The Business of Public Relations
In Chapters 1 and 2 we introduced the concept of best practices and standardization through the history of public relations research. In this chapter we introduce and discuss the role of public relations as it relates to the larger goals and objectives of the organization. Public relations’ impact on an organization’s return on investment (ROI) is a fairly new concept. As the profession has turned from a tactical role to the strategic management of communication, the profession has had to continually wrestle with having to prove its worth. As part of the promotional mix of communication, public relations works in conjunction with advertising and marketing as an integral tool. Typically, the promotional component (advertising, marketing, or public relations) most likely to meet an organization’s communications needs and objectives takes the lead in creating programs and setting the communication agenda (Caywood 1997; Harris 1993, 1998; Schutz, Tannenbaum, and Lauterborn 1998). Up to the last decade that lead almost always has fallen to marketing. Consequently, between the last decade of the 20th and first decade of the 21st centuries, significant proportions of public relations activities, other than media relations, were expected to help support product marketing. Today, however, that role and the move toward truly integrated communications have put public relations—and corporate communication more specifically—at a different and more substantive level in organizations, as noted in the Arthur W. Page Society’s seminal monograph, The Authentic Enterprise (Arthur W. Page Society 2009). That role is to support the overall business objectives of the organization.
Establishing the Public Relations Campaign
On the basis of this discussion it should be clear that a public relations approach to any business goal or objective necessarily incorporates research as a cornerstone in the development, refinement, and evaluation of any campaign that supports organizational objectives. Boston University Professor Donald K. Wright has gone so far as to state that “if you don’t have research on the front end and evaluation on the back end, it isn’t PR” (Wright 1990). Wright stresses the role of research and theory in public relations. Wright (1990) states that there are four basic assumptions to public relations research in daily practice, assumptions that reflect a best practices approach to public relations research:
The decision-making process is basically the same in all organizations [businesses].
All communication [programming and] research should
Set objectives;
Determine a strategy that establishes those objectives; and
Implement tactics that bring those strategies to life.
All campaign research can be divided into three general phases:
Development (initial research helping to establish goals and objectives);
Refinement (continuous evaluation on expected benchmarks once the campaign is initiated and changed as deemed necessary to meet campaign goals and objectives); and
Evaluation (a final review of the campaign aimed at establishing success or failure for not only business but also public relations goals and objectives).
Communication research is behavior-driven and knowledge (theory)-based.
The final assumption drives home the challenge of public relations research as a mediating factor—that public relations programming and its measurement and evaluation strive to impact on stake and stockholder behavior through the management of message-based programming that impacts on awareness, interest, attitudes, and then intended behavior that supports organizational objectives. On the basis of these assumptions, it should be clear that public relations that follows best practices and standards as introduced earlier in this book does the necessary background or competitive analyses that will help drive the public relations effort. It is during the developmental phase or stage that goals and objectives are created that support the business’s goals and objectives.
It is important to understand that public relations efforts—sometimes referred to as actions, programs, or campaigns—can and should be evaluated against this standard. This was introduced in Chapter 2 as looking at effectiveness as excellence. Briefly, the basic or proponent needs of the Excellence Pyramid (see pages 29–32) are focused on goals and objectives, research, and tactics, persuasion, and outcome. Without stated measureable goals and objectives, there is no way to evaluate the data gathered during a campaign to make claims of success. This, together, with the appropriate research methods employed during the campaign, the employment of standardized measures of effectiveness data, and the statistical assessment of those data, we cannot evaluate during and after the effort. We turn now to public relations goals and objectives.
Understanding Goals and Objectives
It is important to understand that goals and objectives are different in several important ways. A goal is a projected outcome that is desired (Stacks and Bowen 2013). Hence, a goal might be to sell or lease X number of automobiles resulting in company profit or to reduce absenteeism to increase profits or to get more positive media attention to a product.
Goals are expectations and fairly open as to results. An objective, on the other hand, is “an explicit statement [or statements] that support[s] a communication strategy” (Stacks and Bowen 2013, 20). In all too many cases, public relations campaigns suffer because they confuse goals with objectives, leading to inabilities to demonstrate impact or influence on business goals and objectives.
