ComPRehension

Professional development and training blog of the Public Relations Society of America (PRSA)
September 1, 2010

Measuring the Financial and Investment Community


Communications and investor relations measurement (in the financial and investment community) is often binary — one-zero, on-off, up-down. Did our stock go up? Are analysts recommending our stock? More than before?

A complex cluster of stakeholders — portfolio managers, stockbrokers, institutional investors, individual investors and the financial media — couldn’t possibly be adequately benchmarked and tracked in simple binary terms. Ideally we should be looking not only at outputs (the how much and how good) but also outcomes (with what effect).

For example, with a hat tip to material from an Institute for Public Relations’ Measurement Commission paper and with some additional original thinking injected:

How Much? How Good?

Outputs: the result of the communications program. In investor relations this can include any of the following types of measures that directly represent the short-term implementation of communication activities:

  1. Analyst content:
    a.    Number of reports — a clear and objective indication of progress in courting sell-side analystsb.
    b.    Framing and content analysis of those reportsi.    Top analysts, top firms, share of discussion, positioning, etc.
  2. Media content:
    a.    Business/financial media content measurement and analysis
    i.    Share of discussion, framing, positioning, share of exec quotes, executive profiling, key messages, article tone, stock reference tone.
  3. Socially-generated media content tracking & analysis:
  • Who’s talking about your organization?
  • What are they saying?
  • Is your message being accurately parroted/advocated?
  • Are those talking about you authentic, credible, relevant?
  • Is the audience engaged? How so and how much?
  • How interrelated/interconnected is this audience?
  • What’s the volume and velocity of the content? Where else is it going?
  • Is the nature of the content/discussion changing as it moves?

With What Effect?

Outcomes: The bottom line measurement for the investor relations executive is achieving a fair market value for the stock. However, other outcomes can also be evaluated:

  1. Price/Earnings ratio in comparison to peer companies. Is the company selling at premium or parity relative to its peers?
  2. Trading volume (Though this is a double-edged sword. Neither very low nor very high trading volume is necessarily good.)
  3. Specific corporate reputation measures such as the financial performance driver of a reputation index:
  • Record profitability
  • Low risk investment
  • Growth prospects
  • Outperforms competitors

Additional outcome measures involve survey research that can be used pre- and post-campaign to determine how successful investor relations’ efforts have been. Surveys would typically focus on securities analysts, portfolio managers, stockbrokers, individual investors and the financial media. Surveys would look at:

  • Awareness of the company and/or its securities
  • Specific knowledge of the company
  • Knowledge of the corporate strategy and positioning
  • Evaluations overall and specific to company attributes
  • Currently holding or recommending stock
  • Likelihood to hold or recommend stock
  • Evaluation of the company on specific reputation attributes such as trustworthiness, transparency, solid management

And while we’re going to the trouble of surveying, we might also consider quantifying the quality of the relationships with these stakeholders. Readers of this column might remember Grunig’s Stakeholder Relationship Index that measures success in terms such as: mutual awareness, accuracy, understanding, agreement and symbiotic behavior by looking at six elements of a relationship along an agree-disagree scale:

  • control mutuality, trust (integrity dependability, competence)
  • satisfaction
  • commitment
  • exchange  and communal value (of the relationship)

Adding the stakeholder relationship questions to the broader survey above would yield important data speaking not only to awareness and action but to how the stakeholders feel about the relationship they have with the organization. It could very well be that the nature of the relationship they have has an important and direct impact on the awareness and action piece.

Alan Chumley, senior consultant at CARMA International Inc., Global Media Analysts, has twelve years’ experience in the corporate communication / measurement industry, including senior-level, in-house corporate communications roles for leading blue chip organizations such as Bell Canada, as the director of Measurement for Hill & Knowlton, and vice president at Cormex Media Content Analysis. An advocate of driving science into the art of communications, Alan has extensive experience not only in corporate communications strategy and execution but also in the use of research and measurement to inform and influence traditional and social media content analysis. He specializes in interviews, focus groups, surveys, stakeholder relationship measurement, communication and perception audits, reputation research, employee engagement research, traditional and social media content analysis, and correlating this data with tangible organization outcomes. Connect with Alan and the CARMunity on Twitter and on LinkedIn.

Join Alan along with other volunteers of the PRSA National Capitol Chapter (PRSA-NCC) at the PRSA 2010 International Conference: Powering PRogress, October 16–19 in Washington, D.C.!

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