Brief History of AVEs and how they have been used by the industry to measure ROI.
Enter the Advertising Value Equivalence or AVEs. One of the most often disputed methods of calculating the value of public relations efforts, with the extent to which is criticized ironically probably proportionately matched by the amount it is used by brands and other organisations all over the world to measure their ROIs.
The challenges posed by using AVE and other flaws in the calculation process
The common criticisms of the practice are that it holds inherent flaws in thinking that the same space that was used for the article would also be used for advertising purposes. Both earned and paid content both have the objective of capturing a reader or viewers interest but within any earned piece, how much does the brand really feature into the story? What is the sentiment of the article? To what extent is source credible? Is the audience the relevant to your brand?
Adding on to all these questions, here’s how this value is being calculated.
The AVE formula should look something like this:
AVE = SIZE X RATE PER COLUMN
So if you had an article 10 cm long, in a paper whose rate is $15 per column, you’d calculate your formula as:
AVE = 10 X 15 = $150 AVE
However, many people will incorporate an extra number into the formula. This comes from the claim that earned communications are more credible and therefore more valuable than paid advertising. Some also mention that articles may be shared with friends or family thereby increasing helping increase the reach of the article.
Although that’s widely accepted, we don’t accurately know how much more effective, so an extra multiplier is included, which is most frequently a 3 times multiplier.
AVE = 10 X 15 X 3 = $450 AVE
So there’s now an additional incorporeal value added, not really telling you much about the value of the article (as mentioned previously) but more so the rates of each publication. It mixes hard numbers with a multiplier to showcase the ultimate value that cannot truly be mathematically or otherwise, be proven accurate.
The usages and challenges faced by AVE on both agency and brand sides
This intangibility makes it easy for misunderstandings and frustrations to be felt on both sides of a business relationship.
Brands may feel cheated due to the numbers supposedly representing an ROI not making much sense as traditional marketing metrics. It may look high but how accurate is this number to present to internal stakeholders? Many would then ask how it was derived and when questions on multipliers or competitors also being mentioned within the article arise without a definite answer, no one benefits from the situation.
Agencies on the other hand may also feel that the metric is irrelevant to their efforts. Certain articles carry more weight and if values were calculated on space, digital publications bring a whole slew of new parameters to be considered and cannot be accurately compared as paid content does not occupy the same space or dimensions on websites. So how then should they report to brands their results based on AVEs that won’t have clients scratching their heads in wonder?
Why AVE is still around despite all of the above
Despite all these however, AVE is still around today, and for good reason. It provides all involved nice quantifiable number that is easily understood. It serves as a KPI that brands can use to assess performance of their agencies as well as proof primarily numbers driven management of campaign or publicity success. These make it very attractive to the industries and is considered black-and-white evidence of excellence in the field.
Proposed alternatives to AVE over the years
Alternatives have been proposed over the years, but none have seen the mass adoption of AVEs just yet.
Here are just a few examples that we’ve seen so far:
Creating a media quality index (MQI)
By looking at an article and determining what are the positive and negative elements within it, assign a value to each element and tally the scores to provide a tangible number that better reflects the value of any secured coverage.
Although comprehensive, it requires large amounts of resources dedicated to calculating the values of each and every article as well as buy-in from senior management. The educating of stakeholders will take time and become a necessary component of any on-boarding of executives.
Conducting brand awareness and perception surveys on audiences have been another way which have been suggested. This provides a real in-depth picture of how your brand is performing and gets you in front of and in the heads of your target audience. Downside is that it requires large amounts of data collection that may not be feasible for every press release sent or byline secured.
Share of voice comparisons
By benchmarking yourself against competitors, we can better understand where we stand in terms of awareness, as well as compatibility. An increase or decrease is quantifiable but at the same time needs to be backed up by hard facts. It all falls apart if there is a lack of trust between parties and both have to have a strong relationship to make it work.
How advancements in technology may be an emerging solution to the problem of calculating the ‘worth’ of PR
The advent of digital media opened up a whole new ballgame as well. It gave us new tools to measure with things likes referrals and conversions tracking becoming much easier. It however brought with it many vanity metrics as well, with things like reach and impressions being well packaged, easily understood numbers (similar to AVE) but not telling much if you delve deeper. What’s needed is a comprehensive approach that covers all aspects of the funnel, from awareness to brand perception, we’re now entering an age where we can do so much more with the tools we have at our disposal.
LEWIS, in collaboration with AMEC, for example has designed an integrated approach to measurement, encompassing both online and offline coverage to provide an accurate, understandable, yet resource efficient method of reporting earned media value.
Telling Our Story
Judging from all this, AVEs might be on the way out but what is more important is establishing key objectives with every client, identifying which are the metrics they would like to focus on and form there, developing tailored media strategies and measurement methods that both parties can agree on.
The AVE may be quick and easy but as PR practitioners, we need to take the time to educate our industry in moving forward in this rapidly evolving economy where everything can change at a moment’s notice. The digital decade is upon us and if we don’t start adapting to match the changing landscape, the only story that we will be telling will be how we as an industry got left behind.
So here’s the pitch – with a majority of clients still using AVEs as their main form of measurement, it’s no doubt that changing things is going to require a massive, active and converted effort to change. It’s now time for us to band together and shape our own narrative, one of where we set the stage for our stories to speak for themselves on their value.