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What is the RONI (The Return on NOT Investing) for PR Services?

Posted on Mon, Jun 06, 2016

Recently I read a post on David Fields’ blog, “Irresistible Consulting Moments,” with the headline “The Value Myth.” David is a consultant to consultants, helping them market themselves better and be more successful at selling their services. The gist of the blog post: there’s a pervasive myth in sales which trips up many sales people, that the most effective way to sell is to present the value of the product or service to a prospect. Actually, he said, the way to sell is to show potential clients what they’ll lose by not buying. What he wrote must have struck a chord with a lot of readers, since there were quite a few interesting comments at the end of his blog.

One comment that resonated with me was an explanation of the term RONI – “Return on Not Investing.” I looked this term up online and found that it’s been used in quite a few contexts. One good example was an article by Derek Thompson in The Atlantic about “college RONI.”  With the
constant increases in the costs of going to college soaring year after year, and middle class incomes stagnating, some people conclude that the ROI – return on investment – of paying for return_on_investment.jpgcollege has substantially decreased since the financial benefits that used to come with a college education seem to have eroded.

Thompson pointed out the fallacy in that conclusion: while the ROI may have declined, ROI isn’t the relevant statistic to look at. What’s really key is the RONI – the return on not investing. Not going to college is financially much worse than going to college. “The typical college graduate earns $570,000 more than the average person with only a high school diploma over her lifetime,” he wrote.

In the public relations industry it has always been hard to prove a return on investment from PR services. These days the use of digital marketing analytics helps get closer to that goal for product marketing campaigns. However, it’s still not easy to calculate the ROI for corporate public relations. PR professionals can use research to prove increases in awareness and/or increased positive sentiment towards a company. However, it’s not easy to tie these to financial improvement. It can be done, but can also be costly.

For example, there has been research over the years that demonstrates a relationship between “share of voice” – meaning the relative amount of media presence a company has compared to its competitors – and positive business outcomes. This kind of research costs thousands of dollars, which is fine for very big companies that are spending millions of dollars on PR. However, for smaller companies where the PR budget is only a five- or six-figure amount, the cost of the research is out of proportion to the financial outlay on the PR itself.

It’s the consequences of not spending money on PR that should give some pause to marketing and PR decision-makers in companies.

For example, take the case of a startup with a revolutionary, game-changing new technology. Even if the company has patented its technology, there may be imitators. Without deep pockets, the cost for a small startup to get into a protracted lawsuit to defend a patent can be impractical. It’s inevitable that there will be copycats, and some will be better financed than the startup. The best way for the startup to protect itself is to move quickly to build visibility and gain market share. That way, even when someone else tries to imitate the technology, the startup will have already created some valuable momentum. The consequence of not using public relations in this example is giving competitors the chance to catch up and leave the startup in the dust.

With startups, the use of budget for one purpose instead of another is a harrowing juggling act every day. That juggling act, while maybe not as dramatic for larger, better established companies, is nonetheless very familiar to executives in all kinds of companies and industries. PR professionals would be well-served to present the concept of RONI to PR budget decision-makers.

By Lucy Siegel

Bridge Global Strategies, a Didit Company

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Tags: budget, PR costs, ROI for PR, return on investment for PR

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