PR Measurement and Fast Food

A good post from Tom Davenport at Harvard Business Online talks about the need for empirical proof that the “solutions” offered by consultancies actually have an impact on the business.

I’m reminded of Sergio Zyman’s comment in “The End of Advertising as We Know It” that the job of advertising is “to sell more things in less time to more people for more money” and that anything that doesn’t do that is a waste of money. He also suggested a new payment scheme for advertisers that based fees on a percentage of profits derived from the campaign. Nothing like a good hanging to concentrate the mind!

Measurement of public relations activities is even more problematic than advertising, in many ways. PR is generally a “slow burn” discipline (though not always – ad-free product launches have garnered some more than respectable results) and so it is often difficult to quantify the impact of activities. Metrics like equivalent advertising value don’t really do the job – EAVs are a fundamentally flawed concept in my opinion, though not as flawed as “PR Value” which simply multiplies EAV’s by a given amount – 2.5 times is usual – on the basis that PR is more credible than advertising. K.D. Paine has an interesting take on EAVs and PR Value which I think is theoretically sound, though I’m not sure how it would deal with negative stories or stories that attack the key message.

Edelman invests significantly in global, regional and local research to try and provide clients with a reasonably high certainty of outcome and empirical evidence for our recommendations from the outset. Persuading clients to share marketing research information is often a challenge, but often this data can provide good additional data such as conversion ratios which can provide a useful base metric.

Once we start talking about measurement of results, though, we often run into resistance from the client. There are a lot of measurement metrics out there, but they all cost money. EAV’s are quick, simple and cheap – the fast food of PR metrics with roughly the same nutritional content. A more robust measurement model based on Output, Impact (Outtake) and Outcome metrics is often appreciated on paper but rejected on price.

I agree entirely with Davenport that consultancies need to provide empirical evidence that their recommendations are effective. However, what is also need for the PR industry in particular is an awareness among companies that PR forms an important and quantifiable component within the marketing mix and the implementation of the necessary internal processes and KPIs to reflect this. I would be delighted if clients demanded specific metrics: one of the biggest frustrations to me is concluding a conversation on the importance of measurement and the reliable tools that are available with the client saying, “That’s really interesting and I see the value, but we prefer to use EAV.”

And I’ll take extra cheese on my burger.

Globalization and the Downturn

How should Korean companies prepare for a downturn within a globalized society? This post is worth a read from Harvard Business Online.

When things go bad, investment, not cutbacks, is what makes a difference in the long term. This is especially true when it comes to marketing and communications, and it’s one of the reasons Samsung emerged from the Asian financial crisis with such a high brand equity – investing in marketing in a downturn (this is something Martin Roll has discussed in the past and touched on here before).

Communications can sometimes be a paradox – speak more when more people are less vocal and you’ll be heard more. This is a valuable reminder to Korean marketing professionals planning budgets for 2008 in the context of an uncertain future…!

100,000 Haves

The second annual Asia-Pacific Wealth Report (by Merrill Lynch and Capgemini) was presented yesterday at the 8th World Knowledge Forum in Seoul.  It turns out that High Net Worth Individuals (HNWIs) in Korea have grown to 99,000, growing by 14.1%, the 6th highest growth rate in the world.

Taken from this morning’s English translation of the Maeil Business newspaper (sorry no link), this growth has been primarily driven by property investment.   Chang Jae-ho, Head of Korea Global Wealth Management at Merrill Lynch said, “Rising property prices in the country combined with the government’s relaxed regulations on overseas property investment helped generate the double digit increase in both the population of HNWIs in the country as well as their value of assets.”

You can’t really view Korea in terms of the westernized view of ‘class‘ but some people separate and categorize Korea in terms of Haves (high net worth individuals with available capital to invest), Have Lessers (those who appear wealthy but are burdened by indebtedness) and Have Nots.  With this increasing portion of wealthy society, its effect on this year’s elections can’t be underestimated.

The report also points out that the majority of HNWI in Korea are male, at over 80%.  In contrast, 43 percent of Taiwan’s HNWI population and over 30 percent of China’s and Hong Kong’s were female.  No surprises there in terms of Korea but does it hint at the entrepreneurial talent and potential of females in neighboring Asian countries, and, therefore, Korea?

Here’s last year’s report.

Premature announcements

An editorial in The Hankyoreh today refers to Presidential candidate Lee Myung Bak’s “disgrace” that the White House has denied that President Bush will meet Lee while the latter is in the U.S. Setting aside Lee’s own more cautious response to media questions on the topic, as reported in the Chosun Ilbo earlier this week, what you’re left with yet again is an organizational spokesperson making a premature announcement to media and shooting an important initiative squarely in the foot. That there was an outreach to the White House is certain. Whether the meeting would ever have taken place is less so. However, by publicly announcing the meeting before it was properly confirmed, Lee’s aides essentially ensured that the White House would back out rather than be painted into a corner.

Despite the predictable indignation from The Hangyoreh, this is far from an unusual event. A good number of foreign companies have been wrong footed when their Korean partners announced details of upcoming deals, “committments” that were entered into in closed meetings, “investment plans” that don’t really exist – the list is endless. In some cases these announcements have been shrugged off, in others they have had a serious impact on important relationships.

In part, this is a cultural difference and it is clear that Korean organizations need to make a closer effort to understand their international partners. It also reflects the lack of an effective media communications function. Korean organizations – public and private – need to be much smarter about they way they address the media, particularly in respect of deals with non-local institutions. Routing communications through a specific channel, and ensuring senior-level oversight of all such communications, is essential in ensuring that this kind of embarrassment does not happen.

However, the easiest thing in the world is to confirm with a partner that a given communication can be released rather than just proceeding unilaterally. A simple e-mail or telephone call confirming that this meeting could be announced to media in Korea would have prevented this embarrassment. After all, isn’t that what a “partnership” is all about?

Travels and Korea

First off: apologies for lack of posts during the summer.  Second: let’s not dwell on it.

I’ve been to a good few countries over the last few months and have in turn met a number of journalists in Korea from a number of different locations.  I’ve found the whole experience has lent a good perspective to me and to how Korean business is perceived.  Here’s a few thoughts in not particular from various groups of people I’ve met.  Take them as you like.

London Investment Bankers and Venture Capitalist: they were all nervous about the future, and the impact of the sub-prime issue.  From their viewpoint, they couldn’t see Korea coping if there was  a major US downturn – however, they all had a limited understanding of Korean business.  Of those that had, only one had dealt with a Korean organization and his experience was ‘infuriating’ and the deal he was trying to broker fell through.  He told me he wouldn’t rush into another deal with a Korean organization again.  Overall, they are clouded in their views of Korean business.

Italian business people: they all believe Italy is crippled by internal corruption and are finder it harder to compete in Europe because of it.  The ruling around Hyundai-Kia’s chairman was in the news and they were very keen to ask if Korea was struggling because of internal corruption also?  Their favourite question: was Korea the Asian Italy?

Ireland: on my return home I notice a lot of advertising for Samsung (this was the same during my stopover in Thailand and in Italy) and I noticed a lot more Korean cars on the road.  Korean cars were no longer just seen as value products, but ‘good for money’.  In terms of the advertising I noticed how western they were and how they weren’t Korean, they were ‘global’.  Korea’s reputation for technology was one of the most common things told to me back home.

German journalists: this group of well-travelled journalists were very impressed by the level of technology and service in Korea.  They were also impressed by the design of their hotels and mentioned that they didn’t expect to experience good Italian food in Asia.  Although, they weren’t Italians!