is at best, flat-lining and yet last month while retail sales rose, unexpectedly (by 0.6%), it was dwarfed by Online retail sales which were up 15% Year on Year. 


    This is not just for the middle market buying the week's groceries. Top of the line retailers are benefiting from the web too and they are not nearly as affected by a sluggish economy.


    When excluding online travel sales, e-retail sales growth in September jumped 20%.  We could do with a similar boost.


    Not to be too bullish, it is realistic to imagine annual growth online in the retail sector to slow somewhat but good double digit growth will continue.


    This suggests there is an opportunity here for us.


    The data is clear that traditional selling outlets, that is, non internet retail sales, are in decline and to make up the shortfall online marketing is essential to maintain turnover, and probably margins.


    With 35 million people already shopping online, it is not a big stretch of the imagination to believe that online selling in B2C is reflected in B2B data as well.


    Organisations like Autorola are projecting sales of 220,000 cars  this year and twice that in five years. Construction Enquirer is an online magazine with a readership that would make the traditional magazines proud and 57% of businesses are reporting increased internet budgets this month.


    We know that seven in ten B2B buyers start their purchase process with a query typed into Google or another search engine. Thus, right at the beginning of the purchase cycle, the internet is pivotal. B2B marketers with a social media strategy has now doubled from 32% to 64% in three months.


    To get some idea of the capabilities that are part of the digital infrastructure now, the BBC has done amazing things online for the Olympics that we can learn from. But most important is that they have taken as their mantra that they will deliver content on "on whatever piece of glass" they choose". 


    The range of platforms is now extensive and PC's are only one platform among many for delivering digital content. 


    Mobile is critical and has even domestic implications notable in being able to offer wifi throughout or premises. 


    At the same time the internet is expanding to include physical objects fitted with sensors or intelligence.


    We need to find systems to manage different platforms and technologies as we increasingly need to accommodate the many different devices chosen by employees and consumers.


    On the delivery side, users are adopting a wider range of channels from Facebook to Google+, mobile phone apps to storing everything in the cloud. 


    This applies as much to individuals as to organisations. For the most part the adoption of these advanced technologies is hardly noticeable. The technology is so good it is not even noticeable. 


    We will have to come to terms with offering digital services internally among employees as well as for an extensive range of external stakeholders.


    What these data tell us is that to be competitive more than £1 in £10 has to exclusively flow from online activity. 


    Better than 7.9% of turnover has to be directly attributable to the internet.


    We need to be able to adopt and enhance activity on many channels with many communications platforms, including social media, throughout the organisation.


    Having done that, we will be ordinary and average. To be competitive, we need to do better. The need to understand the internet at the heart of our organisation is now pressing. 


    This means that all businesses, and ours in particular, need good quality digital capability too.


    We also need to employ and deploy a much greater level of strategic as well as tactical expertise.




    Your sincerely,


    Your PR manager








    Sources:
    Every statement here has excellent provenance


    http://news.sky.com/home/business/article/16092825
    http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-64183
    http://www.bbc.co.uk/news/business-15383602
    http://www.brc.org.uk/brc_news_detail.asp?id=2064
    http://www.imrg.org/IMRGWebSite/user/pages/homepage.aspx
    http://www.clickz.com/clickz/news/2118831/luxury-retailer-saks-courts-percent?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clickz+%28ClickZ+-+News%29&utm_content=Google+Reader
    http://www.bbc.co.uk/blogs/sporteditors/2011/07/countdown_continues_as_olympic_1.html
    http://www.silicon.com/management/cio-insights/2011/10/20/psst-want-to-know-the-top-10-technologies-you-cant-afford-to-miss-next-year-39748109/?s_cid=991
    http://www.am-online.com/news/2011/6/30/european-b2b-online-car-sales-set-for-rapid-growth/29230/
    http://blog.pwcom.co.uk/2011/04/15/for-online-only-b2b-media-twitter-matters/
    http://www.newsreach.co.uk/seo/b2b-search-success-requires-an-ongoing-commitment
    http://www.circle-research.com/2011/business-ideas/b2b-marketing-sector-bounces-back-57-report-rising-budgets/
    http://www.circle-research.com/b2b-barometer/

    Tuesday, July 19, 2011

    How can we make the PR industry more productive and profitable?

