Advertising Equivalency

Advertising equivalency involves calculating the value of public relations generated media coverage by determining what the air time/print space would have cost if the organization had had to pay advertising rates for it. For example, if a print medium charges $200 per column inch for an advertisement, a five-column-inch story generated through public relations efforts would have an advertising equivalency of $1,000. For broadcast media, if a 30-second spot costs $10,000, then a 15-second news mention would be worth $5,000.

Although many organizations use advertising equivalency in an attempt to assign a value to public relations efforts, this practice is fraught with problems. For example, historically most newspapers didn't sell ad space on the front page of a business section, the section where strong public relations efforts often appeared. Therefore, for equivalency purposes comparing such a placement to an advertisement was thus an apples-to-oranges situation. There was no true basis for calculating the cost of the space. However, the rise of digital media and the increasing financial pressures on print media mean that ads now appear where they never did before. When someone reads a newspaper online, and many people do, pop-up ads are ubiquitous. Thus, the long-standing flaw in advertising equivalency isn't as clear as it used to be.

A second issue is the public's difference in credibility when comparing an advertisement and an objective third-party story. The majority of the [Page 14]public today has enough media savvy to understand that ads are controlled in both content and placement by the organizations that paid for them; this naturally engenders a legitimate skepticism about the veracity and motivation behind paid ads. A news or feature story, however, has the credibility boost of being produced by an independent, third party. Although there have been notable media honesty scandals, for the most part people still seem to trust mainstream media sources. Generating a placement in such a source has inherently more credibility than a paid advertising placement. A multiplier is sometimes applied to the advertising rate to compensate for this difference. However, the question then becomes, what is the appropriate multiplier? How much more credible is a story written by a business reporter and placed on the front business page than an ad found on the third page of this same section produced by a company? Given these factors, an attempt to demonstrate the value of public relations efforts through the use of advertising equivalencies can produce more skepticism than it alleviates with an analytical manager or client.

Clearly, the need exists for an adequate and appropriate manner and format to value public relations efforts. Although still used, advertising equivalency has flaws. The inherent differences between advertisements and independent coverage make advertising equivalencies too imprecise to reflect the value and credibility of public relations efforts. If asked to provide such a figure, a practitioner should explain to the client or manager the limits of this method.