So Many Messages, So Few Dollars

Posted by Shelley Grell on January 21st, 2010.

How to allocate a finite PR and Marketing Budget

There is a universal problem afflicting Marketing & Communications Departments worldwide. This issue applies equally to corporations the size of Coca-Cola and one-man bands operating out of the spare room. It is simple enough to define:

We have a finite amount of money to spend on marketing and promotion. What is the best way to allocate it?

Understandably, it’s hard to be sympathetic to Coca-Cola’s plight; they have to make do with a measly US$1.7 billion annual marketing budget1. So we’ll assume we’re talking about more down-to-earth figures.

Before you start spending money, it is vital to make sure you have a clear desired result, target audience and message (see our article Distilling the Message).

To get your message heard, you need to understand how your target group obtains information. There are industries, for example, in which the standard promotional mechanism is the trade show. For purposes of an ongoing presence, however, the two most common promotional methods are PR and advertising.

For some people, PR & marketing are synonymous with advertising. Yet branding does not always have a direct correlation to advertising. The clothing company Zara is the fastest growing retail chain in the world, and only runs two ads per year, focussing instead on public relations and word of mouth. Microsoft’s Xbox had such an effective advance PR programme that 75% of its target audience expressed an interest to buy before the company had ever run an ad.2

Every time your company is mentioned in an article, people are hearing about you and forming an opinion. Every time someone talks about your product to a friend or a colleague, they are affecting your public perception.

It’s important to understand what can and cannot be accomplished through the various promotional avenues. Let’s examine three characteristics of advertising and PR that are likely to impact how you decide to spend your time and money: credibility, certainty and cost.

Credibility

Information received from friends, acquaintances family members and colleagues has the highest amount of credibility. These people presumably have your best interests at heart and don’t stand to benefit from your purchase decision. This is known as Word of Mouth (WoM), and is the most credible form of promotion.

Next to WoM is editorial coverage, the kind generated by a good PR programme. In order for journalists to run with your press releases, attend your media launch events or agree to review your product, they have to be convinced of the story’s independent merit and newsworthiness. And because these people are seen as impartial, their messages are far more convincing than those coming directly from the company by way of advertising.

“Frequent mentions of IPOs by the media can help drive up interest from investors and have greater impact than official prospectus information on IPO prices.” Timothy Pollock, Ph.D, Penn State University

Certainty

Advertising is the most certain of the various promotional tactics. You pay for a specific spot, to be published or broadcast in a specific timeframe, and you have complete control over the look and content of the message. Advertising also allows for a precise level of repetition and consistency.

On the other hand, while you should be wary of any PR agency that guarantees coverage, a good PR person should be able to tell you when a story is newsworthy, and know which avenues to go down to maximise the editorial opportunities. Experienced PR professionals will also have established relationships with a variety of journalists, and will know what angle to take to make a news item more intriguing for a publication’s audience.

Cost

It can be tricky to make an apples-to-apples comparison of the cost of advertising vs. PR. Advertisements usually carry a high cost per impression – guaranteed exposure comes at a premium. The cost of design and production has to be added onto the cost of the ad space, and, in general, ads need to be run multiple times before they will be effective.

When PR is successful, however, the ‘bang for the buck’ tends to be significantly greater than that of advertising. You can potentially get more space than you would if you paid for it (articles can be two or more pages in length, and some TV news segments can go as long as two minutes). One press release or story can be run in as many outlets as are willing to cover it, as opposed to an ad which is limited to how many outlets you can afford.

A good PR campaign can be effectively complemented by strategically placed ads, particularly once the company has achieved a certain reputation. Once these umbrella tactics are laid out, other promotional avenues such as trade shows and direct marketing can be used to fill in the gaps as budget permits.

Every company will need to analyse its market context to make effective decisions on how to allocate the marketing and promotions budget. This comparison of the various techniques, however, can assist you to decide which strategy or combination of strategies is most likely to deliver your desired results.

Some Promotional Avenues

  • Advertising
  • PR (editorial, media launch events and releases, product reviews, feature tracking)
  • WoM Marketing
  • Expos
  • Roadshows
  • Direct Marketing
  • Viral Marketing

Sources

  1. Marakon Associates, Getting More from your Marketing Investments
  2. Al Ries, author, The Fall of Advertising & The Rise of PR
  3. Pollock, T.G. & Rindova, V.P., Media Legitimation Effects in the Market for Initial Public Offerings

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