Beginner's guide for IROs performing corporate communications

Jul 01, 2009
<p>For IROs involved in advertising at investors, successful strategies embrace the language of advertising.</p>

Congratulations! You have just taken a big step. You’ve begun to read this article on corporate advertising and media buying. When you’re done, you’ll feel comfortable with the basics of building an investor-focused campaign. But wait. Advertising? ‘Why bother? What’s in it for me?’ you might ask.

Basically, you want to ‘catapult’ your propaganda (corporate economic, social and political values) into the investor community without any filter. {Study note: There’s nothing inherently malevolent about the word ‘propaganda’. Look it up!} Can you see some of your reasons on this list?

  • Boosting investor understanding, confidence and – often – name awareness around a merger or spin-off.
  • Putting the gloss on a finely retooled company – perhaps a transformation from a yield-oriented income trust to a growth company.
  • You just aren’t into the same stuff anymore. You are into better (probably greener) stuff.
  • You are pushing into new territory and suddenly everyone’s talking about brand recognition.
  • Your company has peed in the pool (created adverse environmental conditions or disregarded key social issues) and must rebuild its image.
  • You really know what you’re doing and want investors and analysts to know it as well.

Yeah, but does it work?
Here’s a number: 0.7 percent. According to a forthcoming study in the Journal of Marketing, that’s the stock price bump you can expect after a decent corporate brand-building campaign. ‘It doesn’t sound like much until you see it in terms of market value,’ says study co-author Amit Joshi, assistant professor at the University of Central Florida.

Joshi adds that the brand value generated is not simply a transient blip. ‘It’s sticky in your stock price and that persistence is where you get the real bang for your buck,’ he says. You’ll have to be patient, though: Joshi says results appear six to eight months after the start of a campaign.

You need a comprehensive media strategy to make the most of your budget while maximizing the chances you’ll reach your target audience. Benoit D’Aoust, CEO of Montreal-based ad agency eau3, describes the process: ‘First you define your message, then who you want to say it to. Next, you determine what types of media your market is exposed to and match your audience with those media.’

D’Aoust points out that some media are better than others when it comes to building brand awareness. ‘Usually, print ads are best for passing on messages, radio for short-term promotions and TV (MSNBC, CNN and so on) for building brand awareness,’ he explains.

Once upon a time, your ad agency would handle your media buy and take its cut. But that model is changing as media outlets – some currently fighting for their corporate lives – are moving aggressively to bypass the agency and sell their product directly to the buyer. ‘You can save money that way – but you had better have a savvy marketing director,’ concludes D’Aoust.

The agency route has other advantages, too. ‘It’s important your message never contradicts your brand,’ comments Michel Francois, senior account manager at LAD Communications, also based in Montreal. ‘Internal marketing directors can come and go. Having a solid, long-standing relationship with an ad agency, however, will ensure your messaging remains consistent.’

Targeted distribution
However you approach it, you might want to have a gander at the Erdos & Morgan Professional Investment Community survey, which many financial media ad salespeople keep close at hand. It has data about institutional investors worldwide, including which publications they read and what they invest in. You would learn, for example, that Institutional Investor reaches 42 percent of surveyed professional investors in the US but only 18 percent in the Asia-Pacific region. If you are targeting analysts and portfolio managers in the Far East, you may want to consider The Economist, with 33 percent coverage, instead.

You may want to engage a professional media planner/buyer at an ad agency or stand-alone media planning agency. It can take a holistic approach, giving recommendations on using various platforms to build your brand.

According to Don Black, director of communications and marketing at Barron’s, a seasoned, dedicated ad sales force can discuss capital markets at the highest level. ‘You might not get that level of specialized insight and experience talking to a person at a media buying agency,’ he says.

At the same time, according to Barbara Frank, senior account executive at IR Services in Connecticut, it takes a steady grip on the tiller to ensure ad agencies and media buyers/planners work hand in glove.

‘Lack of communication between your ad agency and your independent media buying agency leads to a mixed message,’ she explains. ‘That was once a significant problem. The media buyer works for the client, so why create a situation where it kowtows to the agency? You need a strong client to pull everyone together to make sure they are all on the same page.’

Frank, a former president of the Financial Communications Society, sees increasing interaction these days. ‘Ad agencies, media buyers, outlets and all the niche agencies involved are being forced to talk a lot more among themselves because of the state of the market and constraints on budgets,’ she says.

Rick Anguilla, former vice president of brand communications and vice president of IR at Nike and now head of his own Portland-based communications business, Guidance Counsel, agrees. ‘The best thing you can do is maintain consistency of message across all your audiences,’ he says. ‘And don’t expect to speak exclusively to one audience because technology and the increasing number of media points mean there’s too much overlap.’

Ultimately, Anguilla argues that while successful investor and media communications can seem complicated, they become straightforward once you understand what your company is about. ‘If you are honest about your core values and start with a simple playbook on what your brand stands for, then the process of effectively tailoring communications to all your audiences becomes much easier.

Making friends and influencing people

‘All too often IR people are out of the mix when it comes to influencing corporate communications or marketing messages. They should form an active voice drafting the core of the message long before it gets created in an advertising campaign.’

Don Black, Barron’s

Ad lingo

Reach: The number of people an advertising message gets to. The greater the reach, the higher the advertising rate will be.

Agency commission: In addition to a retainer, agencies charge a commission, or a percentage of the total buy placed by a media buyer.

Clutter: The term given to the proliferation of advertising messages aimed at consumers. In TV, it refers to all non-program minutes, such as commercials, station promotions, billboards, public service announcements, and so on.

Rate card: A statement showing advertising costs, issue dates, program names, closing dates, requirements, 
cancellation dates, and so on.

Vehicle: Anything that is capable of exposing advertising to customers.

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