    Mac Funamizu

    Over the weekend I stuck my neck out and suggested that the PR industry needed to be more selective in its activities to release practitioners from the low paid, low productivity trap, short term future it faced by being so immersed in press relations.

    Yesterday, I suggested that the industry is a poor performer among a range of sectors with significantly better productivity.

    Peter Smith took me to task. He asked if I had any solutions!

    In this post I want to extend my brief reply to him in the CIPR group in Linkedin. Here I explore some of the ways I believe the PR industry can escape the low cost trap it has got itself into and evolve into a much more powerful profession.

    I did make the point that to see how we can enhance the profession, there is a case for looking at different sectors to see what they have done.

    At this time, as the Fourth Estate, Parliament and the Police squabble of the role of journalists and their place in PR, we too can have the same debate. There is a good case for PR to look much more closely at the value of the involvement of journalists in PR. Much of the argument I exercised in my post last Saturday. Today, I would extend those arguments a little. There is a place for a form of press officer to be employed in building and maintaining relationships between and organisation and its press (radio and TV) news journalist publics. They can be drawn from the media, re-trained and deployed. In the same way, there is a case for similar skills in online video media, text based social media, Website design and deployment, SEO, social and event organisation for face to face relationship management, Augmented Reality, widgetry and so forth.

    No doubt, as the profession evolves clients will expect PR agencies to have such skills available as a matter of course.

    However, having such skills available will not achieve the sea change needed by the PR industry.

    First the industry must be much more ambitious in what it wants to achieve. It might, for example set itself the target of being in the top quartile of economic sectors by way of productivity (using all three of the methodologies usually associated with economic productivity evaluation).

    Secondly, the industry might, just as other industries have done, go to the PR and management colleges to identify how the industry can seek more productive services, make existing products and services more effective (profitable), train for and deploy them.

    Thirdly, the PR sector needs take corporate management and practitioners along with it. No mean task and there will be exemplars and detractors and huge resistance.

    The Chartered Institute of Marketing now includes a good module on Reputation Management as part of its Diploma. There is a good case for the PR institutions such as the CIPR, PRCA, IABC and the PR universities to make sure that senior management (the people who employ marketing directors/mangers) understand that press relations and reputation management are only a small part of the PR whole.

    I do not want this post to be too overshadowed by the News of the World, hacking story but, it is by no means a co-incidence that a policeman thought that a News of the World journalist was his answer to solving his PR needs. Had the PR industry made its role clear, he would not today be appearing before a Parliamentary Committee.

    Of course, it is reasonable to ask what kind of changes would David Phillips envisage that could make so much difference? Is this just whistling in the dark as the PR industry looses face because a bunch of ill informed politicians and policemen joined some equally poorly informed industrialist hired inadequates to 'do their PR'?

    In all I would like to see a three fold increase in PR productivity over three years.

    The plan will have to consider where early improvements in current practice should be made; where change can be implemented with lowest disruption and optimum return and finally how the sector can move towards greater reliance on advanced productive diversity in practice as well as people.

    This means that:

    1. A large proportion of the improvement would have to come from PR as it is practised today. That is, largely predicated on press relations and events management.
    2. A range of enhanced value activities will need to be exploited which will inevitably mean a move up market into management consultancy and a move sideways to create greater breadth and depth in relationship management (and thereby reputation and brand enhancement).
    3. A very significant deployment of opinion to show the value of a holistic approach to management of relationships by the most senior management of, even the largest, institutions.

    There is a case of examining other industries which have been in a similar dilemma. Can the PR industry look at other sectors to get some idea of what is possible?

    I was working in Bradford in the 1960's when the textile industry was imploding and in manufacturing in the 1980's when we saw carnage in areas like machine tools, car manufacturing and many others.

    As I alluded to in my post in Linkedin, the companies and whole sectors that came through these times did a number of extra ordinary things.

    Today, the apparel industry in the UK is strong and the fashion industry is worth £21 billion.

