Marketing Communications

334 CHAPTER 10 PUBLIC RELATIONS

Table 10.6 PR budgeting techniques

z Historical comparison

z Resources costing

z Action costing

z Competitive tendering

z Income proportion

z Industry comparison

z Capitation rating

A PR programme is decided on and diff erent PR agencies are requested to fi le a proposal and

a budget. In the income proportion method a pre-specifi ed proportion of margin or sales is

devoted to PR. Th is method suff ers from the same weakness as the historical comparison

method. Th ere is a lack of strategic focus, and the PR budget grows with sales – generally a

situation in which less PR activity is needed. In contrast, if there is a decline in sales, PR

budgets decrease at a time during which they may be needed most. In industry comparison ,

the industry average is used as a benchmark to decide the PR budget. Again, there is a lack

of strategic focus, and no link with a pre-specifi ed task.

In the capitation rating or achievement targeting method, audiences to be reached and

objectives to be achieved are defi ned. For instance, a 30% awareness and a 70% favourable

attitude with the general public and fi nancial stakeholders by the end of the year may be the

goals. Experience with other communications tools, such as advertising and direct mailing,

may be used to calculate the budget required to achieve these objectives. Th is method

is probably one of the most useful. However, as for all marketing communications activities,

PR is not an exact science, and the objectives to be achieved are oft en long-term oriented.

Th erefore it is diffi cult to set a PR budget. However, PR agencies increasingly face situations

in which they are paid by results rather than on a mark-up basis.^26

Measuring public relations results

Similar to most other communications instruments, the eff ectiveness of a PR campaign can only

be measured if clear objectives have been defi ned. Th ese objectives have to be measurable and

related to the PR activity. Th is implies that short-term or long-term awareness, opinion and/

or attitude or goodwill changes will have to be measured with the targeted publics. Evolution of

sales or market share is seldom a good indicator, since they are not the main target objectives

of PR activity. Furthermore, they are to a large extent infl uenced by other instruments of the

marketing and communications mix. Th e result of PR activity can be assessed by means of

three categories of performance measures: input, output and achievement indicators:^27

z Input indicators measure PR eff orts, such as the number of news stories disseminated, the

number of interviews given, trade meetings organised, supermarkets visited or brochures

sent. Input indicators measure eff orts and not results. Th erefore they are largely insuffi cient

as measures of PR eff ectiveness. Nevertheless, they can be useful, since they can give a fi rst

indication of the activity undertaken.

z Output indicators measure the result of the PR activity in terms of media coverage or publicity.

Examples of such measures are the press space or TV time devoted to the company, its events

or brands, the length of the stories, the tone and news value of the headlines, readership/

viewership levels, opportunity to see, tone of coverage, etc. Again, although output measures

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