Putting a price on PR coverage is notoriously difficult.
In the past, calculating the AVE of a piece was the go-to method for measuring how much placements were worth compared to paid-for advertising activities. Putting a price on coverage meant clients felt like they were getting a solid return on their investment, and it made signing off bigger budgets a no-brainer.
But with the industry now rightly moving away from AVE, how do we show clients that they’re getting bang for their buck?
This is the second post in our alternatives to AVE series.
In the first post, we highlighted how you can work out the volume of traffic being driven to your piece through Google and, from this, how much the equivalent would cost in an ad format. In this post, we’re going to take a look at the direct impact your coverage has and why you should consider the lifetime value of a customer rather than just write them off as a one-off buyer.
What is Customer Lifetime Value?
Customer Lifetime Value is looking at the direct value a piece of editorial drives and multiplying it by the number of times a customer is likely to make a purchase.
Basically, if someone is reading a piece, sees a product they like mentioned in that piece, and goes and buys it, that’s what we call the direct value of a piece. If they like the product and continue to buy it year after year, the value of that customer is going to increase over time. This is the customer lifetime value.
Let’s dig into it more.
This all forms part of the AIDA model (Awareness, Interest, Desire, Action), which is one of the best-known marketing models for guiding customers through the sales funnel.
Most PR measurement looks at awareness, but it’s hard to put a monetary value on this simply because there are usually other marketing tactics in play between the initial stages and the bottom of the funnel when the consumer becomes a buyer.
However, it is possible to put a price on the communication that led to direct action.
Think about it:
If someone reads a piece of editorial and goes on to purchase from there, it’s pretty much a sure thing that it was the editorial that pushed them to buy.
And editorial content is more important than ever in the user journey. Almost 95% of shoppers actively search for reviews online before making a purchase, and it’s during this research stage that your editorial coverage is likely to pop up.
Have you had a look lately at the terms that prospective buyers of your brand may be using to research your products?
For instance, if people are searching for “reviews of <<insert product name>>” then it’s pretty certain they are looking for one last piece of reassurance before they buy. And if your editorial appears then, they are more likely to purchase from there.
It’s worth remembering that, before a piece has had a chance at ranking naturally on Google, the number of direct buyers is going to be small. This is because the coverage is likely to have landed when a user is in browsing mode rather than research mode.
But if, after a few months, your coverage is starting to appear for certain keywords and search terms, take a look at the number of sales that coverage is directly getting.
It may seem like nothing if it’s just a handful — but fear not! This is just the tip of the iceberg, and that’s fine for the first step.
Now check back in on it next month, and the months after that. As time goes on, a great piece of content will continue to rank for more terms and be seen by and convert more people. Think of your coverage like a snowball that’s gathering more and more customers as it rolls through the months.
But it doesn’t stop there
At the moment, you can prove that your coverage has converted a handful of people. The numbers might be small, but remember that those sales are one-off purchases.
Now think about whether people only buy your product once or whether it’s something they are likely to repeatedly buy (we’re talking about recurring purchases here, like makeup, gym memberships, perfume, and specific food items etc).
Say, for example, you run a campaign for a new foundation brand and get editorial coverage in a number of places. If someone likes what they see and switches their current foundation brand for the new one, that might be a one-off payment of £30.
But think about how regularly someone might run out of foundation. If it’s 4 times a year, you can multiply the one-off price by 4 to get £120 for the year just for that customer. The customer might then stay loyal to the brand for 10 years and continue to buy 4 foundations a year at £30 — that’s a lifetime value of £1,200 for that particular customer.
If the product you’re securing coverage for is more of a one-off purchase, like a TV or an oven, then working out the lifetime value might not be the best fit for you. But, if your customers generally turn into loyal, repeat purchasers, then the lifetime value will provide a much more accurate price on each customer.
Instances, where you create an account associated to each buyer, are easier to model out here but market research may also help you input brand loyalty.
How to Work Out Customer Lifetime Value.
What you need to get started:
- Access to analytics
- An understanding of the lifetime journey and typical repeat purchases of a customer
You can then use our free tool AnswerTheClient to see how much traffic and transactions your coverage has generated. To do this, simply bung your URLs in and we crunch all the data for you.
Then multiply the value by the average number of purchases your customer makes (so the foundation customer we used as an example made 40 purchases over 10 years).
Even if you don’t have an e-commerce site, you can use the same data to do similar calculations.
Say, for example, your coverage achieved 50 brochure downloads. Find out how many downloads typically lead to a sale. If you usually get a sale for every 10 downloads, you can assume that, for every 10 downloads, you’ll have generated a sale. You can then use this information to multiply the amount of times a customer tends to make a purchase from you.
Ask yourself these questions:
Firstly, is your piece of coverage starting to appear in search results at the research stage? If so, the number of views it gets might start to snowball each month.
Secondly, have you checked to see if any of the coverage has resulted in direct sales?
Thirdly, have you considered the lifetime value of a customer based on how many products they’ll buy over the next years or even decades? Each sale on its own might not seem like much but, over time, those individual sales can lead to loyal customers that buy the same product time and time again.
If you’re ready to show clients just how much value your coverage has for them not just in the short term, but over months and even years, try calculating the CLV of customers and sharing the results with them.