Archive | December, 2007

AVEs (Advertising Value Equivalents) Revisited

24 Dec

Generally speaking, advertising delivers a lower ROI than public relations.  So why do we want to compare our results to those of an ad?  Because it is a path of least resistance to calculating ROI, flawed as it is.  Many people obviously believe a poor metric for ROI is better than none at all.

So, in the spirit of the 12 Days of Christmas, here are the 12 reasons why AVEs are a poor metric for public relations.  And one rationale for using them that makes at least a little sense.      

1. Advertisements and editorial articles are perceived differently by receivers/readers.  Editorial material benefits from the credibility of a third-party (the publication) by earning, not paying, its way into the magazine, newspaper or broadcast

2. AVEs equate an article with the appearance cost of an advertisement.  It does not speak at all to the results or impact that the article may have on a reader.  Advertisers do not judge the success of advertising on how much the insertions cost.  The true value of an ad or article is in what it does – the outcome or impact, not the cost of appearance.

3. AVEs do not address the value of several important aspects of public relations including strategic counsel, crisis communications, grassroots, viral campaigns or public affairs.  In other words, AVEs reduce PR to just the media dimension by only assigning a value in this area.  If only AVEs are used to assess PR value, the results will be much understated when considering the totality of value delivered by PR.

4. AVEs cannot measure the value of keeping a client with potentially negative news (e.g. layoff, scandal) out of the media, yet that may be the primary objective of the PR practitioner.  How much is it worth for a troubled company to notappear in the Wall Street Journal?  AVEs cannot address this.

5. Impression information for public relations is somewhat inconsistent.  Online impressions figures are not as reliable as print or broadcast, and are generally believed to be overstated  The fact that they are inflated skews AVE calculations to (pick one: somewhat, very, grossly) overstate the value of online media, often assigning unbelievable values to online articles compared to their print counterparts.  This hurts credibility and believability.

6. AVEs do not properly distinguish between hits/articles that appear in ‘high value’ columns or publications and articles in more general or generic publications.  The calculation is based on ad cost only.  The value of appearing in a Walt Mossberg column in the WSJ or on Oprah with your new book far exceeds the cost of an advertisement in the WSJ or on Oprah due to the implied or explicit endorsement with earned media.  Just look at what Oprah’s endorsement has done for Obama recently.

7. Advertising and PR actually work together synergistically, yet AVEs treat them essentially as equals or alternatives.  Ads that run in a climate of positive publicity actually receive lift from the PR.  Conversely, ads run in an environment of negative publicity will likely not be successful and/or may be perceived negatively by consumers/customers.

8. AVEs are generally calculated by mainly, or only, taking into account the physical size of the article, and then equating that to the cost/value of an advertisement of the same size.  Often, article valence is not even considered, so a predominantly negative article would add positively to the overall AVE calculation.  Others count the size of the entire article, even if only one paragraph directly addresses the company in question.

9. Some groups have devised their own ways to calculate AVEs.  PR articles are generally rated or scored as part of an algorithm used to calculate AVEs.  Factors considered might include brand prominence within the article, competitive mentions, overall article tonality and finally size/length of the article.  The problem here is there is no standard way to ‘score’ PR articles to implement an AVE system.


11. AVE results can be misleading.  AVEs may be trending up while important metrics like message communication, share of favorable positioning and share of positive press are falling.  Objects may appear larger than they really are.


If you are still searching for a rationale for using AVEs, there is one that has some merit IMHO.  That is the economic argument that advertising rates are established in a free market system.  Publishers can only charge what advertisers are willing to pay for a page in their publication.  Essentially the value of that page is established by this free market system.  Of course what appears on this page is not considered in the value determination.  I would suggest one refer to the value of a page determined in this way as the ‘Media Value’ rather than the Advertising Value.  By using the term Media Value, one eliminates the uncomfortable and unjustified comparison of an article generated by PR with an advertisement.  You are merely suggesting the page has a value and you use that value to determine how much the public relations content is therefore ‘worth’.  Media Value is still not a great way to assess the value generated by public relations for many of the reasons stated previously, but it seems to me to be less objectionable than AVEs.  

(Note: Much of this commentary about AVEs appeared in earlier posts and comments in this blog.  You can see them here)

As always, thanks for reading.  May the New Year bring you and yours happiness, health and prosperity.  -Don B