CIPR Skills Guides Introduction to Financial PR What makes financial PR different to other PR practices? Financial PR ultimately targets investors of all sizes, aiming to convey the strengths of a company’s equity story in order to sustain an upwardly moving share price. Investors are reached through press and sell-side analysts, where third party endorsement is powerful and can influence decision making amongst investors. Whilst financial PR uses many of the same techniques as other PR practices, it has different audiences and therefore different channels through which to communicate with them. Media In terms of the media that financial PR targets, in order to reach all types of investors, from institutions such as Fidelity and AXA Framlington, to private individuals who might be interested in buying shares, companies must communicate to all types of media. The national press is key, as its high readership will reach a wide range of audiences. Investor press targets retail investors, who are an important group as they drive demand for smaller pockets of stock of up to £10,000. Recommendations to buy a particular company’s shares in investor press such as Shares Magazine, Investors Chronicle, and Growth Company Investor, can be powerful ways to move share prices. Although not specifically part of Financial PR, targeting the trade press is also important, as it is read by both analysts and national press. A solid profile in the trade press can therefore positively impact a company’s share price. In order to engage with the press, background briefings with the management team are very helpful, as they give journalists the opportunity to get to know a company; they will then be more inclined to write when the company releases news. Site visits are also useful in cases when the client’s operations are visually informative. Round table events and sector themed gatherings can also be creative ways to introduce journalists to companies. In cases when companies have specific news, press releases are the initial tool used to gain coverage. Key journalists should be offered briefings with the management, to get further detail on the story. Sell-side analysts When a company is listed, its house broker will write regular analyst research at key points during the year, such as the preliminary and interim results, in order to give the market independent analysis of the company and its prospects. It is important for listed companies to strive to attract additional analysts from other houses to cover the story, as they will have distinct distribution from house broker, which means that the strength of the equity story will be pushed to a broader institutional investor base. Attracting additional analysts is achieved through presentations twice a year at the time of a company’s financial results, as well as supplementary one-to-one meetings, and site visits when appropriate. It is critical for the Board of a listed company to managing market expectations through regular statements and up to date information to the market, and analyst research notes are another influential way to achieve this. Skills and tools needed Financial PR uses many of the skills and techniques that are common to all types of PR. One of the skills that overlap with other PR practices is the ability to identify the most relevant audiences for a company’s messages and to then draw out the most interesting story or angle that is appropriate to them. For example, when speaking to a journalist from a trade
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magazine about a client, the information given will be more technical than a parallel conversation with a journalist from the investor press, which will be more focused on the strength of the equity story and the market opportunity for the company. The ability to handle clients, to manage their expectations and to work closely with them is essential. Writing skills are vital, as press releases and emails to journalists must be concise and highly targeted. Challenges The main challenge which Financial PRs face is the regulatory framework within which listed companies operate. Although the PR companies themselves are not regulated by the Financial Services Authority (“FSA”) unlike other advisers such as the client’s Nominated Adviser and broker, listed companies do have to adhere to either the AIM Rules for Companies or the Combined Code, depending upon which market they are listed on. This means that certain information, such as management’s financial forecasts, cannot be disclosed. It also affects the timing for the release of information, as in order to maintain a fair and orderly market it is essential that all investors are given access to new information about the company at the same time, i.e. giving a select few access to information which could affect the share price would be against the rules for either market. Working with other advisers can be challenging, and often it is the role of the PR to coordinate communication between advisers and the client. This involves arranging all parties’ strategy meetings, to agree on messaging and tone of announcements and presentations to investors. Top do’s and don’ts Be consistent with your messaging, particularly in terms of how much detail you give Look at other companies in your clients’ sectors to see what sort of key performance indicators they are using – adopting similar ones will enable analysts and press to quickly benchmark you Build a following of press and analysts and continue to communicate with them, even in the case of bad news Analyse your clients’ shareholder registers regularly to understand what type of investor they should be communicating with (i.e. if they have a large retail investor holding, ensure that they are communicated with through investor press such as Shares magazine and Investors Chronicle) Work closely with your clients’ other advisors, so that you all have the same strategic objectives and are communicating the same messages A consistent drip-feed of newsflow to the market will help to sustain an upwardly moving share price. No news is considered bad news, so keeping investors regularly informed is essential to support the share price Don’t try to bury bad news; be upfront with shareholders Engage with the press at all times of the year, so that they understand the company’s story and will be more likely to write when there is news.
For further information, specifically on investor relations, Abchurch has contributed to the London Stock Exchange’s Guide to Investor Relations, which can be found here: http://www.londonstockexchange.com/home/ir-apracticalguide.pdf
By Joanne Shears Director, Abchurch Communications Joanne is a first class English Honours graduate from the University of Durham. Prior to Joining Abchurch she held positions within the media and PR industries, and specialised in online PR for a year and a half.
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Joanne works across all sectors, and focuses specifically on technology, media and financial services, working with companies on events such as acquisitions, delistings, recommended offers, and crisis management, as well as advising on and executing financial calendar programmes. Joanne has specialised in financial and corporate communications for growth companies since joining Abchurch in 2006.
Downloading and reading this skills guide is worth 5 CIPR CPD points. www.cipr.co.uk/cpd
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