Advertising vs. PR: What pays off?

June 17, 2009: 7:03 AM ET

A research study of the quintessential business dilemma has turned up some surprising answers.

Max Smith, Miami
I run a small company, and the recession is making me re-examine my advertising budget. I ran across claims that publicity may be much more cost-effective than advertising, but found no formal studies on it. I always thought PR was too expensive for small businesses, but in doing my research I posted my project on AllPublicists and got many low-cost offers from publicists. One firm, for example, doesn't charge anything unless they deliver results. However, most companies still put much more reliance on advertising than on PR. Is it because pay-for-results-only publicity such a new option, or am I missing something? Are there any studies on the subject?


By Kathleen Ryan O'Connor
, CNNMoney.com contributor

Considering all the time and energy that has gone into pitching everything from snake oil to fabric softener, you would think someone would have answered the age-old question by now: What's better, advertising or public relations?

"It's a little bit of a complex question, actually," says David Michaelson, president of Echo Research and a leader in communications research. "The answer is, it depends on what you want to achieve. Advertising and PR have decidedly different benefits, and each contributes differently to your communication goals."

Michaelson and research partner Don Stacks, a public relations professor at the University of Miami, tackled this dilemma in a major study that began in 2004. So far, they've found was little difference in the results from advertising and PR, contrary to that conventional wisdom that public relations -- ie, "free" publicity -- is always better.

To conduct their research, Michaelson and Stacks had to find a scientifically rigorous way to measure each approach. They created the fictitious product "ZipChips." The snack was perfect. "It had no sodium, no calories, no fat, tasted great," Michaelson says. "What's not to like?"

They created a fake story about the chips in a mock-up of The New York Times, and also made a fake advertisement. Then they quizzed mall shoppers on their impressions.

"They tended to perform pretty much the same," Michaelson says. "At every single point of measure, when you found out about the very basic level of awareness and intent of purchase, there wasn't a lot of difference between the two."

There were a few areas of divergence. When it came to communicating depth of information, public relations was more effective. Ditto for the "relationship" between a product and person, and for inspiring thoughts about how it might fit into their lifestyle. But with advertising, the message was much easier to control. With PR, you not only can't guarantee placement, you have little say in what comes out on the other end.

So the researchers found that the simple answer is "there is no simple answer," Michaelson says. When you are dealing with choice between PR and advertising, the answer isn't one or the other, it's both.

Veteran publicist Michelle Tennant Nicholson agrees, and notes that effective doesn't have to mean expensive.

There's an old adage in the business, she says: "You pay for advertising and you pray for PR."
Rubbish. "It couldn't be further from the truth, and a lot of small business owners are confused," says Nicholson, co-founder and co-owner of Wasabi Publicity in Asheville, N.C.

In her view, advertising generates sales while PR boosts your business's visibility and credibility. "PR is one element of many other aspects," she says. "I think people are getting a disservice if they're told, 'don't use advertising' or 'just use PR.'"

So can you drum up good publicity when every penny counts? The concept of paying only for results in public relations is not new, though delivering service exclusively over the Web is somewhat novel. But Nicholson says small business owners can do a lot to garner positive press for the best price of all: free.

Free sites such as PitchRate.com, which Nicholson helped found, and Help A Reporter Out narrow the gulf between you and the media. If you have an area of expertise or compelling personal story behind your business, sign up on those sites and put your shingle out. If it's relevant to a reporter or producer, they will contact you. And it's not just free until a story happens-- it's completely free.

Give us your advice: Check out recent "Ask & Answer" questions.

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