PR and ROI: what is the dollar value of a reputation?

Being a small business owner, I clearly understand the value and necessity of "ROI" measurement. When we invest in something, we want to understand the returns on what we spend. While that is a simple concept to explain and understand, as a public relations agency, ROI measurement is a source of unending frustration and argument. I've conducted extensive research on PR ROI, discussed it with various colleagues, and (sometimes amusingly) scrolled through pages and pages of arguments among PR pros on online public relations discussion boards... forever in search of a clear way to scientifically measure something that is, at essence, an art. The ever-elusive prey: a firm measurement of ROI for a public relations (or social media) campaign.

Unlike advertising (with its simple "I pay x and I see x" ROI measurement), public relations--especially in the social media age--is entirely not scientific. We craft a message; we communicate a message to influence-makers; and we push that message out via social networking. In essence, we put a brand message in the public's mind. We lay the groundwork and ripen the fruit for plucking when it's time for the sale. But, with much of public relations being a subconscious impact... while incredibly powerful, it is equally incredibly difficult to ascertain. And nearly impossible to attach a dollar value to. We try, by measuring returns versus goals or, at a most basic level, monetarily converting the space allocated to an editorial placement into the cost for that ad space in a particular media. Both, however, fall short.

As humans in the 21st Century, we receive so many messages via so many mediums, how does one break down the value of each? For instance... I drive a Saab. I've never owned or driven a Mercedes. I've never (to my recollection) even been a passenger in one. Thus, Mercedes as a vehicle is entirely out of my personal experience. Yet, if a friend shopping for a luxury vehicle asked me to recommend a brand, Mercedes would be one of the first I would mention. Why? Their advertisements? Their editorial mentions? Their sponsorships like New York Fashion Week? How can I possibly measure?! And, if my recommendation resulted in the sale of a Mercedes, how would Mercedes' PR or ad agency monetarily measure that PR ROI?

Obviously, Miamore Communications works on a much smaller scale than Mercedes. And, yet, is the brand recognition we create for our clients, within their target markets, any less valuable to the clients themselves? Absolutely not. Is it just as difficult to measure? Absolutely!

Interestingly, as I pondered and researched public relations/social media ROI this week, I had two clients enjoy the power of Miamore's efforts. First, Lori Carr, CEO of long-time Miamore client Tomgirl Tours, was at an event and heard a stranger say "I LOVE Tomgirl Tours!" Second, a Miamore intern overheard a random conversation about how exciting it was that Providence was holding a fashion week this spring. Neither Tomgirl Tours nor StyleWeek Providence has invested a penny in advertising. In both cases, those enthusiastic word-of-mouth recommendations seemingly resulted entirely from effective PR messaging. So, my question: what is the dollar value on that??

While businesses ask for detailed measurement of ROI, and Miamore Communications (along with every other PR agency out there) scrambles to find some way to report success monetarily... I look at these two examples, scratch my head and wonder: how can one possibly determine a dollar value--or a scientific formula to calculate the monetary value--for a strong reputation and positive word of mouth?