Public relations objectives are no different from marketing and advertising objectives in one critical sense—the need for establishing a campaign baseline for the necessary conditions needed to achieve business goals with benchmarks that need to be stressed in every instance. Quite simply, without a starting point or baseline research results, public relations cannot demonstrate campaign success or failure and in turn business success or failure. Furthermore, without projected benchmarks it is difficult to demonstrate how strategy and tactics impact on campaign goals. Unfortunately, most public relations campaigns today fail to establish the beginning baseline and set expected benchmarks throughout the campaign. As related to Wright’s assumptions first introduced in Chapter 2, Figure 3.1 demonstrates the relationship between the baseline benchmark, planned benchmarks, and continuous testing of the campaign (Wright 1990). Best practice campaign management would set multiple planned benchmarks to establish campaign effectiveness and allow for revision of objectives, if necessary in order to assure success.
Figure 3.1 Planned benchmarking
Source: Used with permission of Don W. Stacks and Guilford Press.
Stating the Objectives
All research and evaluation planning should end with formal statements of the campaign’s objectives. This is a standard that not all campaigns rise to. These objectives need to be related to the overall business goals and objectives and can be more specific, relating to specific outcomes during the campaign for which the public relations portion is being conducted. In general, the objective takes the form of a “to” statement: To do something that by such a date is expected to result in an outcome. Hence, a business objective might be, “To gain a percent market share by the end of third quarter sales through enhanced communication programs.” The business goal would be to increase market share.
From a best practices approach, the objective should have been written with a benchmark for comparison or against the initial campaign baseline. Hence, a better objective would have been:
To increase market share from 7 percent [baseline] to 10 percent by the end of third quarter sales through enhanced communication programs.
The enhanced communication programs could then be further defined in terms of public relations, advertising, and marketing goals and objectives.
Public Relations Objectives
To better comprehend what public relations objectives are, it is important to understand the three basic functions that public relations does in any business campaign. According to Stacks (2011), all public relations activities fulfill three basic functions:
First, the public relations function is to get necessary information out to the appropriate audience. An audience that behaves without understanding why it did so cannot be expected to do so again; hence, an important function is to ensure that the information necessary for any intended action is out and has been understood, this is stated as an informational objective. This information can include general awareness of a product service or issue as well as detailed knowledge.
Second, once it has been established that the information has been (a) received and (b) understood, then the information’s effect must be measured and evaluated—whether attitudes, beliefs, values, or both have been shaped, changed, or reinforced. This is stated as a motivational objective.
And, third, once it has been verified that the information has been received, understood, and has had an impact on the audience, the campaign has influenced the audience to intended action such as a stated intent to purchase. This is stated as a behavioral objective.
The relationship between the three objective types should be clear. If the information is not reaching the target audiences, then the campaign’s media relations strategy has not done what it was expected to do and research into the media channels employed reexamined. If that information has been received but not understood, then research must establish why—as Michaelson and Griffin (2009) did when they examined MetLife news stories and found systematic reporting problems confusing the target audience—and corrective action taken to put the campaign back on track. (This study is examined in more detail in the Chapter 7 on content analysis; it is the first study to measure reporting errors by the media and suggest remedial action to reduce them.) Once the information has been received and understood, then the audience must be evaluated to establish effect or impact. If the campaign is to change attitudes toward a product, is it actually doing so? If so, has that change been what was planned? If not, the message strategy must be reexamined. The informational and motivational objectives lead to the final public relations objective—the campaign outcome is such that audience intends to behave as expected—and the public relations campaign has contributed to business objectives and goals.
Stating Public Relations Research Objectives
From a measurement and evaluation point of view, most public relations objectives fall woefully short of being precise enough to establish what kinds of research methods are required. Obviously, the type of research being conducted will differ in terms of cost. In-depth interviews are more expensive than surveys, for instance, in terms of understanding how audiences will or have responded to a campaign. Also, the measurement and evaluation of the campaign is influenced by the public relations tactics being employed. Future chapters explore the various methods public relations researchers employ to measure outcomes. In this section, we examine the research secondary objectives associated with public relations objectives. For each public relations objective there should be at least one research objective. These research objectives determine which research methods are to be employed, when they are to be employed, and the expected outcome (Stacks 2017). If the informational objective is “to increase auto purchasers knowledge of the 2015 models from 2014 [baseline] through increased use of employee blogging [tactic] by nine percent [informational outcome],” the research objective should state how and when measurement and evaluation is to take place. Thus, a public relations research objective might be:
To gather data from social media users [audience] who intend to purchase a new auto on their understanding of new models [continuing informational outcome] to ascertain if intended purchasing has increased from benchmark [behavioral outcome]. The most appropriate way to collect this data is through an Internet-based web survey [method] three times during the first and second quarters of 2017 [time frame].
