Marketing, PR and Integrated Reporting

Terminology is important. Clarifying the concepts behind important terms has always been a passion of mine. So many conceptual blunders can be found in the so-called social sciences in particular, both in the past and today, and management and communications are rife with them. For this reason, I jumped with high expectations on an article tweeted by @JulianaRuizCobo about The Real Difference between marketing, PR, branding and advertising. Unfortunately, the author didn’t understand what PR is in relation to marketing because she doesn’t understand what public relations really is.

But before I explain some basic facts about PR and marketing, I would like to emphasize that the correct understanding of the said practices is important not only for practitioners and theorists of marketing, branding, public relations and advertising but for all of us who deal with issues of management, corporate governance and corporate reporting. The misconception of the above practices leads to fatal mistakes at all other levels of management. I will try to make this clear at the end of this post.

Marketing is not an umbrella practice!

Let me first clarify why marketing is not the umbrella under which public relations operates. Marketing and PR are two related practices but hierarchically on the same level. Neither is PR subordinate to marketing nor is marketing subordinate to PR.

It is relatively easy to separate and understand PR and marketing. Public relations deals with publics, while marketing deals with markets (as the name implies). There is a big difference between publics and markets. Publics exchange non-material values with businesses (and businesses exchange the same values with publics), while markets exchange money for businesses’ goods and services. Both value chains are important, but the underlying mechanisms, motivations, personal drives, and all the other elements that determine individuals and firms’ behaviour in each situation are completely different.

Being a market vs being a public

I behave differently when I find myself in the position of a market for a particular consumer company than when that same company pushes me into the position of a civil society fighting against a new plant to be built in my neighbourhood. I simply shape my relationships with that company as a market with money. When I buy a product, I consume that (market) relationship entirely. The fact that I can complain if I am not satisfied as a consumer is nothing compared to my decision that I cease to exist as a market for such a company. In the first case, the value chain still exists; in the second case, it breaks down.

On the other hand, my value chains towards such a company on the issue-level (public relations) usually cannot be settled with money. I can’t cease to exist as a public towards a company building a new building in my neighbourhood. The issue remains as long as we both exist. A company may be able to make up a value chain discrepancy to me with monetary compensation, but such compensation does not consume my relationship with that company. It only makes it more bearable for me. The public relations value chain remains, the issues remain.

As we have seen, the marketing level’s value chains are structured quite differently from those at the public relations level. Thus, practices that drive marketing and public relations are completely different and not subordinate to each other.

Publicity and public relations

I’m encountering public relations’ stated misconception in almost the same form for more than 20 years. Why does this misconception persist for so long?

The explanation is found in the same article to which I refer. Not only does the lay public fail to distinguish between publicity and public relations, but many practitioners and theorists do not either. Publicity is a practice that can also be understood as media relations. And since both public relations and marketing sometimes use media as a communication channel that allows both practices to communicate with targeted publics or markets, and since the term “publicity” is associated with publics, it is not surprising that over time the true nature of public relations has been forgotten and replaced with publicity. And since publicity is often a tool of marketing, the whole field of shortened public relations came under the umbrella of marketing in the form of publicity.

That is why professional public relations never speak of publicity but always of media relations. PR does not aim to sell anything but create an environment for constructive value chains between a company and its public.

The role of branding

Correctly, the brand connects and links marketing, public relations, and all other management practices. Each brand element in the Standard branding model can be seen as responsible for one practice or another, almost as each gene in the genome is responsible for different bodily functions or organs (phenotypes). (Please note my simplification: just as we cannot locate gene functions in such a linear explanation, neither should brand elements be understood as direct controllers of distinct management functions. The interrelationships are much more complex in both the genome and the brand). We know, for example, that the vision part of the brand formula is more market-focused, and the mission part is more public-focused, a distinction I have detailed in Brandlife.

Publics and Integrated Reporting (IR)

There are many examples in management by which the meaning of stated distinctions may be seen. I will refer to only one of them: reporting in the form of integrated reporting. Integrated reporting as a fairly new reporting concept intends to integrate financial capital with five other capitals. Three of these capitals that need to be managed, communicated and reported are human capital, intellectual capital and social capital. Value chains that form the aforementioned capitals are not based on markets but predominantly on publics. A company that does not have adequate publics, including all the necessary mental models that assume adequate public relations practice, do not form adequate value chains for these capitals, cannot report on them, and cannot build their value to the optimal degree.

Andrej Drapal