    One only has to think of the high levels of productivity and quality achieved by the motor manufacturers by Nissan in Sunderland and Honda in Swindon or the Airbus aircraft manufacturing capability to see just how much can change when the effort is put in.

    The £100 billion internet industry and the highly productive music industries in the UK are examples of how success can come out of adversity once the people involved realise the opportunities available and the production and change that is required to become globally competitive.

    In examining what other sectors have achieved, can PR learn the lessons and move forward?

    I can imagine some of the first things that the PR industry can do.

    The first is to look at under performing activities and either ship them out to low cost suppliers or automated the process.

    In almost every PR office and agency in the land there are interns. Many of them do lowly jobs like filling envelopes, maintaining libraries of magazines and newspapers, prepare clip books and other tasks that consume time and are labour intensive.

    The task here is to look at the lowest paid people, examine the tasks they perform and the reasons for them and the enhance such activities to become less labour intensive, higher value and profitable.

    If, for example the library activities (press clips, evaluation reports and magazine libraries) of interns was transformed into corporate intelligence, and insights to allow deeper understanding and acquisition of knowledge for all the client board of directors, the mundane jobs would become interesting and very valuable. So much of these tasks can be transformed using modern technologies.

    At the same time some activities can be shipped out such that, for example, filling envelopes could be part of corporate social responsibility programmes giving work to the most disadvantaged in our society.

    Having turned the intern's most dreary work into a highly significant, intellectually challenging and adsorbing services and removed the lowest value add activities, an immediate advantage is available to every PR office in the country.

    What then of the next lowest paid member of staff. Here again, close examination of the activity, its transformation from low value to highest value can be achieved with imagination and application.

    A typical example is the (I really can't believe I am writing this) chore of researching and building media and other lists.

    Part of the role of the new intern activity will identify those clusters of interest (the nexus of values) and the people with particular interest in such values. Such activities are part of semantic search. If the Bank of England can use such capabilities (to identify economic trends) using Search and Twitter trends, so too can the PR industry. Its not just Twitter but many other forms of expression in media as diverse as computer games, motives for attending events, other social media, corporate transparency and other on and off-line activities that can transform the idea of finding opinion forming and behaviour enhancing activists.

    From such developments, the junior account executive's life is transformed from magazine list building into transformative PR campaign management. From just lists of magazines and journalists the activity engages real people and the their motivations. The work of 26% of practitioners paid less than £25,000 per years (according to the PRW/PRCA sector report) is transformed into activities worth as much as a £40,000 a year Media Manager/account Director. The productivity gain is considerable.

    This kind of activity is iterative. Take the lowest value activity and develop it into the highest value added activity until you reach the highest paid executive in the organisation/department and productivity enhancements will be extraordinary.

    High on the list of priorities in the 70's was quality. Total Quality Management which examined those areas which had lowest quality was worked on until it had the highest quality returns and iteratively, all activity was examined and improved. This was followed by Right First Time. This "do it one and do it right" principle would cut approval costs very quickly.

    In another time and in another industry, we went through such challenges and can now apply them to PR.

    The first problem we faced then and PR faces now is being able to measure quality.

    In almost every PR office you will hear the baleful cry of 'I am waiting for press release/tweet/blogpost approval'. Here is a measure of quality. Approvals, if they are needed should be a joy to give not a chore for the manager involved. Cutting number of people involved and approval times will cut costs significantly.

    Imagine, if you will, measuring the uptake of press releases without the awful and demeaning phone round. "did, you receive my press release?" THAT sort of phone call is a symptom of poor quality. Measuring it will immediately focus attention on a productivity leaching activity.

    Developing the 'Right First Time' capability is only one part of the process. The other is in motivating the approver such that approval is quick and a joy.

    Some of this activity will, no doubt, include that good old fashioned process of delegating up the management chain. Most people delegate down and that is a PR mindset. Try working the other way round.

    One of the other major developments we learned all those years ago was the need to be in the vanguard of innovative practice. In PR there are a lot of things we can do to innovate and at present, there are many ways we can enhance corporate relationship management with very exciting new approaches to PR.

