During the internet gold rush of 1999, an array of new communications companies emerged to service the many web start-ups and more traditional companies seeking to carve out slices of market share in the new economy.
Obsessed with integrating an IPO strategy at all costs, companies turned to traditional IR firms to cultivate Wall Street in the hopes of creating market hype and increasing anticipation. Thus was an agency boom spawned, ultimately driving the creation of boutique PR agencies and a new breed of IR agency. These agencies aimed to tackle the glamorous role of business media relations, and carried the flag of market PR and IR, or strategic media relations. They represented an evolutionary change from their IR and PR origins.
During Nasdaq’s bull run, every dot-com and aspiring brick-to-click-and-mortar operation set out to woo Wall Street. To succeed, they often hired multiple agencies to manage multifaceted programs and generate corporate brand awareness, promote technology benefits and appeal to venture capital and institutional investors. Many agencies fused their IR and PR services, offering companies integrated communications packages for business and financial publicity.
Many publicly traded companies and those seeking new investment continue to employ the services of IR consultants to communicate financial news and activities as well as to interact with investors. Due to current budget restrictions, however, many executives are opting for IR over PR in the hopes of moving a stock price north or expediting the next round of funding. IR over PR? What about the trade-off? What about the customers? Does this new breed of IR agency really engage in the due diligence necessary to manage market-makers, earnings, and institutional investors? Or is it simply PR in a more strategic guise? After all, is this new breed of IR qualified, staffed and capable enough to accomplish some of the more traditional IR objectives such as moving stock prices, influencing market-makers and appeasing the investor community? Can traditional IR influence a market to use products, solutions or services?
The answer is no. Just as PR is not qualified to manage investor relations, IR should not attempt to extend itself into the ranks of customer, alliance and business public relations and brand management.
Nowadays, the promise to generate brand equity in business markets underlines the appeal of the hybrid PR/IR firm, with or without a ticker symbol. To compete, traditional PR agencies are now offering a form of evolving, non-traditional IR services with the ultimate hope of securing a combined technology and business campaign. But isn’t it the job of any good PR agency to offer technology and business media relations under one corporate campaign? And shouldn’t IR focus instead on the due diligence of true investor relations? Yes.
The IR/PR strategy will not work, and investors and customers will ultimately dictate the outcome. Remember, customers control the company’s revenue flow and if it shrinks, the investment community will be unhappy. After all, the lesson the dot-coms learned is that Wall Street focuses on revenue, and therefore on the customer.
Any group that claims to do both IR and PR well is bound to sacrifice some elements of success. There is an opportunity cost associated with incorporating both strategies under one roof. Either the market gets its due diligence or the customers receive full courtship. Somewhere in the middle is the trade-off of servicing both targets.
It is important for companies to select the right IR and PR firms for the most appropriate objectives, and not to confuse the role of one with the other. A good ‘total relations’ team, whether made up of a single agency or several, is vital to successfully creating a well-rounded presence across the board with the investment community, the media, influencers, analysts and customers. It is absolutely critical that management determine the most valuable markets and audiences to influence, and then build the most qualified team to secure those objectives. Regardless of whether the desired audience comprises investors, trade targets or the mass media, the goal is ultimately the same. The difference is where to beat the drum and how to beat it in a way that attracts the target listener. The most important objective of any communications effort is to communicate effectively and diligently. That is the measure of any IR or PR agency, and that is the standard by which an agency will succeed or fail.
