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PR’s 2006 Resolution: Become Accountable

The presents may still be wrapped and under the tree, but last month’s news from Procter & Gamble that PR is more cost effective than advertising for four out of six brands evaluated should have PR professionals planning their New Year’s resolution: Get to know market mix modeling.

The news received widespread coverage. PRWeek’s November 28 article began with dreams of sugarplum budget increases for PR, then continued with a good overview of market mix modeling. Even Ad Age (registration and purchase required) picked it up, focusing on the broader issue of marketing accountability. Shel Holtz noted on his blog that it took P&G 18 months to develop the tool, which they dubbed PREvaluate.

This is puzzling: the time frame and use of a special name seems to imply that P&G built a separate model instead of simply incorporating PR data into their existing models. What a shame, if the PR and marketing people couldn’t get together to share this resource.

In any case, this demonstrates a clear need for PR to catch up with marketing’s increasing sophistication in tying their spending to sales results. Market mix modeling is a statistical technique that correlates marketing stimuli (ads, promotions, etc.) to sales. Market mix models have been used in the CPG world for over 15 years and have been adopted by retailers, financial services companies, pharmaceutical marketers and others recently. With all the emphasis on marketing ROI, many more are planning on using them in the future.

The biggest benefit of these models is being able to talk to C-level executives in the language they understand: “My activities drove $x million in revenue.” The result: less pressure to cut budgets and more respect for the work you do.

If you work for a Fortune 1000 company, chances are pretty good that your marketing counterparts are using these models. So make your New Year’s resolution now to incorporate PR into the model. Here are some resources to get you started:

1) The AMA has a good definition, while iKnowtion, one of the boutique firms specializing in modeling, has a deeper explanation.
2) iMediaConnection hosted an excellent discussion on the topic at a recent conference, with MMA’s John Nardone and Ogilvy’s Gerard Broussard.
3) Knowledge Networks, one of the leading companies specializing in building these models, has an excellent case study looking at the effects of advertising and promotion which illustrates the use of the technique for comparing different marketing disciplines.
4) In my days as a Forrester analyst, I wrote a report outlining the key steps in getting started with the technique (free summary; full report available for purchase to non-Forrester subscribers).

While the models are sophisticated, the most important step is preparing the data. If you are using a PR measurement tool, you’ve already done most of the work. If you are not, resolve now to seek out your company's modeling experts, understand the data requirements of your company’s models, and work with a firm that can package the data for easy inclusion in the model.

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Posted by Jim Nail on December 22, 2005 at 10:30 AM | Email this post Permalink

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