    I hinted at some of the areas we can look into. At the tactical level there are exciting opportunities in areas such as online video media, text based social media, Website design and deployment, SEO, social and event organisation for face to face relationship management, Augmented Reality, smart phone games, widgetry and many more. They all interlock. Would you believe that journalists like widgets too?

    However, such activities are quite mundane when looking at what is available just over the current horizon.

    In the development of the high value added sectors in our economy, decisions are constantly being made as to whether it is more effective to make of buy. This means that the PR industry may well become a major economic driver in its own right. It will need a much bigger supply base and that is no bad thing and a big advantage for the sector. The upstream economic value of say the UK Space industry is such that it is needed by governments to enhance national GDP, employment and global influence.

    This is another advantage of making the PR industry more productive (as though growth, profitability and global leadership was not enough).

    But the industry does have to go much further.

    Being not the participant but the initiator of developing vision, mission, objectives and values at the most senior level is a start and when applied to organisational relationships is quite a challenge. It is a challenge that the PR industry is quite capable of meeting.

    As greater transparency becomes the norm (and here we get back to one of the outcomes to anticipate from the Hacking scandal) and transparency technologies gain in momentum (a consequence of the semantic web and the Internet of Things), the PR sector will become ever closer to being the expert in developing facilitators as well as drivers of corporate effectiveness.

    To be able to do these things, the overarching need is to re-look at the data from the PRW/PRCA research and take from it the urgent need to increase PR sector productivity by factors.

    Image by Mac Funamizu http://petitinvention.wordpress.com

    Saturday, July 16, 2011

    Press relations as a PR practice - a diversity trap for practitioners

    This week-end will be the first without the News of the World at our newsagents.

    It marks another occasion when the number of editorial pages that could be influenced by the media relations sector of PR shrinks.

    This post explores print media as an arena for future public relations practice.

    The prospects do not look good.

    The reality seems to be that there is a declining appetite for the kind of media to which we are accustomed.

    This has consequences for both existing practitioners and the likes of Amanda Andrews of the Telegraph Media Group (since 2008) who announced this week that she is about to jump ship to Freud Communications in the role of head of media, focusing on technology, media and telecoms clients.

    There already seems to be some reluctance to recruit from the media. A number of senior ex-News of the World journalists have enquired about PR jobs, reported PR Week. But recruitment consultants have warned that the paper's 'toxic' reputation could harm their chances of making the transition.

    In a word, will there be any media for these journalists to talk to?

    Yesterday (14 July 2011), Fraser Nelson the editor of The Spectator (and ex-political columnist for the News of the World) wrote about how British newspapers are haemorrhaging readers and influence. He said that on Sunday "we will see just how much this process has accelerated." Graphically, he showed that average circulation of daily newspapers is now lower than the worst days of the 1940's Blitz and for Sunday titles, we have to go back to the 1930's depression to find comparably low circulation.

    Notably, the trends show steady decline from the 1960's and very rapid decline over the last decade.

    In the same week Mark Sweney of the Guardian reported that "...the move to close the NoW was taken on political grounds in a bid to contain the phone-hacking scandal, it is nevertheless a hammer blow – potential relaunch notwithstanding – to a sector where publishers are trying to wrestle with high costs against a backdrop of declining revenues."

    He quotes Adam Smith, director at WPP's media buying network Group M: "It is like taking Channel 4 off-air on Sundays, you are suddenly taking out 20%-plus of the market, it is really substantial with no other home [for advertisers] to really go to."

    Smith makes the point that: "Taking the NoW's total 7 million readership out of the equation is massive, as there really is no substitute and the market is already not in great shape generally."

    Rob Lynam, head of press and media agency MEC, is reported saying: "The Sunday model is busted," adding: "The cost base on Sunday titles is significantly higher than running a daily and publishers are looking to reduce overheads. That is why News International is moving to a seven-day model, that is why Guardian Media Group made changes to the Observer and so on."

    In the same article we discover that in May 2007 the total circulation of Sunday newspapers was 12.5m; by May this year it had fallen 22% to 9.7m, according to the Audit Bureau of Circulations. Advertisers have also walked away, with display advertising revenue down by more than 25% over the same period, from £406m to £303m. By comparison the daily national newspaper market has seen a slight increase over the past four years – although it is a very mixed picture with the only major winners the Sun, Metro and Daily Star.

