If you’ve been paying attention over the last decade you’ll know one thing. Smoking Gun is a data-driven expert in PR strategy and measurement. Neither of which are fixed. The way we evaluate campaigns is always changing in line with consumer behaviour.
One of the biggest shifts we’ve observed over those ten years until is marketers and PR professionals, in-house or agency, increasingly turning to econometrics. But what exactly does the term mean, and is it really a silver bullet for these sectors?
Why econometrics is so important in PR strategy
Both marketing and PR have suffered badly from a perceived lack of proof and evidence. ROI remains difficult to show even in today’s big data age. This is because the metrics we measure don’t quite match the way humans work. Take a look at our post on Nudge Theory for an example of campaigns with low immediate ROI, and high long term impact.
Econometrics looks to counterbalance all that uncertainty. The idea is simple but the execution complex. Econometrics is a statistical-based methodology that quantifies the relationship between cause and effect. It creates a mathematical model that can attribute sales and reputation outcomes to marketing inputs. It’s interchangeably referred to as Marketing Mix Modelling or Time-series regression.
When are econometrics relevant?
It’s a common misconception that econometrics are a justification tool to prove ROI post-campaign. This is a naive and basic view of the practice.
The real benefit is understanding where money was thrown away and where more investment — of both time and cash — could pay dividends down the line. Seen from this angle, it can be highly effective at future planning, calculating and allocating new budgets and forecasting. It’s part of a ‘do-learn-do’ culture of continued improvement.
Why are econometrics increasingly used in PR strategy?
We don’t need to explain how fragile the UK and global economy is right now. From trade wars to Brexit, costs and sales potential have an incredible number of variables influencing them. PR strategy and marketing approach are two things that regularly struggle in times of uncertainty, therefore the need to prove value has never been higher.
The downsides of econometrics
As we recently blogged, the metrics companies use to gauge success and strength are being questioned on a daily basis. Some firms are now including wellbeing, sustainability and even hope within their measurements for success. This ties in with what we already know about consumer and customer purchase drivers increasingly including ethics, morals and positive global citizenship.
Sadly for econometrics, these concepts are difficult to quantify through data. We can, of course, look to staff surveys or read the level of environmental waste a firm is creating in clear numbers. Nevertheless, the way measurement is changing shows that businesses are maturing into a 21st Century’s mindset, and evaluation is being viewed differently, with more long term goals in mind.
We’re not saying ignore econometrics, we’re simply saying the buck shouldn’t stop there.
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