Why This Common PR Agency Metric Doesn’t Apply To Entrepreneurs

Here’s what to measure instead if you’re pursuing media.

“I just landed a paid column in Yoga Journal!”

 

That was what a text I received last week from a former client said. We worked together last year and created a strategy on how she could better market herself, and now she’s left the nest and lands new opportunities all on her own.

Why This Common PR Agency Metric Doesn’t Apply To Entrepreneurs – Post Outline

>>> Advertising Value Equivalency (AVE)

>>> Why AVE Is Meaningless For Most Entrepreneurs

>>> What To Focus On Instead

>>> Final Takeaways

The text felt good. And — it was a complete 180 from the usual snake oil and hot air I’d experienced in PR culture.

 

Just a few years ago, I was at a startup PR agency focusing on content. To do my job, I needed deep clarity on how the company justified ROI.

 

What I discovered was an equation agencies use to“prove” how valuable PR and media hits are to the clients.

 

It’s called Advertising Value Equivalency.

 

And while I love the idea of this metric… it’s mostly B.S. for entrepreneurs.

 

Let’s discuss why.

Advertising Value Equivalency (AVE)

Is a metric in PR culture that first appeared in the 1940s. It was a way to calculate ROI from earned media: Interviews, write-ups, magazine spreads, radio and TV appearances, and so on. Business owners want to see ROI on pretty much everything they invest in, so the data point was welcomed with open arms at the time.

 

AVE is simple enough: You take what an ad would have cost in a magazine, newspaper, TV show, or podcast, and then you apply that rate to your PR placement.

 

Generally, it would be:

 

AD RATE x SIZE OF COVERAGE = VALUE

Here’s an example: If a half-page ad in a newspaper costs $1,000, and you have an interview and your photo in the paper instead that takes up that much space, one could argue that that coverage was worth $1,000.

 

But as we all know, people hate ads. According to a stat from Cision, 92% of people trust earned media, whereas only 50% trust ads. (Feels like in the last two years the misinformation mills have likely driven both of these numbers lower.)

 

To accommodate for this difference in trust, PR companies decided decades ago to add a multiplier to advertising value equivalency.

 
 

This is where things get weird

 

The AVE is then put through the multiplier, which is usually 2 or 3. (But sometimes 6 or 8 or 12. Yes, really.) So now your newspaper spot is magically worth $3,000 instead of $1,000.

 

(Shit like this is why entrepreneurs don’t trust PR people.)

 

The obvious problem with AVE is that it’s really antiquated. It was created in the Mad Men era, decades before social media and testimonial culture flipped information power dynamics.

 

But it still gets used a lot as a measurement of ROI. That’s why a publicist will spend six months getting you a quarter-page spread in a national print magazine and then tell you that the placement was worth $100,000.

 

You raise your eyebrows, check your bank account, and see no evidence of that number. But maybe this is how it works? 🤷🏻‍♂️

Why AVE Is Meaningless For Most Entrepreneurs

These comparisons might be interesting to corporations who are spending millions on advertising.

 

But for most small business owners and online entrepreneurs, Advertising Value Equivalency doesn’t matter. Here’s why:

 

…You weren’t going to buy a huge magazine spread or TV commercials anyway.

    • Were you going to run radio spots on your local radio station for your new free downloadable checklist?
    • Were you going to buy a full-page ad in Forbes for your new self-published book on Amazon?
    • Were you planning to buy a commercial to air during the Olympics broadcast for your online course launch?

NO.

 

As a small business owner or startup, it’s very unlikely you’re spending on anything so broad that Advertising Value Equivalency would be worth the comparison.

 

Let’s say you had $50,000 in a year to throw around for marketing. That’s a healthy number for a consultant or entrepreneur, but still not much when it comes to penetrating mainstream media.

 

You’d have to be strategic and ensure your investment stretches as far as possible.

    • You’d do more tactical and targeted paid ads, or
    • You’d produce and distribute a fun viral video, or
    • You’d contract a publicist or agency for a year to advocate for you on your behalf.

And then you would leverage the shit outta that investment.

 

You DO want earned media in your marketing strategy. Earned media helps you stand out from the crowd and get more attention or better attention for the same ideas than if you were self-publishing alone.

What To Focus On Instead

PR for entrepreneurs is DIFFERENT.

 

There are other factors besides “I was seen on TV once” that you’d want to leverage. Here are a few I like to focus on.
 

 

🏆 Media helps you stack up credibility now that you can leverage later

 

Once you have a media hit and properly document it, you own it forever. Why stop the credibility bump after 15 minutes of fame? Y’all are sleeping on your media hits. Those could be repurposed into your website or a welcome email sequence.

 

Here is one of mine. About 7 weeks into being on my email list, a scheduled email sends out to subscribers that highlights a past Entrepreneur article of mine. I wrote this article over a year ago, yet it gets new eyeballs and new replies every single week.

advertising-value-equivalency

Screenshot from the author

This is reason #578 you should have an email list. Y’all know I can’t go one article without plugging email.

 

 

🏆 Media helps you position yourself for premium pricing

 

You can charge 2x, 4x, or even more for the same product or service when it is positioned in a premium way.

 

To do this, however, you need two things: Relevance and evidence.

    • Your offer has to be relevant to your avatar. There’s a saying in business: The riches are in the niches. Become a specialist and you can raise your rates.
    • You need evidence that you know your stuff. Testimonials do this. Content marketing does this. Media also does this. It’s good to have all three in the picture.

TL;DR: Charge more money. Relevance and evidence help you do that.

 

 

🏆 Cementing kickass SEO

 

The domain authority of big media sites is high, so if you have a placement, it’s likely to show up in Google searches for your name or your company’s name.

 

When I began writing for Entrepreneur, my author page almost immediately became a top-5 result for web searches on my name. I checked just now, and in this query the page ranked second, just below my website.

advertising-value-equivalency

Screenshot from the author

This visibility remains very stable once you lock in placements.

 

Also, gentle reminder: Every single Google search on your name or company is a free opportunity to showcase what other people on the internet have said about you.

 

 

🏆 Momentum

 

I want to be clear here: Media begets more media.

 

A big reason my client mentioned above is getting bigger and bigger opportunities is that she has a proven track record of placements.

 

If you’ve never published anything on the internet, anywhere, ever… getting that show on Netflix or that really big book deal is going to be a challenge.

 

Get some momentum by landing these hits now rather than later. To do that, you have to actually start.

Final Takeaways

Advertising Value Equivalency is a shifty metric. But let’s not throw the baby out with the bathwater; earned media placements can give your brand a hit of instant credibility and add a luster of trustworthiness to your online efforts.

 

Ignore bizarre ROI metrics, focus on how to get in front of new audiences in a quality way, and before you know it your online efforts will take off.

Thanks for reading. 🙏🏼

 

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Nick Wolny is a media and marketing strategist for entrepreneurs. Named a “40 Under 40” by the Houston Business Journal, he’s a contributor for Entrepreneur and Fast Company and a technology commentator for NBC and FOX with over 60 live TV appearances.