    If the model for newspapers is bad, spare a thought for the celebrity titles.

    The Mail Online reports that circulation figures for Hello! and OK! make sorry reading.

    During the second half of last year the average net circulation for Hello! was 527,000 per issue and that for OK! 487,000 from previous levels as high as 800,000 and 600,000 respectively.

    Dominic Ponsford reporting in Press Gazette earlier this year showed that second half of 2010 UK market for print consumer magazines was still in decline overall. Overall, the UK's top 100 purchased magazine titles had an average per-issue total circulation of 28,844,482 - which was a 4.1 per cent decline year on year. A continuing trend.

    Is this just an issue for consumer magazines? It seems not.

    A Mashable report seems to show that the magazine format has its own problems among consumers. While digital downloads may be down, compared to the print equivalent they “roughly correlate their performance on the newsstand.” Based on the numbers, the decline may not be a lack of interest in the iPad as a digital print platform but rather a general disinterest in magazines.

    In the B2B sector life is not very different.

    Recently, business publisher Centaur Media announced it was merging its business publishing group – which includes The Lawyer and Money Marketing and it confirmed disposal of titles like The Recruiter, The Logistics Manager and Process Engineering. In November 2009 Haymarket announced the closure of the print edition of Media Week with the axing of 18 out of 58 editorial jobs across the media group as monthly title Revolution went quarterly and the websites Marketing Direct and Promotions and Incentives were merged into Brand Republic. It is putting its network of media titles behind online paywalls from July including Brand Republic, PR Week, Marketing, Campaign and Media Week. We also heard that United Business Media has sold its licensed trade titles to rival William Reed. In addition, Accountancy Age and Computer Weekly both abandoning the weekly news magazine format after more than 40 years and going online only.

    Ben Dowell at the Guardian reports that there were 4,733 UK B2B titles being published in October 2010, compared to 5,108 five years earlier.

    This decline in support of the media from marketing budgets is part of a significant trend according to PR Week. It reported the the second quarter IPA/BDO Bellwether Report showing marketing budgets were to reduce spend by 4.2% and a decline in PR budgets as well.

    This is reflected in a number of other reports. Wark reports on a study suggesting: "The year has proved harder going, particularly in print, and there is a similar narrative coming out of the other big European economies."

    So we see the long term decline in print and this must have an effect at some time on the media relations sector of the PR industry.

    Meantime, television is doing very well and radio listeners, who were found to be (PDF)  happier than TV watchers and Internet users, reached its highest audience level ever in Q1, 2011 and the internet goes from strength to strength.

    There are, no doubt, a lot of people who would argue that print media is only going through a trough and it will bounce back. However, this has the smack of whistling in the dark. The trends are long term and few in publishing seem to have any mould breaking ideas.

    Of course, no one should make assumptions about the UK media without reference to Michael Bromley, Visiting Professor in Journalism at City University London, UK Media Landscape study. An enthusiast for the press he may be, but has made the point about the future of newspapers and magazines very well.

    Against this backdrop one might expect the PR industry to be on its knees.

    But we hear from PR Week that PR is doing well. The International Communications Consultancy Organisation (ICCO) reported that the UK PR industry sector witnessed a 13% increase in overall fee revenue, a figure similarly reflected by PR Week's Top 150 PR Consultancies 2011 report, which showed the average growth for a PR agency in 2010 was 9.24 per cent.

    Perhaps we find some of the answers in the 2011 PR Census, a joint PR Week and PRCA research project, published this week.

    It is a thorough study of the British PR industry and shows UK PR industry contributes £7.5bn to the economy and employs some 61,600 people.

    PR could be compared to the UK space sector which is also worth around £7.5 billion to the economy. Space directly employs almost 25,000 people - so there is a considerable - a factor of 2.5 - productivity gap.

    At last we begin to see what is happening to the PR industry. It is really dying.

