Like a gladiator in the Roman arena, a company today waits with bated breath for a thumbs-up or -down sign from financial and industry analysts in the media ring. A positive
comment can send stock soaring and improve sales prospects, while negative remarks can cause a tailspin.
As a result, the courting of analysts for favorable opinions has become increasingly in vogue, both for the opinions themselves and as the opening salvo in an overall PR
campaign. The rules of courtship have not changed much over the decades, but the competition for analysts' attention has heated up in recent years.
Today's top firms receive thousands of overtures each month. "We get so many calls a day we can't respond," says Marty Kurowski, VP of marketing and events with The Yankee
Group, which provides research and consulting services for companies in the electronic marketplace. "We're trying to automate by using the Internet, so [companies] can register
online."
Similarly, Forrester Research draws 2,000 to 2,500 press calls and roughly 1,000 client or prospect calls each month, according to PR manager Michael Schirer. "[But] we do not
discriminate against or favor a firm if it's a client or not. We regularly turn down clients and take very interesting briefings from non-clients," he says.
Getting in the Door
In determining who will gain a review, analysts consider factors such as whether the business serves the industries they study; whether it's a new company with an interesting
product or technology; major strategic initiatives, such as a merger or moving into a new market; and their own research schedules.
"Let's say we know we have an email marketing report coming in three months," Schirer explains. "It makes it that much more important to get briefings."
While reporters and research firms often will show interest in the same types of announcements (a merger, for example), talking to the media is not the same as talking to
analysts.
"It's very important from the company's point of view that the media understand why [the move] is good from a business perspective," says Jeffrey Taufield, senior partner with
Kekst and Co., a corporate investment communications firm.
"Analysts want to know, too, but they also want to know the financial dynamics of the deal so they can model their companies, their following, to make a determination whether
to buy, hold or sell the stock ... The deal has to make sense. A reporter will say, 'Gee, that's a great deal.' The analyst will say, 'It makes all the sense in the world, but
they paid too much of a premium [or] it will be a boost to earnings on day one and we strongly recommend the stock.' Reporters aren't going to do the analysis."
A Really Good Show
A good analyst briefing will communicate a company's game plan in the coming months. A great briefing will provide context. "I think a lot of companies are learning now not
just to talk about the company but the industry. Play it up and say, 'By the way, we play in that space,'" Kurowski says.
"Our analysts - and I think it's reasonably true of most tech analysts - focus on trend-spotting, where the technology is going to be five years from now," Schirer says. But he
draws a distinction between analysts serving end-users, those serving vendors, and those operating on Wall Street.
Forrester's clients, for example, tend to be end-users looking to make purchasing decisions, while analysts serving vendors look at market size, potential and the direction a
company is headed. Financial analysts focus more on performance issues and what market potential means to the company.
As for "leave-behind" materials, Schirer recommends keeping them to an absolute minimum. "Most analysts prefer electronic [media], PDFs, a Web site - not media kits," he says.
"Don't add to the clutter. If there's something that's so critical you need to bring it to the analyst's attention, it can be done with email."
(Kurowski, Yankee Group, 617/956-5000; Schirer, Forrester, 617/497-7090; Taufield, Kekst, 212/521-4800)
-Patience Wait
Analysts: The Sequel
How are leading corporations strengthening their ties with analysts? What role should the PR agency play in the process? And how do financial analysts' concerns differ from
those of industry analysts?
Watch for insights into these issues in part two of our analyst relations coverage - coming your way June 19.