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Can the material value of public relations be quantitatively measured?

Posted by Greg Owens on 5 May 2019

Having spent more than 20 years working in the fields of marketing and communications in the private sector, I have often wondered if the strategies and tactics that I have employed typically learned 'on the job' from mentors or, more often, honed using processes of trial and error are based on sound methods and well-established academic theories.

On a daily basis, I consider which activities might best benefit my organization: writing press releases and pitching story ideas to media, working closely with industry analysts and institutional investors, or interacting directly with customers and other important stakeholders.
Like many others in my profession, I have taken for granted that a relationship exists between my activities as a professional and the performance of the firms with whom I have worked. In the case of public relations (PR), most corporate executives seem to be satisfied with metrics that rely on the number of articles and press releases published as an indicator of the fiscal impact of PR activities. (There remains a certain appeal to seeing one's company name or one's actual name appear 'in print.')

Personally, I have never been comfortable with using such 'output-based' metrics as proxies for the material value created by activities. It was this sense of cognitive dissonance that sparked my desire to investigate metrics that promise to quantifiably measure the impact of PR activities in a more substantive way. Recently, I completed a Master of Arts degree (with a focus on Organizational Communications) at the University of Ottawa. The objective of my major research paper (MRP) the 60-page, 17,000-word document that summarized several months of extensive research was to provide fellow PR practitioners with a synopsis of academic research about the real, tangible benefits of PR activities for private corporations.

'Scientific' evidence demonstrating the financial impact of PR activities remains elusive

Apart from satisfying the objectives of some executives, simply providing a list of published press releases and articles provides little evidence of the actual fiscal impact and reach of the message being communicated. For example, measuring the quantity of articles published offers few insights into whether the intended audience received the message, nor does it provide any indication of the quality, tone, or perception of the subsequent media coverage.

Quantifying the material value which I defined as improved stock price and market valuation, increased stock trading activity/volumes, improved market share, or reduced costs associated with mismanaged crises, public complaints, lawsuits, and activist pressure of PR activities in a more 'scientific' manner, however, is elusive.

Companies continue to expend large sums on PR activities; despite a lack of consensus on the benefits

Market data from Statistica (2018) suggests that the revenue generated by PR companies in the United States in 2017 reached $12.48 billion (USD) (1). In Canada, Statistica (2015) reported that PR agencies generated $631.6 million (CDN) in 2012 (2).

Despite such large PR expenditures, there appears to be little consensus among scholars as to whether the benefits firms accrue from PR activities can be measured quantitatively. While some scholars maintain that good PR can improve a firm's financial position and contribute to its profitability, others are less optimistic, questioning the very possibility of identifying, let alone establishing, a causal relationship between a firm's PR activities and its financial performance. Some go even further, claiming that the inability to demonstrate a link between PR activities and the creation of value marginalizes PR activities and can result in senior management questioning the strategic importance to their organizations.

Some academic studies have reported a relationship between PR activities and the creation of material value for firms

In the course of my research, I did discover some academic studies that found a relationship between PR activities, like corporate-issued press releases, and the creation of material value for firms:

  • Neuhierl, Scherbina, and Schlusche (2013) (3) found that the market reacted positively to announcements about "new products, patent awards, exiting unsuccessful ventures, new partnerships formed, legal settlements, management additions, FDA approvals, and successful research outcomes [as well as] reaching a sales milestone or winning a company award";
  • Ryan and Taffler (2004) (4) reported findings suggesting that 65% of large changes in a firm's stock price could be attributed to firm-issued press releases; with the caveat that the press releases with the most impact contained information about firms' financial performance; and
  • Earlier studies found that markets also react to announcements about seasoned equity offerings (Jegadeesh, 2000) (5), institutional trading activity (Chan & Lakonishok, 1995) (6), and takeover bids (Jensen & Ruback, 1983) (7).

Put simply, press releases can have an impact if the content contained within them is of consequence. By extension, press releases that contain 'frivolous' information tend to have little, or no, impact.

Is the Future of PR Activities in Jeopardy?

Without quantitative data demonstrating the material value of PR activities for organizations, PR practitioners will struggle to provide clear evidence of the strategic nature of their roles. This can result in diminished credibility, less autonomy, fewer career advancement opportunities, and reduced budgets, potentially leading to less effective external communications and a lack of clarity about the very future of PR activities within organizations.


(1) Statistica. (2018) "Estimated aggregate revenue of U.S. public relations agencies from 2000 to 2017 (in billion U.S. dollars)" Retrieved from: https://www.statista.com/statistics/183972/estimated-revenue-of-us-public-relations-agencies-since-2000 (accessed March 23, 2019).

(2) Statistica. (2015) "Operating revenue generated by public relations services industry in Canada from 2012 to 2013 (in million Canadian dollars)", Retrieved from: https://www.statista.com/statistics/478574/public-relations-services-operating-expenses-canada (accessed January 8, 2019).

(3) Neuhierl, A., Scherbina, A. and Schlusche, B. (2013). "Market Reaction to Corporate Press Releases," Journal of Financial and Quantitative Analysis 48(4): 1207-1240.

(4) Ryan, P. and Taffler, R.J. (2004). "Are Economically Significant Stock Returns and Trading Volumes Driven by Firm-specific News Releases," Journal of Business Finance and Accounting 31(1/2): 49-86.

(5) Jegadeesh, N. (2000). "Long Term Performance of Seasoned Equity Offerings: Benchmark Errors and Biases in Expectations," Financial Management: 5-30.

(6) Chan, L. and Lakonishok, J. (1995). "The Behavior of Stock Prices Around Institutional Trades," Journal of Finance, 50(4): 1147-74.

(7) Jensen, M.C. and Ruback, R.S. (1983). "The Market for Corporate Control: The Scientific Evidence," Journal of Financial Economics, 11(1): 5-50.

Greg OwensAuthor: Greg Owens
About: Founder and principal consultant; has 25 years’ experience in the ICT sector. He’s led marketing teams for one of the ICT industry’s largest network equipment vendors, with global responsibilities for product marketing, brand management, demand generation, digital/social media marketing and global events.
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