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Advertising Value Equivalency: How to calculate it?

Advertising Value Equivalency: How to calculate it?

Home Blog Digital Marketing Advertising Value Equivalency: How to calculate it?

Advertising Value Equivalency (AVE) has long been controversial in public relations and marketing. It attempts to measure the value of earned media by comparing it to the cost of equivalent paid advertising.

If your brand gets a quarter-page article in a magazine, the AVE would estimate how much that space would cost if it were an advertisement.

AVE is now considered outdated and often criticized for being inaccurate and misleading. Many professionals argue that it doesn’t truly reflect the impact of earned media coverage.

They suggest that PR campaigns can bring much more value through engagement, brand reputation, and long-term relationships rather than just comparing it to ad costs.

So why do some still use AVE?

Simply put, it offers a quick and easy metric. However, newer methods and tools, such as social media analytics, provide more precise and meaningful ways to measure the success of PR efforts.

These alternatives help capture the true value earned media brings to the table.

Understanding AVE

Advertising Value Equivalency (AVE) helps measure the monetary value of earned media by comparing it to the cost of paid advertising. This section will cover its definition and historical significance in public relations.

Definition of AVE

AVE calculates the value of media coverage by determining the cost of buying an equivalent amount of advertising space or time.

PR professionals use AVE to show the impact of their work. It translates earned media into a dollar value, making it easier for stakeholders to understand.

While some argue that PR brings more value, AVE provides a starting point for quantifying that value.

Adding a multiplier to the basic AVE formula, such as doubling the calculated value, can emphasize the additional credibility and influence earned media has over paid advertising.

The Historical Context of AVE in PR

In the early days of PR, professionals needed a simple way to demonstrate their success. That’s how AVE emerged. As paid advertising grew, the need to quantify the value of earned media became more apparent.

AVE became popular in the 1940s and 1950s when print advertising was dominant. As media channels expanded, so did the use of AVE.

Over time, the metric faced criticism for oversimplifying the value of PR efforts. Critics argue that AVE does not account for factors like audience engagement or sentiment.

Despite its limitations, AVE remains a widely used tool. Many firms still rely on it because it provides a tangible way to discuss PR value in financial terms.

Calculating AVE

Calculating Advertising Value Equivalency (AVE) involves understanding the formula, the importance of advertising rates, and the potential use of multipliers to gain deeper insights.

Breakdown of the AVE Formula

The Advertising Value Equivalency formula is fairly straightforward: AVE = SIZE x RATE. Here, SIZE refers to the amount of media coverage, such as the number of column inches in a newspaper or the duration of a TV segment.

For instance, if you have an article measuring 10 columns and the rate for a single column is $10, AVE would be 10 x 10, totaling $100. This metric provides a basic monetary value for PR coverage.

The Role of Advertising Rates

Advertising rates are crucial for calculating AVE. These rates can vary depending on factors like publication, medium, and audience reach.

A larger circulation or higher viewership typically commands higher rates.

Rates are often detailed in a publication’s rate card, specifying costs for different ad sizes and formats.

Knowing these rates allows accurate calculation of what it would cost to buy equivalent ad space, making the AVE more precise.

Incorporating Multipliers for Enhanced Insights

While the basic AVE formula provides a starting point, many PR professionals suggest that earned media often has greater value than paid ads. To reflect this, they might incorporate multipliers into the formula.

For example, if editorial content is perceived to be 1.5 times more valuable than ads due to higher trust and engagement, a multiplier of 1.5 is used.

So, if your basic AVE is $100, applying the multiplier would adjust the AVE to $150, giving a more nuanced view of PR impact.

AVE in Modern PR and Marketing

The role of Advertising Value Equivalency (AVE) in PR has evolved, especially in the age of digital and social media. Examining its transition from a simple metric to a tool that, when integrated wisely, can offer valuable insights is essential.

From Vanity Metrics to Valuable Insights

AVE began as a straightforward metric to equate PR mentions to the cost of advertising.

Yet, in modern PR, the picture is more complex. Critics argue that AVE can be too simplistic and may not capture the true impact of PR efforts.

For instance, a positive news article might carry more value than an equivalent ad due to its perceived credibility.

