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The Integrated IR Marketing Model
With increasing pressure on management to drive performance an “integrated” approach to the issue of marketing a listed company is critical.
Understanding the nature of listed company marketing is just one of the many areas Directors, Company Secretaries and IR professionals must embrace and build into their growing intellectual tool kit in order to skilfully navigate the current M&A takeover frenzy. Investor focus has shifted irrevocably to the credibility of company management and transparency as a major driving force for market ratings. With increasing pressure on management to drive performance (to then drive their company’s market rating), an “integrated” approach to the issue of marketing a listed company is critical.
While it is difficult to elaborate on the entirety of the Integrated Marketing approach in a few words, the overall thinking required can be captured and explained diagrammatically (see below).
The diagram illustrates the systematic analysis of the listed company in a marketing context. This involves viewing your listed company as a “Product”, then attributing the Four P’s of marketing (i.e. Product, Packaging, Promotion, and Place or Distribution) to your Investor Relations activities as a whole. Taken all together the totality of the four P’s are essentially geared towards the “communications” of the company to its full range of stakeholders.
The widest and timeliest distribution is via real-time Internet communication. Netcraft , an internet monitoring company, recently announced that there are now over 100 million websites (in 1995 there were 18,957!) A listed company’s website is its window to the global investor world. With over 70% of Australians regularly using the internet, listed companies MUST become experts at integrating their website with their offline and online communications. In essence it is the combination of these activities and how well your company co-ordinates and disseminates information that helps to build the credibility required for attracting and retaining key investor groups.
A measure of how well your company is doing within each of these communications can be measured in various quantitative and qualitative ways over time. The effectiveness of your investor communication can then be translated into a ROIR (Return On Investor Relations). The ROIR and its components can then provide a feedback mechanism for directors and management on the areas that may need attention and those areas that are working effectively.
Nowadays, as highlighted by the Boston Consulting Group (BCG), Investor Expectation Premiums (IEP) - where the reputation and expectations of the management are evaluated in the overall rating for a stock - are now almost on par with the fundamental value. BCG estimates that fundamental value now forms 53% of a rating and the IEP 47% (together both represent the total market rating for a company) .
The driver of IEP is linked directly to the credibility of the CEO and his/her executive team, on how expertly they can build and communicate the vision and performance of the company. Without a highly co-ordinated approach to managing communications across the organisation it is difficult to build consistent, timely communications and therefore meet the expectations of a large and disparate range of company stakeholders. Astute IROs and/or Company Secretaries are well placed to understand the benefits an Integrated IR Marketing approach delivers to their companies. In formulating the approach the four key areas of marketing must be firstly addressed:
Understand your market – Questions such as: Who are your best investor targets? How would they benefit? What drives them? Short or long term motives?
Understand your product – The killer question is why should investors buy your stock? What is its value as an investment to the target investors identified?
Understand your communication tools – Understand all the tools available, including PR, analyst conferences, web casts, pod casts, RSS feeds - even blogs are being used effectively by some companies.
Manage your communication tools – This requires that the execution of your use of the tools is flawless.
The Integrated IR Marketing Model can be used to best advantage where the overall IR Communication Strategy is built on a well-defined and researched basis. This forms the springboard for an effective and successful, long-term approach to building a company’s overall market rating - and importantly, ensuring a sustainable basis for enjoying investor support for future company initiatives.
By Susan Werkner, Managing Director, Interactive Investor Pty Ltd
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