New Study Shows Public Relations is More Powerful than Advertising in Building Brand Value.New York, NY, 03/09/2009 — Text 100 Global Public Relations and its research arm Context Analytics today announced the results of their Media Prominence Study*, shedding new light on the debate between public relations and advertising. The Media Prominence Study gives evidence that public relations may be more important than advertising to brand value, especially for companies that sell feature-rich or complicated products such as consumer electronics, financial services and automobiles.
“Companies must closely manage what is perhaps their most valuable asset – their brand – and this study helps executives quantify the impact public relations has on their brand value,” said Aedhmar Hynes, CEO of Text 100. “Given the recessionary times and our clients’ needs to justify their PR spend, we were looking to put real numbers on the impact PR has on brand value. Our findings reinforce that PR and communications are important and cost-effective tools that deliver real business value – often at fractions of the cost of advertising.”
The findings of the Media Prominence Study, which calculates brand value based on Interbrand’s 2008 Best Global Brands report, show that on average 27 percent of brand value is tied to how often the brand name appears in the press. In industries that involve more research before purchases are made, public relations can account for nearly half of brand value. For example, in the computing industry, media prominence accounted for 47 percent of brand value, or 16 times that of the personal care industry.
This study underscores the importance of managing and growing brand value through public relations efforts during a recession. The more complex a product is to a buyer, the more likely they are to research the product category and to look for information they can trust – from editorial content rather than advertisements.
Some industries exhibit a stronger link between media coverage and brand value, indicating that managers in these product categories need to pay special attention to the way the brand’s value is impacted by its communications activities. In the computing industry 48% of brand value is explained by media prominence, while in the Automotive, Consumer Electronics and Financial Services industries it is 23%, 20% and 19% respectively. Click here for a complete table of industries and sample companies.
Calculating Public Relations Return on Investment
This research has led Text 100 and Context Analytics to create a model that calculates the return on investment companies receive from public relations. Through the offering, companies can quantify the impact of public relations activities on business outcomes such as sales and stock value, something that has been elusive in the PR industry for years. The methodology measures cause-and-effect relationships among media metrics, consumer perceptions, consumer behavior and sales. With this information, companies can determine which aspects of their media coverage have the greatest impact on their business and use every dollar wisely.
“One of the goals in undertaking this study was to demonstrate that the value of PR becomes much clearer when media metrics are tied to business value rather than soft metrics that are only understood by PR professionals,” according to Nils Mork-Ulnes, vice president, Context Analytics.
While this study focused on how the volume of media coverage relates to brand value, reputation in the media is often a greater predictor of brand value and business outcomes such as sales than volume alone. “Our own clients often find that the tonality of a company’s coverage is closely connected to future sales and revenue,” continued Mork-Ulnes. “We expect that we would see a similar trend if we were to look at all the companies in the Interbrand report.”
Context Analytics and Text 100 are currently working on a second report that will assess exactly how the tone of media coverage relates to brand value. This next report will also evaluate how newer forms of media, such as consumer-generated media, relate to brand value as well.
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