Let me tell you a little secret. You know those big PR agencies? The ones that long ago stopped calling themselves PR agencies and instead adopted titles like Global Communications Consultancies or Corporate Brand Strategists? The ones that have identical affiliates so their listed parent company can get the budget from competing clients? The ones that seem to employ a disproportionate number of young women called Pippa or Lucy? Well, none of them seems to be providing dedicated IR advice anymore.
Seems like only yesterday they were all outboasting each other about the size of their IR departments. Bragging about which well-known figure from biotech or computer hardware or some industry sector they had employed; or who had the most former bankers and analysts. Now those so-called specialists have been given the boot. Or they’ve left. Or they’re busy scribbling press releases having seen their once proud standalone departments merged with the ex-hacks in media relations.
But, I hear you cry, they promised! They told us their approach meant a truly dedicated solution to corporate communications strategy, rather than (and they whispered here) the biased approach of the corporate broker or investment banker. They said we should hold their hands and skip gaily through the meadows of integrated strategic IR communications.
So those charlatans conned you too.
But is it all just a temporary change due to the global economic downturn, or is it a permanent adjustment in the way the Goliaths operate?
‘The big boys are only doing this while the recession is here,’ says one former executive from a large (at one time the largest) global multi-discipline public relations agency. ‘You need to understand the pressure corporate brokers are able to place on these communication agencies.’ In the UK, brokers (which act much like investment bankers on retainer) are often the key suppliers of business to PR agencies, while giving out a lot of investor relations advice themselves. When times are good the brokers don’t charge for IR, and are therefore happy to let others, such as the agencies, feast on the crumbs at their table. When the markets contract the brokers have to look at every revenue stream, and so start charging for their IR advice, and start objecting to the agencies getting a piece of the pie. If the agencies want to carry on being referred for the PR work they’ll stop selling IR strengths, and focus on their media relations skills.
However, according to one former IR consultant at a global (though still independent) corporate communications firm, this view is much too optimistic. ‘This type of IR advisor has gone, and it isn’t ever coming back. The current communications pricing model means that you can talk about a strategic corporate vision directly with the CEO, and charge £350 per hour. A CEO now knows investor relations isn’t rocket science. He’s not going to waste his time, and his company budget, talking about whether to include Edinburgh, Milan or Madrid on his next roadshow, or about who’s who at Julius Baer.’
There’s a chance, however, that none of these theories hold up. It could just be that skilled IROs have pushed advisors out of the market. They know what they’re doing, they’re doing it well, and the advisors have decided to leave them alone.
Regardless of the reason, they told us they were doing IR, and that their way was best, and now they’re not doing it. There’s no doubt these companies’ roots lie deep in the soil of spin.