Other methods employed might include conducting focus groups of audience members, content analyses of reactions to employee blogs, tracking website requests for more information, and so forth. What the research objective does is to specify methods.
Public Relations Role as Defined at the Managerial Level
Public relations historically has focused primarily on media relations—getting the message out. It was not until the last quarter of a century that the focus of public relations has shifted to the strategic value it provides on the organization’s ROI. This change, from a strictly media-relations perspective to one that includes a broader strategic management perspective, can be seen in how public relations’ outputs—communication materials that are produced to support the corporation—have changed over the years (Stacks 2017). Figure 3.2 shows the early relationships between marketing, advertising, and public relations. Here we can see that in traditional practice, marketing drives advertising, which in turn drives public relations.
Figure 3.2 Traditional perspectives on the relationships between marketing, advertising, and public relations
Source: Used with permission of Don W. Stacks and Guilford Press.
Figure 3.3 Contemporary thought on the relationships between marketing, advertising, and public relations
Source: Used with permission of Don W. Stacks and Guilford Press.
Influence, starting with marketing, originates at the far left. Why? Because marketing provides hard data on what it drives toward the investment put into it; advertising provides numeric data based on circulation figures that reflect awareness, interest, and intent to purchase—data that may be of questionable use, but backed by considerable secondary data on potential purchasers of a product or service (Stacks 2017). On the other hand, public relations provided little numeric data beyond the number of press materials sent out and the number of articles that contain information from those press materials.
When using a strategic management approach, however, contemporary public relations assumes a different role, one that divides promotional communication (e.g., marketing, advertising, and public relations) outcomes into two classes of indicators, financial and nonfinancial (see Figure 3.3).
Understanding Nonfinancial Indicators
Since nonfinancial indicators are not “hard,” how are they measured? Basically all nonfinancial indicators are subjective and exist in the minds of the public or target audience a client seeks to influence. To demonstrate impact, a nonfinancial indicator—often referred to as key performance indicator (KPI)—must show how it relates to a business goal or objective. That is, in the mixed-marketing model, for example, how does the public relations effort impact on awareness, knowledge, interest, and intent to purchase? In an employee relations effort, how does managerial relationship affect employee morale or absenteeism?
The nonfinancial indicators that have demonstrated public relations value and impact are perceptual. They are social and psychological in nature and, as such, must be approached using subjective, yet reliable and valid measurement. Yet even though they are perceptual, they clearly indicate an impact on the financial indicators and need to be treated in much the same way. Thus, a public relations objective should find a way to demonstrate how the output is communicated to those who may influence the intended public or target audience to do something. This is done through specification of an outtake, a specified evaluation of a product or company or idea by an opinion leader (Stacks and Bowen 2013, 21). As noted earlier, an opinion leader—a stock analyst, political analyst, politician, or editorial endorsement—can change a target audience’s perceptions of whatever it is that the opinion leader opines on. As noted in Figure 3.4, the variables the public relations professional can use via some messaging strategy have demonstrated influence on opinion leaders. Indeed, the public relations goal may be to improve client reputation through influencing—persuading—opinion leader reporting on that client.
Financial indicators traditionally include marketing and advertising outcomes, while public relations nonfinancial indicators deal with outcomes—defined as the “data gathered that do not include ‘hard’ data such as sales, profits, attendance; data that are social in nature and reflect attitudinal variables such as credibility, relationships, reputation, trust, and confidence”—that can be demonstrated to impact an organization’s social and financial goals and objectives (Stacks and Bowen 2013, 19). While financial indicators deal with hard-core data, nonfinancial indicators deal with social data—perceptions, attitudes, and beliefs that have demonstrated impact on what public relations refers to as “third-party endorsers” (Michaelson and Stacks 2007). Figure 3.2 also noted that the outcomes of interest from a promotional approach are mediated by the expectations of stake or stockholders, but from the public relations perspective those expectations can be manipulated via carefully selected messages aimed at influential audience members (e.g., editors, analysts, or any opinion leaders).
Figure 3.4 A strategic communication management model of public relations’ influence on ROI
Source: Used with permission of Don W. Stacks and Guilford Press.
