Deborah Radman has lost track of the amount of time and money
she has saved by talking to industry analysts who "really get to
the nub" of what she needs to know to properly advise her
clients.
But the credibility analysts provide cuts both ways. Radman, who
heads Stanton Communications' New York office and Corporate
Practice Group, and is also chair-elect of the Counselors Academy,
recalls a conversation she had with a senior researcher who told
her that analysts' influence is so significant that they can get a
company "removed from an RFP (Request for Proposal) process just by
saying, 'You know, I have never heard of that company.' So in order
to be a player, you have to play."
Radman's comments were part of PR NEWS' February 25 virtual
seminar, "Analyst Relations: Communications Strategies That Work."
The online seminar addressed many of the strategies needed to build
and nurture analyst relations in a post-Regulation FD environment,
including how to integrate the efforts of AR, PR, IR, marketing and
human resources, finding the right mix between AR and media
relations and the brave new world brought on by Sarbanes-Oxley and
other efforts to reform - cue the strings - corporate governance.
(As a general rule, AR deals with industry analysts and IR execs
deal with financial analysts.)
With just a few choice comments in, say, a trade magazine that
covers your market, analysts can validate a company, product and/or
service. Analysts also play an important role in influencing
potential partners, investors, customers and competitors. They can
provide valuable insight when you go to market with your
prospective clients and offer "information that will make your
market entry a lot smoother," Radman says.
Enhancing analyst relationships is crucial in the current
climate, as consumer mistrust about corporate America shows no sign
of abating. Even so, with times still tight, corporations often see
"Analyst Relations" as a line item that can be cut from the overall
budget. Radman says that kind of thinking is shortsighted when you
consider current financial trends. "In the end, it's worth fighting
for to maintain some link to what the analysts are looking at and
what they are thinking about in the marketplace."
The bar for financial compliance has been raised dramatically by
the advent of SOX and Reg FD, although it's still an unknown
whether the push for greater transparency will build trust in a
company or open the door to further scrutiny.
"Part of that depends on your relationships with investors,
analysts and the media and how you handle that very question," says
Scott Mall, president of Mall Communications and vice
chairman/chairman-elect of the Corporate Section of the Public
Relations Society of America. "A lot of companies have used Reg FD
to clam up -- I don't think that's what it was intended for - and
the smart companies have used Reg FD to push the envelop and be
transparent and have reaped the benefit, although it hasn't been
easy."
Mall focused on finding the right mix among all the different
communications elements throughout the company, such as PR, IR and
media relations. "Effective investor relations is a hybrid of
finance, communications and marketing," he says. "What this means
is making sure management understands what makes the company's
stock special or unique, and the company positioning that
uniqueness in the minds of the investment community."
Half the battle to effective analyst relations is an ability
among all the different communications execs to make sure they are
on the same page when gathering information to provide to analysts
- easier said than done.
Although establishing a rapport with industry analysts is tough
-- both in terms of time and investment -- it's a lot more
preferable than the alternative. Still, large gaps exist between
the level of disclosure investors want and the level that
management feels it should provide. "A company that doesn't want to
talk usually trades at a lower level than one that's willing -- all
things else being equal - to speak to its publics," Mall says, who
adds that research shows that smaller gaps in communication tend to
correspond to better stock price performance. In fact,
non-financial information drives more than one-third of investment
decisions.
Robert Carlton, VP of SparkSource, which also specializes in
tech PR, homed in on the online aspects of analyst relations.
Carlton, who has handled AR, PR and IR for both large, global
companies and start-ups, said one of the biggest trends in analyst
relations that PR execs can take advantage of is one-on-one
communication.
"The last thing you want to do is invest a lot of time and money
into fancy graphics for your analyst newsletter," she says. "It's
an immediate turnoff if it's an e-mail that's going out to dozens
of people. [Analysts] want to see something that is more personal
and don't want to see a rehash of the same news that's been sent
time and time again."
Contacts: Roberta Carlton, [email protected];
Scott Mall, [email protected]; Deborah
Radman, [email protected]
The right mix between Analyst Relations and Media
Relations
Responsibilities of today's IR/PR practitioner include:
- Assist management; define strategic messaging and
positioning - Develop a comprehensive plan for implementing both required
financial reporting and communication of non-financial of
"intangible" information - Monitor shareholders and determine if that investor mix is best
suited to the company - Provide feedback from the investment community, analysts and
media to your management (2-way communication/window in and window
out) - Evaluate whether marketplace truly understands your company,
its business and operations
Conducting frequent and focused communication with
industry analysts
An effective IR program can be "tie-breaker" for analysts
choosing among similar companies
Tips to be attractive to analysts:
- A willingness by CEO/senior management to be available to
investment community (within Reg FD and Sarbanes-Oxley limits) - Have a clear, concise and accurate message, with major players
(CEO, CFO, IRO) up to speed and rehearsed - Have an effective IR section of the company website
- Hold conference calls at convenient time/on convenient day
- "Good relationships with analysts - built on integrity,
credibility, trust, responsiveness and evenhandedness" (Paul
Gifford, Goodrich Corporation)
Preparing quarterly and annual earnings
statements
- Key is collective - not selective - disclosure
- Who is on distribution list
- Announcement of release date/time
- Announcement of quarterly earnings conference call date/time
and how to access - NIRI/SEC/relevant stock exchange
Dealing with negative publicity from analysts (and the
media)
- IR/PR practitioners need to help management understand
analysts' perspectives - Practitioners also need to get involved in strategy
- Work effectively with analysts/be a strategic practitioner
- Learn to speak in listeners' language
- Anticipate/understand/answer the FAQs about your company, its
business, business plan and goals - What sets strategic IR/PR practitioners apart from
tacticians
Source: Scott Mall/Mall Communications