Arun Sudhaman 13 Jan 2014 // 1:51PM GMT
Amid all of the talk of PR growth, it is worth noting that — for the financial sector at least — the boom years of 2008 may never return. While the capital markets have recovered, financial PR firms have learned that deals are no longer the lucrative source of fees that they once were.
Instead, financial PR increasingly requires a sophisticated understanding of reputation, particularly as financial service companies remain assailed by consumer and regulatory criticism. In tandem, the digital world means that new skills are now a necessity rather than a luxury, requiring more than the traditional results document or press meeting.
For its annual Trend Forecast, the Holmes Report rounded up a number of specialists to help outline five trends that will define the financial PR sector in 2014. We also asked Stephen Thomas of AIA for his views as capital flows East-ward and the sector responds in accordance.
1. Democratization of financial performance
It used to be that only a few specialist outlets focused on covering the next tech IPO or the long-term investment value of a retail brand. That, says MWW chief social strategist Mitzi Emrich, is all changing, thanks to online media such as Buzzfeed and Business Insider, which combine broad appeal with a savvy understanding of business. “Stories that were once expected to be featured in a just a few outlets dedicated to covering the Street are now potential fodder a new breed of journalists and their readers, requiring a shift in how companies engage media reporting on their financial performance,” says Emrich. To respond, companies need to get better at understanding online influencers. Emrich advises them to provide first-hand access to internal experts and “unique insights beyond approved statements in a press release”, while also participating in the social media conversation. “A 21-year old day trader sitting in Hong Kong now has the exact tools as a short fund in New York,” adds SharpeLankester’s Charles Lankester. “This means they both have the ability to make or break a listed company.”
2. Online influence
The Netflix case means that companies can now use Twitter and Facebook as disclosure outlets. This, says Lankester, means “the old, long-winded press releases might be replaced by the 140 characters that Twitter allows you.” Meanwhile, notes Emrich, PR agencies have long focused social media monitoring on consumer sentiment, “building complex products that do little more than track complaints or mentions of products.” Yet a tweet from Carl Icahn can move markets. “As analysts, activist shareholders and institutional investors turn to channels to share their perspectives on corporate performance, mining social data should focus on more than just chatter,” explains Emrich. “Financial communicators and their agency partners must invest in building social media tools that predict how investor commentary, media coverage and consumer opinion are likely to converge and impact corporate valuation.” “The old information delivery mechanisms – brokers, financial journalists, newswires – are being rapidly disintermediated,” adds SharpeLankester’s Charles Lankester. “Those who get this right will see their shares trade at a premium. Those who ignore it, or get it wrong, will find themselves rapidly discounted.”
3. The rise of China
A rising China will influence the financial PR world in two ways. First, notes Ryan Financial’s Damien Ryan, we will see more private Chinese companies buying up assets in mature markets. Ryan points to the examples of Shuanghui, which used PE backing to acquire US company Smithfield last year for $4.7bn, and Dalian Wanda’s 2012 purchase of cinema operator AMC. “Relatively strong balance sheets and high competition for assets in their domestic markets should be supportive of outbound M&A, particularly in Western markets, which have mature and established companies,” notes Ryan. Deals of this nature, though, often spark a backlash, ranging from concern about job losses to political issues such as transfer of technology. “A key area of communication, for a start, is introducing the potential buyer to the market early to allow all stakeholders, such as authorities, investors and employees,” explains Ryan. “There is seldom a case against over-communicating acquisitions when there may be bias or misperception around the buyer.”
Second, we can expect to see more from financial PR firms in China, and Asia more generally, led — unsurprisingly — by domestic powerhouse BlueFocus, which has already struck two major deals in the West, and is likely to make several more this year.
4. Regulatory insight
As Cicero principal Iain Anderson points out, financial communications is increasingly influenced by the “regulatory debate”, whether we are talking about such areas as corporate taxation, financial service charges, customer data or even bankers bonuses. Recent years have seen a rise in regulatory activism where financial services players are concerned, and 2014 will only see an amplification of this trend, across Washington DC, London, Brussels, Hong Kong and beyond.
5. Multimedia, mobile content
Twin buzzwords that have dominated consumer marketing trends, content and mobile will both influence how financial players engage in 2014. Emrich notes that multimedia content can no longer be the sole domain of marketing. “For IROs and other functions responsible for reporting on the performance of a company, creating multimedia assets is a requirement,” she explains. “By transforming staid talking points about financial performance into compelling content, such as infographics to highlight key details from quarterly earnings or brief videos of executives explaining their vision of success, financial communicators can steal a page from the marketing handbook and ensure that important market information is easy to understand and amplify.” Meanwhile, surging use of mobile devices is forcing financial institutions to rapidly adjust how they do business. “As mobile transactions grow into just another way of doing business, banks will need to convince their customers that they offer a safe and secure mobile banking experience,” says Emrich.
In-house view: “The concept of shared value should become more prominent”
Stephen Thomas, group head of corporate communications, AIA Group
“The financial services sector in Asia should be generally optimistic about the prospects for significant growth in 2014, due in large part to renewed investor confidence and to the continued rise of the region’s middle class. That important group is fuelling consumption-led growth in the region, and they are also turning to financial service firms to support their evolving savings and protection needs. Building reputation and maintaining trust in a highly competitive and dynamic environment have never been more important for financial service firms, and those who do it well stand to benefit the most from the growth in Asia’s Middle Class. In relation to both reputation and trust, the concept of shared value – identifying and enhancing the connections between social good and economic progress – should become more prominent throughout the year. For all of these reasons, financial services firms will more than ever require public relations counsel that is both strategic and able to deliver measurable results – that allows financial services companies to proactively enter into a dialogue with their customers, employees and other stakeholders in a genuine and meaningful manner that explains who they are, and to do so in a way that is localized to particular markets, through both traditional and non-traditional platforms.”