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It’s PR Time for Miller

Dec 1, 2003  •  Post A Comment

In a rare public disclosure, one of the nation’s largest marketers recently went public with the results of a little-known shift in its marketing strategy that it says is causing it to shift budgets out of TV advertising and into public relations.
Using a relatively new form of marketing research, the marketer, Miller Brewing Co., a division of Altria Corp., has been able to demonstrate the impact on actual product sales that PR has relative to other forms of marketing, including TV advertising and sales promotions.
Miller’s marketing team learned that PR has a significant material impact on generating incremental sales of Miller products, and it is far more cost-efficient than other forms of marketing, especially TV advertising.
“In this study we found out that PR was much more efficient than other promotions for the brand,” said Ranjit Choudhary, the strategic modeling specialist in Miller’s marketing department who has been leading an effort to make the marketer’s PR efforts measurable and accountable. The next step, he said, is to make PR an integral part of the strategic planning process for the company’s brands.
Mr. Choudhary, who revealed Miller’s findings during a recent research conference sponsored by PR researcher Delahaye and the International Association of Business Communicators, said more research needs to be conducted before that happens, but that he believes these findings will lead to a change in Miller’s marketing mix and that it likely will come at the expense of TV advertising budgets that will be shifted into PR programs.
“That mix has to change,” he said, because PR is being made more measurable and accountable and because TV advertising is growing increasingly inefficient.
“Typically, if a medium is prone to being cut these days, it is TV. The No. 1 reason is that it has a lot of money to begin with. But it also is growing less efficient as TV becomes more fragmented. Twenty years ago, it was possible to put all your money on prime time and see results. That’s no longer the case,” Mr. Choudhary explained.
Miller’s PR revelation is but the latest round in a progression of developments, including communications planning and return-on-investment marketing models, that have TV in their cross-hairs. Communications planning, which has been discussed several times in this column, is an effort by media agencies to expand from simply planning traditional media such as TV, radio and magazines to planning a broader mix of marketing channels, including advertising, PR, direct response and promotion.
That shift, coupled with a move toward ROI models that value media based on sales results or profits as opposed to conventional media metrics such as reach or frequency, are bad news for TV ad budgets.
And while many major marketers conduct the type of modeling discussed by Miller, few have revealed the impact of PR on sales or its impact relative to TV advertising. But based on 21/2 years of analysis of data, including Miller sales data, Miller’s promotion spending data, ratings data from Nielsen Media Research and new PR research developed for Miller by Delahaye, the marketer claims to have proved PR’s bottom line.
Mr. Choudhary said the PR data was the missing link that has held back PR from becoming a strategic part of the brand planning process, but that is beginning to change. And the results are startling. Based on the analysis, Miller has learned that its PR campaigns generate 1.2 percent of base product sales, or 4 percent of incremental product sales (the amount of sales created specifically from marketing efforts such as advertising, PR or promotion). While that might not seem like a significant number, he noted, Miller’s TV advertising campaigns contribute only 5.3 percent of base sales and 17.3 percent of incremental sales. More significantly, he said PR contributes those sales results with a fraction of TV advertising budgets. While he did not specify what Miller’s precise advertising-to-PR ratio is, he noted that the U.S. industry average is 61 to 1 in favor of ad spending.
To compare Miller’s PR results with the impact of its TV ad campaigns, Delahaye uses a metric called net effect, which counts all the print and electronic media news impressions generated by the company and then gives it a score based on whether the coverage was positive or negative.
“The easy way to explain the net effect is quality times reach equals weighted net effect,” said Amy Domeika, research director at Delahaye.
To illustrate that process, Ms. Domeika used as an example a story about General Electric and its Vice Chairman Bob Wright that appeared in Electronic Media (now TelevisionWeek). After factoring the prominence and editorial tone of the story, the Delahaye analysts determined the story had a “positive net effect” of 65.7 based on a scale of plus or minus 100 points. The researchers then multiplied that net effect times the magazine’s reported circulation (28,172) to come up with the story’s “weighted net effect,” the number of “positive potential impressions” (18,509) generated by the story. Delahaye then aggregated the impact of that story with those in other publications, including The New York Times, USA Today and the Los Angeles Times, to come up with a total weighted net effect of 260,275.
While these figures are not completely analogous to TV gross rating points, Miller’s Mr. Choudhary said they are close enough to be factored into the company’s marketing mix model to determine the impact PR has vs. TV on actual product sales.
“One of the reasons we came up with this is there has been no consistent metric in PR. In the TV advertising world everyone talks about GRPs. So now there is a metric for PR,” he said.
While the approach has significant implications for TV overall, it may also have specific implications for spot TV ad planning. Because Miller’s marketing strategies are extremely localized-indeed, almost down to the store level-Miller had Delahaye develop PR data that could be looked at weekly and on a market-by-market basis, giving it the same kind of weight in its market planning as Nielsen’s weekly GRP estimates for each spot TV market.