PR has no affect on sales…

You know the phrase “blinded by the light”? In addition to being a great Manfred Mann’s song it also reflects what happens to us when our product or company gets a beating in the press and all hell breaks loose internally and everybody runs around trying to put out the fire. But for the outsiders, even those who buys the product or from our company, it doesn’t seem to have much effect on their willingness to buy.

Can it be proved?
Of course this will make a lot of you start protesting and come up with tons of examples where PR indeed seemed to have an effect on short term sales. And I mean seems. The problem with most of these cases is that you might see a drop in sales during bad PR, but most haven’t really used any methods to confirm that the drop really is because of the bad PR. There is really only one way of doing this, and if you use it you can, with a probability of probably 80-95%, say that is has an effect or not. And I can, with a probability of 96,6% say that PR has no effect on our recruitment of bachelor students (being a private foundation, the students apply and pays to attend, so its just as much a sale as any other high end service product).

The method that will give you these answers is econometrics, or sales modeling. We are using econometrics to find the main factors that affects someone to apply. By doing so you will have a pretty good view of what factors affects your sales, and what doesn’t, and you can concentrate on the factors that have the biggest impact on your costumer’s decision to buy.

We evaluated about 160 cases of press during one year. About 10 of them were negative, 16 positive and the rest neutral. I will not go into the definition, but the first two should be easy to understand… 10 of 160 might not seem to be much, but the timing of the bad press was critical based on the application deadline and went on for a couple of weeks, but still didn’t  affect the target group’s decision to apply.

Some conclusions
First I will stress that this is not my attempt to make PR unimportant, it isn’t. What I am trying to stress is that things like bad press is normally a big thing for a company and can take away the focus for looking at the real reason for why your sales is taking a plunge.

  • My first conclusion is that this is a finding during one year and when this has been evaluated over several years it will be easier to conclude that this is in fact the case that PR does not have any short term effect on sales.
  • It seams to me that if PR should have such an affect it has to be consistent and over a longer time span nationally. Shell and Enron is companies that felt this the hard way during the years.
  • That PR doesn’t have an effect on sales in the short run doesn’t imply that it has no effect. As a factor for building a strong brand over time, PR is an important contributor, if used strategically.
  • The above example is of a high end service product with a lot of involvement from the buyer. So it’s impossible to say that the conclusion would be the same for FMCG products.

 If you have any good examples where PR has been measured using econometrics it would be great to hear from you!

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