I still remember holding a ruler against my magazine clippings, hoping a client’s placement took up enough space to be considered ⅓ of the page versus ¼. It was my first job out of college: a boutique public relations agency serving fashion brands. An account assistant, I was tasked with compiling Ad Value Equivalency, or AVE, reports.
Each quarter, I dutifully pulled out the ruler to determine what percent of a page in GQ my client’s sneakers took up (let’s say 33%), and multiplied that by how much a full page ad would cost to run in GQ ($143,681 at the time, I checked). The Ad Value Equivalency for getting those sneakers into the hands of a stylist, who in turn put them in the final shot: $47,415. Rinse and repeat until I had a full tally of how much my client would have paid in advertising for the coverage produced through PR.
Was it bulletproof? Of course not. Comparing advertisements to media coverage was, and still is, an apples-to-oranges comparison.
But was it really that bad? I’d argue no! Since the magazine’s ad rates were determined by its monthly circulation and audience, that ad rate was a decent proxy for the caliber of placement. If the placement took up less than a full page, my handy ruler accounted for that. We avoided subjective multipliers to account for added value of earned over paid. For print coverage, AVE gave my client a solid metric to track each quarter, and it let the agency demonstrate the millions of dollars in value we were generating. So where did it all go wrong?
AVE didn’t evolve with the rise of digital media
Let’s say I got those sneakers featured today on GQ.com. AVE would have me take the site’s 10 million unique monthly visitors, multiply them by a percentage of traffic I think saw that placement (let’s generously say 1%), and then multiply it by whatever GQ charges for an impression of a display ad on the page. With a hypothetical display ad rate of $50 per 1000 impressions, or $0.05 per visitor, the AVE for my hard-earned GQ.com placement comes out to 10,000,000 * 1% * $0.5 = $5,000.
Yikes. At some point over the last two decades, the sneaker placement went from being valued at $47k to a “generous” $5k. Is earned media truly less valuable in the digital age, or is something else at play?
“The greatest trick advertising ever pulled on PR was getting the industry to use its math”
I’ve heard Memo CEO Eddie Kim come back to this refrain a lot. He argues that the biggest issue with AVE in the digital age isn’t that it’s derived from inaccurate potential reach numbers or that it makes assumptions about how many people saw the content.
AVE’s fundamental flaw is taking an entire article – where a reader is actively engaging with content about a brand for 80 seconds on average – and comparing it to the rate for a small box on the page that we’re conditioned to tune out. Finding a true apples-to-apples comparison means completely rethinking the foundation of AVE in the digital age.
What if we treated an article like the destination it is: a landing page
We can think of an article as a landing page, and this opens up an entirely new way to assign a dollar value to earned media. Our full methodology for MRV (Memo Readership Value) is outlined here. In brief, MRV calculates what it would cost a marketing team to pay for the engagement that was earned by PR and uses three inputs:
- The article’s unique visitors (what Memo reports as readership)
- How each unique visitor came to that article (i.e. how many readers found the article through Google search, via Twitter, through a newsletter, etc)
- The cost-per-click rates associated with each of those channels, as a comp for how much a paid media team would need to pay in order to replicate the earned engagement of PR
The result is a dollar-based value for an earned placement based on relevant paid-media math. Instead of trying to fit a square peg into a round hole like AVE, MRV uses newly available, accurate data to completely reinvent a way to show ROI for PR.
TL;DR: MRV does what AVE could not
AVE is fundamentally flawed because it equates a full article with a small digital ad. We shouldn’t be calculating value based on ad space but rather how much it costs to drive traffic to the article content via equivalent cost-per-click rates. That’s what MRV does.
For the first time, you get an accurate view of impact through readership and you can demonstrate ROI for all your work. Bonus: we do the math so you don’t have to.