Investor Relations 2.0: Next Practices In Abolishing PR/IR Silos


The evolution of the business landscape--aided and abetted largely by new digital technologies--has revolutionized the way communications fits into the overall organization, be it a corporate department, an independent agency or a nonprofit. Now, everything has a PR element and execs in this discipline are transitioning from tacticians to strategic advisors--but not without a fight. Part of that battle has come with the need to learn new things that, in the past, were relegated to departments down the hall. Marketing, human resources, legal--all of these are (or at least should be) on communications execs' speed dials. But silos still remain. That is where IR comes in. In the "Recession-Proof Investor Relations: Leveraging PR to Reassure Stakeholders" (PRN 03-31-08), PR News talked to professionals who are tapping into the IR knowledge pool to deal with image crises and reticent stakeholders who are intimidated by today's tumultuous marketplace. But what about the day-to-day IR initiatives that occur without PR's input--to the detriment of the organization, no less? With this as a backdrop, what follows are strategies (and tactics to help execute them) for bridging the gap between PR and IR to positively impact your organization's bottomline. *Log on to get tapped in. "Given the digitalization of communications, the separation between PR and IR is not in any company's best interest," says Fred Bratman, EVP of Hyde Park Communications. "There needs to be a better job done on the part of communicators to cross-fertilize these interests." Jennifer Farrelly, a researcher at the Tuck School of Business, echoes this sentiment. "New advances in technology and new methods of delivering information are forcing IR to invest significant time, money and effort in staying current," she says. "This is seen through trends such as EBRL [Extensible Business Reporting Language, an Internet- centric platform for enhanced business reporting] reporting structure, the growing influence of new media and the need for a strong Web presence." Of course, digital platforms are PR's bailiwick, so execs should use these IR trends as opportunities to take a leadership stance. Start simple with annual reports and executive blogs; both are key resources for investors who are going online with greater frequency to get information. Yahoo!, for example, used its first annual report to brand itself as a media company--not solely a search engine--to investors. It was a strategic branding initiative that yielded a positive return. As for Web sites, the following information should be available: Financial news and stock information (if applicable); Investor contact information; An investment mission; Interactive stock charts; Analyst coverage; and, Annual reports. *Put on your marketing caps. Farrelly notes that IR teams are increasingly focused on brand attributes, and in making sure these come across in all financial communications. She points to best practices defined by the Investor Relations Roundtable to integrating brand communications with IR: Integrate: The integration of advertising, PR, financial communications and branding ensure consistent messaging. Keep it simple: The branding of IR communication outputs should be simple and consistent with all other brand messaging. Use ticker symbols: Incorporating ticker symbols in marketing materials increases visibility of the company's stock. *Get up-close and in-person. Yes, digital platforms are changing the way people interact, but Bratman warns against relying on them as your sole communications tool. "I firmly believe that people need to spend face-time with one another. Sometimes we forget that we're humans and we think an e-mail suffices as the way of communicating," he says. "Those in the business of diplomacy and negotiations recognize the value of in-person communications." With that, communicators can insert themselves into the IR mix by planning analyst days, for example; these are opportunities for execs to bring in analysts to hear management presentations and ask questions. A common format is as follows (source: Corporate Executive Board Finance Best Practices): Introduction by IR officer Business overview by CEO Business segments/product lines by COO of business unit heads Financial overview by CFO Q&A and/or one-on-one meetings with investors Merging communicators' prowess with that of investors is an ongoing process that won't happen overnight; however, small things can be done to show this function the value of PR. It's just a matter of taking initial steps ... and what better time than now? PRN CONTACTS: Fred Bratman, fbratman@hydeparkcomm.com; Jennifer Farrelly, jennifer.m.farrelly@tuck.dartmouth.edu Measuring The Value Of Investor Relations Programs As with all initiatives, benchmarking the success (or lack thereof) of IR programs is a necessary step to shaping ongoing strategies, determining if goals are achieved, while honing contributions to the bottomline and improving future efforts. Case in point: According to a 2006 Investor Relations Roundtable survey, 86% of IR officers believe that measuring the value of the investor relations function is a top priority. Likewise, though, are the inherent challenges in doing so effectively--namely, the difficulty in defining the intangibles of the brand, and the unpredictable/uncontrollable factors that constantly affect the stock market, making it difficult to show cause and effect. These difficulties aside, communications professionals are armed with the greatest capabilities to help with the function's measurement efforts; after all, measuring the value of intangibles is central to their growth within their organizations. Here are a few theories on how to facilitate IR measurement: 1. Outputs vs. Outcomes: As is the case with communications metrics, these two factors help define an IR measurement program. David Michaelson of David Michaelson & Company and John Gilfeather (Executive Vice President, Stakeholder Management, North America, TNS) identify outputs as the results of the communications program, and outcomes as the results of the actions taken by investors. Consider this breakdown: Outputs: Number of sell-side analyst reports published by the company, quality of sell-side analyst coverage, and quantity, quality and favorability of the company's media coverage. Outcomes: Price/earnings ratio of the company in comparison to its peers, tradition volume and reputation measures such as Fortune's "Most Admired Companies" list. 2. Think in 3-D: Carol Metzker, contributing editor for the National Investor Relations Institute's IR Update, has also written on the topic of IR measurement, and she identifies three distinct areas of consideration: quantitative/qualitative measures, activities-based/results-based measurements and personal/organizational aspects metrics. Quantitative/qualitative measures: Counts and proportions, such as price/earnings ratios, perception studies or anecdotal feedback from investors. Activities-based/results-based measurements: Initial baseline activities as compared to counts over time; for example, number of meetings per quarter and success rates with investor targeting. Personal/organizational aspects metrics: Measures that show how well the IR team or company meets goals; for example, improving investor expectations for future performance.

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