These relationships for the nonfinancial indicators have been further conceptualized by Stacks (2011) as a working model of the relationships between and within the nonfinancial variables as demonstrated in Figure 2.4. This represents a strategic model of communication management that can be parsed out to establish how much each variable contributes to the final ROI. As Stacks notes, these indicators can be written as a mathematical formula:
In this formula, β is the starting point [in a promotional campaign] that is in turn influenced by credibility, relationship, reputation, and trust and then further modified by audience confidence. That confidence can be in the product, service, or even the overall organization and has an overall tolerance that can be described as error. This model allows the professional to classify specific outcomes as functions of the nonfinancial indicators that can be used to predict outcomes and provide guidance in communication decisions (see Chapter 9, Statistical Analysis).
Understand the Relationship to Financial Indicators
This model is not independent of the financial indicators, but works in conjunction with them, especially when public relations is approached from a mixed-marketing model (Weiner 2007). In the mixed-marketing model, public relations efforts are focused on providing data that correlate directly to sales and have taken the form of approximated advertising indicators. These indicators—reach and circulation, for instance—try to establish the value of placed public relations activities when compared to the actual paid value of an advertisement. The problem with such indicators is that they do not reflect value but reflect costs associated with placement. While advertisers can specify where their material is placed in the various media (the more prominent the greater the cost), public relations placements cannot be guaranteed. In fact, the Commissions on Public Relations Measurement and Evaluation no longer accepts pseudo advertising as representing true public relations value, while attempting to identify better measures of impact on ROI.
The Challenge of Establishing Public Relations Effect on ROI
The challenge for public relations is to establish a relationship between financial indicators and the nonfinancial indicators that also influence a business’s bottom line that is now more than simply financial and has added social responsibility and ecology (e.g., the “triple bottom line”). For instance, how does a company’s relationship with its customer’s impact on sales performance? How does reputation impact on stock prices? What happens when a trusted company does something bad? Are green companies more socially responsible and profitable? A recent Edelman “Goodpurpose” study reported by PR Week “found that found 61 percent of consumers worldwide have purchased a brand that supports a good cause even if it wasn’t the cheapest brand,” which demonstrates the impact of social responsibility as a public relations outcome (PR Week 2009).
The correlation between a financial indicator and a nonfinancial indicator is the first step. A second step is to show over time how the non-financial indicators influence company outcome. We know, for instance, that it only takes one bad analyst report on a publicly-traded company to drop stock prices. Furthermore, we know that consumer confidence in a company can drive sales, stock prices, and other business outcomes. And, third, we need to look at these relationships based on how they have influenced business goals and objectives from a set point in time—a benchmark against which comparisons can be made and strategic decisions made.
Finally, the public relations effort should be viewed in terms of the traditional outcome model associated with promotional communication and, in particular, where it currently is in the communication life cycle as discussed with B.A.S.I.C. in Chapter 2. That is, each phase of the public relations campaign must clearly understand what part of the campaign it is being employed in and the campaign’s strategy associated with it. For instance, is the campaign to introduce a new brand, in which case its goal is most likely to establish brand awareness? If awareness is not a goal, then perhaps it is increasing interest and understanding of the brand. If awareness and interest and understanding are present, then perhaps the campaign is to create desire for the brand. If awareness, interest, understanding, and desire are present then perhaps the campaign’s goal is to influence adoption of the brand.
These goals can then be stated more precisely by looking at what nonfinancial variables are most relevant for the brand over a campaign. Attitudinal outcomes such as increased homophily or authority might be part of the campaign’s strategy in a new brand introduction (Stacks and Michaelson 2009) or reputation variables such as social responsibility and company familiarity (Carroll 2006) might be used to influence intentions to purchase. In the end, however, the public relations outcomes must have a demonstrated correlation to business outcome; that is, ROE must demonstrate impact on ROI.
Summary
This chapter introduced the reader to the relationships public relations has to business goals and objectives. It has established that the public relations effort does not exist in a vacuum but works closely with business goals and objectives, whether they be financial or nonfinancial. By now readers should have a basic understanding of outputs, outtakes, and outcomes and how they relate to the public relations effort. Furthermore, they should understand the importance of setting realistic and measurable objectives.
The next chapter examines the major research methods employed by public relations to gather the information (data) necessary to evaluate the public relations effort. The section begins with the gathering of existing information through historical and secondary data. It then examines the use of content analysis—perhaps the most common of the methods used by public relations researchers. Following content analysis, qualitative methods are explored—in-depth interviews, focus groups, and participant observation. The last two chapters focus on the quantitative gathering of data through an understanding of sampling and then survey and poll methodology.