Return on Investment in Public Relations: A critique of concepts used by practitioners from the perspectives of communication and management sciences.

Abstract

Return on Investment (ROI) is a term commonly and non-specifically used by public relations practitioners when discussing the value to be created from communication activities. It mimics business language, particularly from business administration and financial management, but does not figure widely in academic discourse (Watson, 2005). The Institute for Public Relations [now CIPR] undertook a review of ROI practice in the United Kingdom (IPR/CDF 2004) and Likely, Rockland and Weiner (2006) proposed variations of ROI as alternatives to the discredited Advertising Value Equivalence (AVEs) measure of value creation. There has, however, been little discussion other than Macnamara (2007) and Gregory and Watson (2008). This paper gives an overview on the limited discussion of ROI in public relations literature and of concepts used by agencies and providers of measurement services in Europe, although this is a global issue. It reports on survey research among practitioners in many European countries on identifying the economic value of public relations. The findings are compared with the concepts of ROI used in business and accounting literature (Weber & Schäffer, 2006; Drury, 2007). Applied theory and parameters for the development of measurement and evaluation techniques are proposed. The paper concludes that the use of the term ROI in public relations needs a proper foundation in overriding management theory; otherwise public relations theory and practice will discredit themselves.