    What I read in the statistics is that there are far too many people doing media relations in the shrinking press relations sector which is depressing incomes and opportunities.

    85% of practitioners include 'General Media Relations' as part or all of their work (84% are also involved in Media relations strategy planning).

    Perhaps it is not surprising that with the media in such dire straights that the part of the PR sector involved in media relations (at least 77% have a direct role) has such a poor productivity performance compared to more advanced industries. Working on average 46.5 hours per week, PR people are doing everything they can to sustain a form of practice that is on the way out.

    The numbers offer us an even worse view. 70% of people employed in the PR sector are aged between 25 and 44. This is in the prime of their career, the springboard for their future and it looks bleak.

    Indeed the profile looks like white, middle class, middle aged women fighting for a falling slice of shrinking media pages available for editorial content and paid very little for long hours in a dying sector.

    We are fooled by the growth in the industry as it bounces back from the recession in 2008 and we see higher turnover based on sweated labour offering misleading and what can only be temporary margins.

    In an industry that prides itself on significance to corporate governance, it is evident that this is not a very profitable career choice. Only 30% of the people employed in PR earn £50,000 or more or the going rate for the mass of qualified Financial Accountants. For the average PR CEO/director in a salary of £83,000 is good which compares to the 40%of financial directors in the FT 250 who earn between £300,000 and £499,000 per year.

    Media relations would seem to be holding the PR industry back, depressing salaries and creating a diversity trap for practitioners.


    Image: DEATH A GROWTH INDUSTRY from Scrape TV

    Monday, July 11, 2011

    iPad activism and the investing institutions


    So much of the chatter about the end of The News of the World has been about reputation.

    A lot of it centres on reputation as a commodity. Building reputation is, apparently, about advertising or PR'ing or connections.

    Well, in the digital age such nonsense is patently, visibly and completely exposed.

    Reputation is not owned by organisations it is proffered by constituents. That complex societal group that is bounded only by its interests in the values surrounding the organisation (as distinct from Publics, Stakeholders, Market segments and followers). This is not about the values of the organisation but its interaction with values held by the constituency.

    Reputation management gets on well with marketing because so many people believe reputation, trust and regard are bought with pieces of silver.

    Relationship management, which is a two way street, is much harder. In this street, values have teeth and bite.

    Relationships and values management are the critical elements that distinguish PR from other disciplines. It is what makes PR different from marketing, advertising, propaganda, spin and publicity.

    Without PR, corporate managers like Rupert Murdoch (Newscorp), Tony Hayward (BP), Pierre Beaudoin (Bombardier), Jamie Buchan (Southern Cross) have failed. They believed that PR was about spin and press releases and more fool them and more fool their shareholders for employing such people.

    Mr Murdoch needs a PR manager and not a 'reputation' manger and that will allow him to begin to build trust, reputation and regards for his empire.

    To do that, he needs savvy shareholders.

    Sensible shareholders are now in short supply. Sensible shareholders will by now have worked out that lack of sincerity and ethics as part of the DNA of corporate culture will mean that they will take a haircut sooner or later on the bourses of the world.

    Explaining this to shareholders is the job of the institutions like CIPR, PRCA, IAB etc.

    It has to be explained among the investing institutions (remembering that institutional investors are in the same mould as the failed banking sector) in simple outcomes terms.

    The argument is relatively simple. If the bloggers says the directors suck, fire the chairman at the AGM. If Facebook says service sucks, fire the executive board during interims and if Twitter says it is uncomfortable dump the stock fast.

    This is not an ethical brief we have to give to the financial institutions. This is war. The normal citizen can and does become an iPad activist at the drop of a hat. In the case of NotW, as Robin Grant put it "brands were being bombarded in protest – most of whom will have been unused to such a spike in negative attention. This was not just happening on Twitter, with targeted brands’ Facebook pages becoming venues for significant protest too." Unless and until the financial sector gets its act together the pension funds will suffer at the hands of social media time after time. This is why it is in the interest of the financial institutions to be assured that they have proper Public Relations managers advising the Boards they invest in. Andy Coulson, is not and never can be a public relations practitioner. He is a journalist. He does not have what it takes to be effective in modern PR. Gaming the system was fine when Coulson was the editor of the biggest circulating newspaper in the UK. Try Gaming Google+ and the online world will crush the company and shareholders with it.