Therefore, many PR professionals apply multipliers to the basic AVE equation, reflecting the additional trust earned media brings over paid placements.

Integrating AVE with Digital and Social Media

The digital age has transformed how PR value is measured. Today, integrating AVE with digital metrics like social engagement and sentiment analysis can better reflect the influence of a PR campaign.

For example, a blog post shared thousands of times on social media could have a more lasting impact than a traditional ad.

Using formulas incorporating traditional AVE and digital metrics is the best way to move forward.

Social engagement metrics, like the number of shares or comments, can offer a fuller picture. Additionally, sentiment analysis helps gauge the emotional response to the content, adding more nuance to value assessment.

Mention sentiment analysis

Critique and Contemporary Alternatives to AVE

Advertising Value Equivalency (AVE) has faced significant critique due to its limitations and inaccuracies. Modern PR has evolved, with more effective metrics such as the Barcelona Principles guiding the way forward.

Limitations and Criticisms of AVE

AVE estimates the value of PR by comparing it to advertising costs, yet this approach is often criticized.

Accuracy: AVE provides a simple number, but it’s not reliable. It assigns value based on ad rates, ignoring the message’s impact or audience engagement.

Credibility: Many experts argue AVE lacks credibility. It doesn’t account for the quality of the PR content, and comparing PR to paid ads overlooks the unique nature of earned media.

Limitations: This metric also disregards intangible benefits. PR isn’t just about visibility but also about building relationships and trust, which AVE cannot measure accurately.

The Barcelona Principles and PR Measurement Evolution

The Barcelona Principles, established in 2010 and updated in 2015, aim to create a more comprehensive approach to PR measurement.

Framework: The principles emphasize transparency, consistency, and focus on outcomes rather than outputs. PR should align with organizational goals instead of just generating media value.

Metrics: New metrics consider audience engagement, sentiment analysis, and behavioral changes.

These are more reflective of PR’s real impact compared to simple exposure values.

Evolution: PR measurement now includes both quantitative and qualitative data.

Methods such as surveys, social media analytics, and web traffic analysis provide richer insights into a campaign’s effectiveness.

AVE’s Role in Strategic PR Planning

Advertising Value Equivalency (AVE) allows PR professionals to quantify the value of their earned media. By comparing PR efforts to advertising costs, AVE can help in setting measurable goals and evaluating campaign success.

Incorporating AVE into PR Campaigns

Using AVE, PR teams can translate media mentions into dollar values, making it easier to report results to stakeholders. This helps in showing the effectiveness of PR in monetary terms.

For example, if a magazine article would cost $5,000 as an ad, the PR mention can be attributed the same value.

Media monitoring tools are essential here. They track coverage and help calculate AVE by comparing space or airtime. This aligns PR strategy with measurable KPIs, giving a clear picture of audience reach.

Example: If a PR campaign secures a feature on a popular blog, AVE helps in determining the value of that placement, aiding in the overall ROI calculation.

PR coverage

Setting Targets and Measuring ROI

AVE is useful for setting realistic PR targets. By estimating the potential AVE of different media outlets, PR teams can prioritize efforts on high-value publications, ensuring resources are efficiently utilized.

AVE provides a benchmark for evaluating ROI. Comparing the cost of PR activities with their AVE helps assess whether the investments are paying off.

Regularly updating AVE calculations keeps the PR strategy dynamic and adaptive.

Case Study: A company aiming to increase brand equity can set a target AVE based on previous campaigns. Tracking progress towards this target helps continuously refine PR efforts.

By incorporating AVE into the strategic planning process, PR campaigns become more goal-oriented and transparent, providing clarity on the financial impact of PR activities.

Want to get access to all the metrics to calculate AVE? Try Mention for free.

Lucas Carval

Lucas is a Growth Specialist at Mention, where he focuses on digital marketing, SEO, outreach, and social listening. Since joining Mention in October 2023, he has quickly made an impact by implementing strategies that enhance the company's lead generation. With over 2 years of experience in digital marketing, Lucas previously grew a streetwear Instagram page network from 0 to 120k followers in a year. He holds certifications in Google Analytics and has been recognized for his expertise through his bachelor's degree in Economics and Management.

Growth Specialist @Mention