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.

10. If you get a hit on the front page of a newspaper or a cover story in a magazine, there is no way to calculate an advertising equivalency since advertising space is never sold in these locations 

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.

12.  AVEs only apply to traditional media.  What is the AVE of a positive conversation about your company on a leading blog? 

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

34 Responses to “AVEs (Advertising Value Equivalents) Revisited”

  1. Spike Jones December 26, 2007 at 2:57 pm #

    Bravo. Bravo. Bravo.

    We will be putting this post in our arsenal. Many thanks for THAT!

  2. sean williams January 11, 2008 at 2:37 pm #

    Don – excellent post. A colleague had several comments I share here —

    If AVE is the standard, why do we compare PR to it? Why not just buy more advertising!? Don’t compare oranges to apples…just buy more apples!

    Imagine what the result would be if you compared advertising to PR ROI…there’d be nobody left in marketing! BTW, “advertising value” may be an oxymoron.

    (Re: #11) This is why I had (pr agency) take all the AVE out of (a recent product launch). We got about 60 placements in the precise demographic we were aiming for…and the ad value was less than one full page ad in USA Today. This should be “PR efficiency” vs. AVE.

    Using AVE, the “value” of an editorial would increase if the publication’s ad rates go up…even though not a word of the editorial would change!

    AVE’s are a very poor substitute for real measurement and evaluation…

  3. Don Bartholomew January 11, 2008 at 3:01 pm #

    Thanks for sharing this Sean. The new thought here is the notion that an ad rate increase would hypothetically change the value of the editorial. Ludicrous but true in the wacky world of AVEs!

    Thanks for reading. -Don B

  4. john July 22, 2008 at 10:58 am #

    hasnt somebody devised a better way to calculate PR Value..? surely AVEs method of determining PR Value is seriously flawed.

  5. Todd Wright August 1, 2008 at 6:57 am #

    Thanks for the useful article. I referenced it when attempting to explain to one of my clients why the event that they participated in that allegedly got $6million of PR (AVE) wasn’t really a good way to determine the promotional valkue of the event. I encouraged him to ask the event PR company if they did any quantative or qualitative reserach on event participants to establish wether the PR had any effect on their attendance or awareness of the event. I also asked him if he thought that a $6million media spend would have got the same result. The media spend was actually $40,000 and I argued if they got $6million in ‘free’ PR why did they bother spending any $$ at all on advertising. That said – because the whole AVE concept wan’t explained to him he only saw $6million and was happy. He was happy but in this case their was more to the story.

    thanks again.

  6. TEst May 9, 2011 at 8:19 am #

    EAV or AVEs are normally calculated using the Gross or un-negotiated cost of a FP4C making them not account for client cost rates or size.

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  8. Tom Church (@tomchurch) October 18, 2011 at 11:34 am #

    Very interesting, especially your argument that advertising values are set in a “free market system”. I believe technology will enable PR to join that free market as well, as soon you will be able to track what editorial someone reads, and what they ultimately purchase.

  9. Joan October 25, 2011 at 9:40 am #

    Gracies per compartir aquesta informació. Es molt interessant. Et convido a que vegis els meus darrers treballs sobre publicitat a http://www.verdandgreen.com

  10. Cledgespupe November 4, 2011 at 12:23 pm #

    Договора с ВЭБ будет недостаточно , чтобы осуществить все проекты. АСИ (Агентство стратегических инициатив) кроме того предполагает подписать рамочные соглашения о сотрудничестве с наиболее крупными отечественными банками и зарубежными, имеющими отделения на территории России. Эту информацию “Известиям” сообщил Аветисян Артем Давидович (Artem Avetisyan), являющийся директором направления АСИ – “Новый бизнес”.
    В агентстве в основном рассчитывают на первую “десятку” банков, но собираются разослать подобные предложения минимум 50 учреждениям. Артем Аветисян, комментируя намерения АСИ, также сообщил, что начать подписание соглашений предполагается в ноябре, а закончить выполнять работу в этом направлении намечается до конца этого года.
    – Все, что требуется от кредитных учреждений – это принципиальное соглАСИе на сотрудничество, – объясняет директор “Нового бизнеса”.
    – Наличие рамочного соглашения не означает безусловную обязанность по выдачи кредитных средств всем нашим подопечным. Но мы хотели бы, чтобы от каждого банка был назначен ответственный за взаимодействие с нами. Это гарантия 70-80% успеха нашей работы.
    В настоящее время Агентство стратегических инициатив заключило соглашение только с Внешэкономбанком (ВЭБ), создавшим подразделение, специализирующееся на работе с нашим агентством. Госкорпорация предоставляет технологов и маркетологов для проведения экспертизы, требуемой для оценки претендующих на поддержку бизнес-проектов. Также ВЭБ предоставил АСИ и деньги на собственное развитие в сумме 100 млн. рублей. Кроме того, сотрудничество госкорпорации и АСИ подразумевает кредитование некоторых проектов одобренные на всех уровнях – менеджментом, экспертами и наблюдательным советом АСИ. Но все же, комментирует Артем Аветисян, поддержки Банка развития и внешнеэкономической деятельности недостаточно , чтобы реализовать все бизнес-проекты. Внешэкономбанк согласно законодательству сильно ограничен в вопросах выбора отраслей для вложения денежных средств (10 отраслей). – ВЭБ – это институт развития, кредитующий далеко не всех желающих, – отмечает директор направления “Новый бизнес”.
    – В связи с этим в наших интересах иметь большой список дружественных банков. Они отличаются линейкой продуктов и специализацией. Предприниматели в таком случае будут располагать возможностью выбора лучших условий кредитования. Директор “Нового бизнеса” Артем Давидович Аветисян убежден, что для самих банков будет выгодно кредитование клиентов, пришедших из АСИ. Ведь это является гарантией добросовестного бизнеса и нулевого риска невозврата суммы кредита. Все это не означает получение бизнесменами, рекомендованными агентством, льготных условий кредитования.
    Агентство стратегических инициатив не предоставляет поручительства и финансовые гарантии. Роль агентства – быть посредником. Неизбежно возникает вопрос в необходимости существования такой структуры. Ее необходимость Артем Давидович объясняет тем, что часто предприниматели сталкиваются со сложностями в процессе коммуникации с банками – не знают, как качественно воспроизвести финансовую модель, не знают требований банков. В такой ситуации задача специалистов агентства – привести предпринимателя в необходимы ему банк, специализирующийся на соответствующем бизнесе и имеющий самые выгодные условия кредитования.

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  18. Rodolfo January 16, 2014 at 9:21 am #

    You actually make it seem so easy with your presentation but I find this matter to be really something which I think I would never understand.
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  19. Si Evans February 18, 2014 at 12:53 am #

    A fascinating piece with which I fully agree. I’ve always found the AVE metric to be flawed and this further confirms it. Earned editorial is king.


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