    Why pick on G+? Because it is of a new breed of services with in built web 3.0. The semantic web. Semantic as in searching for and exposing secrets (automatically soon enough too).

    A number of authors have been making this point for years (first time I published a book about it was in 2008). There is nothing new here.

    What we now need are some PR institutions that are aware of what is happening in the fields of communication and who are prepared to make the point to corporate managers and investors and in public if need be.


    Cartoon by the clever Vicky Woodward

    Wednesday, June 15, 2011

    Return on Values

    Yesterday, I began to  look at ROI in a slightly different way and Philip Sheldrake and Tim Marklein maintained the argument for staying with a financial measure of public relations based on cash investment providing an incremental cash return.

    For some PR trades, this is a perfectly adequate. One press release reaches a readership of a million people who in turn repay the client the cost of the press release and then some. The effect on the relationship between the organisation and the readers as well as tertiary publics such as journalists, editors and the process of WOM is ignored. Crude, better than nothing and informing management very little about effect.

    Lets see if we can improve on that.

    Suppose the PR practitioner was to ask the client:

    • "Do you have values?"
    • "Does your organisation have values?"
    • "Do you invest time explaining, even re-enforcing, your values and the organisation's values to the Board?"
    • "Do you and the Board invest time explaining your values and the organisation's values to your shareholders, employees, customers, vendors and other stakeholders?"
    • "Do you use your values and the organisation's values to single out your brands among consumers/customers?"

    I think that most managers would agree that their values and the values of the organisation are very significant competitive differentiators and that valued have value.

    Now, lets make this harder. What if you ask the CEO:


    • "What is the Return on Investment from your values and the values of the organisation?"


    Ummm......

    Now, in PR, we do have the answer.

    Not marketers, not accountants, not business gurus.

    Although many do recognise values as important even if they are not really sure how to identify values I cite: Charles Handy, Peter Drucker and Henry Mintzberg plus L Chen - 2009; H Donker 2008; M Chong 2010; J Cambra-Fierro & Y Polo-Redondo 2008; NL Trapp 2010 etc. etc).

    In PR, grounded research (much better research than brand mangers have - and explained in this post), show that, among different segments of the public, there are drivers that build relationships between them and the organisation. They take the values of the organisation and where those values coincide with personal or group values, they find an affinity with the organisation.

    An organisation can be described as a nexus of values and, to extent that they chime with the values of people or groups, there is a coincidence of interest.

    We also know from a range of research and academic writing that organisations need to be able to understand the affinity between consumers and brand values to be effective and successful.

    I cite, for example: JN Kapferer 2008; S Boo, J Busser, 2009; KL Keller & T Apéria 2008; S Srinivasan 2009; N Mizik & R Jacobson 2008; AE Cretu 2007; J Kim & JD Morris 2008 ....

    For PR, deeper and more relevant measurement is to be able to identify the Return on organisational Values.

    Does the organisation understand the values of its constituents? Does the organisation have values that chime with its constituency and in explications of its values, is it creating, sustaining and enriching positive relationships.

    There is significant literature which explores the concept of Return on Values and much of the literature touches on matters like ethics, trust and reputation.

    I cite for example: P van Beurden 2011; KS Cameron 2006; DA Waldman & MS de Luque 2006 LL Nash 2010 etc.

    With rich, sustainable and supportive relationships, organisations will prosper both in the short and long term.

    The return on investment in having clear, relevant, supportive and mutually acceptable values with the organisational constituency is a great deal more than cash out and cash-plus back. Yes, there is cash-plus back today but also cash-plus back tomorrow and with wider audiences. The real ROI will be seen to deliver real shareholder value, lower cost of doing business, a stable workforce with lower recruitment cost, enhanced vendor relationships and a more supportive licence to operate (Keller, Handy, etc etc).


    Return on Values seems to be a much more sensible way of measuring PR.


    Image from http://thefinancialbrand.com.

    Tuesday, June 14, 2011

    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