How to Calculate the Advertising Value
A business can receive free publicity in the form of magazine or newspaper articles if it is newsworthy. Companies calculate advertising value equivalency (AVE), in order to measure the effectiveness of this free publicity. Unlike paid advertising where the value of the ad relates directly to the ad cost, free publicity does not have an intrinsic value. PR firms use advertising value calculations to attract clients by showing how much the paid advertising would cost in comparison to PR efforts. Many experts feel that advertising value calculation does not accurately portray PR worth. AVE, however, can prove beneficial when combined with other marketing analysis.
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Instructions
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1
Find a media kit for the media source where your free article was published. A media kit contains advertising prices and specifications. Download media kits from company websites or contact media outlets by phone or email to request a media kit.
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2
Measure the length and width of the free PR article to calculate total size. For example, if the news story ran 6 inches long and 3 inches wide, consider the total size as 18 inches.
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3
Examine the media kit to find out how much an ad costs per inch. If the media kit lists ads in terms of page sizes such as "full page ad," "half page ad" and "quarter page ad," and does not list prices in terms of inches, then determine price per inch by determining number of inches per ad size. For example, if a quarter page ad costs $120 and is 4 inches long and 3 inches wide, then calculate the total ad size as 12 inches and cost per inch as $10.
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4
Calculate size of the PR article, determined in step 2, by the price per inch, determined in step 3. For example, if the PR news story ran a total of 18 inches and each inch of advertising costs $10, then the advertising value of the story would be $180 (as of 2010).
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5
Multiply the calculated advertising value by a factor representing the content of the article. PR news stories that contain heavy product endorsement often yield much higher revenue than a paid ad, but you cannot accurately calculate this added value. PR firms often multiply the advertising value by an approximate number, based on their knowledge of advertising success. For example, a PR firm may determine that a news story presented very a positive picture of a company and therefore the AVE should be multiplied by four. Using the calculations in step 4, the total advertising value, in this case, would equal $720.
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