Industry analysts have become the Roger Eberts of the new economy, often driving the fate of corporate ventures with a collective thumbs up...or down. And when they speak, reporters listen. Case in
point: the latest media frenzy surrounding AOL's planned launch of AOLTV, a service that will enable users to chat online and check email while watching the tube. A June 8 Reuters article discussing the
long-term viability of the service quoted seven analysts, but not a single AOL spokesperson (okay, we're nerds...we counted). Outlook? Partly cloudy skies, but generally a good forecast for AOL -
provided its merger with Time Warner goes through.
But companies that view their analyst relations programs solely as a conduit to instantaneous press attention may be missing out on a golden opportunity to leverage their brands on a deeper scale. "Our
long-term strategy is to [use our partnerships with analysts] to help differentiate ourselves [in a new marketplace]," says Erin Curtis, director of corporate communications for Kinecta Corp., a San
Francisco start up specializing in Web-based content syndication.
When Kinecta - formerly known as ShiftKey - changed its name last February, it catapulted its new brand into a marketplace still in its infancy. A road show helped educate technology analysts about
the new "space" - and, in essence, prompted researchers to start defining the new online syndication market and its key players. Kinecta is now poised to become a de facto market leader.
"[Analysts] will help validate your strategy, your role in the market and the notion that your product actually has a market," says Michael Schirer, PR manager for Forrester Research. By the same
token, "if there's a hole in your business plan, or your product won't hold up in the marketplace, it's better to find out sooner," he says. Analysts will give you a straight verdict as to whether or not
you've even got a product that's worth pitching.
The critical stroke for Kinecta was understanding the difference between analysts' concerns and reporters' concerns, Curtis says. "When we launched Kinecta, we gave the press a short window in terms of
our whole strategy. They wanted the here and now. But analysts wanted the full vision of where we were going."
Following its road show, Kinecta received some cushy plugs in analyst reports (which then trickled into media stories). The company has since established partnerships with three analyst firms in order
to gain greater feedback, one-on-one consulting time and market research.
Strategies for Young and Old
Startups aren't the only businesses vying for analyst endorsements, although the strategy certainly appears to be most popular in the technology sector. Schirer cites IBM's analyst relations
department as exemplary among old-line Fortune 500 companies.
U S West, which lately transformed itself from an old-line phone company into a hip telecom giant, is also in the game. "We do an industry analyst newsletter [and] package all the latest news
information, product information, stock price, subscriber numbers ... everything an analyst might be interested in," says Audrey Mautner, news desk manager for the corporation.
Both U S West and Kinecta use outside PR agencies to handle the tactical details of analyst relations, such as setting up briefings, pitching speaking gigs and digging for editorial opportunities.
But some analysts say this convention can backfire and damage a corporation's rep if the agency isn't knowledgeable about the technology.
"I can't believe their practices - they don't know who they're calling, they don't know their client," says Schirer, referring to certain offending agencies that shall remain nameless. "I'm frankly
shocked because I know how much they're being paid by their clients."
But this criticism isn't necessarily a straight indictment of agency competence, either. Schirer suspects that many corporations hire agencies to handle the analyst-courting process because they don't
know how to do it themselves and think outsourcing is the only way.
Which explains why any analyst worth his bits will expect to get face time with a corporation's top-tier leadership. In a road show, the CEO should generally serve as the chief spokesman of the
company, says Jeffrey Taufield, senior partner with Kekst & Co., a corporate investment communications firm. The CFO should also be on hand to provide back-up, along with division heads, product
managers and engineers if the content is highly technical.
Funny how times have changed. "In the past, companies begrudgingly accepted research and industry analysts as a necessary evil," says Marty Kurowski, VP of marketing and events with the Yankee Group,
which keeps tabs on the electronic marketplace. Now corporations - particularly those in the high-tech sector - are hard-pressed to survive without an enthusiastic analysts' thumbs-up.
(Curtis, 415/934-5800; Kurowksi, 617/956-5000; Schirer, 617/497-7090; Taufield, 212/521-4800)
Financial Matters
Hoping to make more than a blip on the Wall Street radar screen? Financial analysts are a different breed from industry analysts. What's more, they tend to operate in
accordance with different investment parameters, depending on their specialties, according to Ted Pincus, chairman of The Financial Relations Board BSMG. Some factors that
influence their recommendations:
Market Cap. The stock price times the number of shares outstanding (many
sell-side brokers have minimum criteria).
Stock Float. The number of shares that are in the hands of the public.
Earnings History. The company's past performance.
Investable Ideas.
Why is the company now of interest? Financial analysts like hearing about "correctable
problems," Pincus says. "An exciting investment story might be a company that's
doing okay, but has several deficits or weaknesses and is targeting solutions.
That should be the main content of a briefing - not a nice description of your
business. What is your game plan for the next 36 months? When people look for
undiscovered, undervalued situations, they look for that kind of play."
(Pincus, 312/266-7800)