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Financial PR—what it is and why it’s so important

by | Sep 6, 2019 | Analysis, Public Relations

Media in the financial world is far less forgiving than for other industries. There’s only one currency, and it’s literal currency, with everyone involved determined to get their hands on it. Corporations are particularly fervent in jostling for position in the grand game of speculation. Which stocks are heading down? Which are heading up? What will the markets do tomorrow?

Because there can be such an immense disparity between what businesses are actually achieving and how they’re perceived, it’s dangerous (which is to say, potentially very expensive) to simply do good work and trust that the markets will recognize it. In the most gentle and stigma-free meaning of the word, you need so-called spinin your favor.

That’s where financial PR enters the picture. Let’s take a look at what it involves, and what it’s so vital for financial companies:

Presenting performance to interested parties

Companies in the finance industry are keenly aware of the significance of financial performance, and are obliged (to their stockholders and shareholders, and to their reputations) to report on it on a regular basis. Quarterly and annual results are particularly significant, encompassing everything from revenue and net profit to dividends and employee turnover.

Financial PR—what it is and why it's so important

Image credit: PxHere

What’s so notable about this is that companies get to choose howthey present their performance metrics, and will often hold conference calls to announce their results and deal with subsequent queries from interested investors. One result can be presented in countless different ways, and the efficacy of the presentation of an underwhelming result can make the difference between stock plummeting and staying roughly the same.

Financial PR people will be tasked with handling much of this reporting process, taking it from the first hints at what’s to be expected to the post-result wrap up and attempted positive spin. The chief executives will take the big calls, of course, but their angles will be PR-sourced.

Advising on public-facing activities

The formal performance reports aren’t the only things of consequence to financial PR companies. They also get called in to contribute during big negotiations between companies, especially when events such as mergers or outright acquisitions are on the agenda. A floated merger, for instance, can easily attract a lot of criticism: this could be due to the customers of the companies involved being opposed to it, or even the threat of a virtual monopoly.

While plenty of companies are big enough to avoid being majorly affected by souring public sentiment (in the short term, at least), they’d rather not risk people turning against them. If they need to spend heavily on PR firms to find ways for them to pursue their goals without attracting criticism, they’ll do it, considering it a price well worth paying.

Consider the rise of the customer success approach to business. Being thought to care more than anything else about the success of its customers is a fantastic way for a business to win plaudits, and the merest whisper of a business move that would run counter to that can ruin a hard-earned reputation. It isn’t something to take lightly.

Mitigating the threat of company leaks

In the days before social media, employees weren’t seen as particularly threatening. Newspapers wouldn’t run headlines about anecdotal experiences, after all. But that all changed when Twitter and Facebook made it possible for people to freely and easily have their thoughts seen by thousands or even millions.

Consequently, the reputation of a brand can take a hit due to an employee leaking company information to the online world. It needn’t even be salacious: it can simply involve numerous snippets of insight that lead people to question the competence or intentions of the brand. A financial PR firm can assess a company’s structure from top to bottom, looking for issues that could look bad if revealed to the public or to other companies.

For instance, imagine a financial company that carefully protects a reputation for innovation but doesn’t live up to it internally. Maybe it fails to run a paperless office despite claiming repeatedly in its blog posts that every business should move with the times (not a good look regardless in a time of environmental awareness). Perhaps the CEO still puts staff payments through manually out of habit, despite the existence of free payroll software that could do it better. Any such revelation could be extremely embarrassing if made public, and even end up tanking the stock.

For another example, a financial company could espouse generous treatment of workers, trying to get away from old-fashioned perceptions of such businesses driving employees to work extremely long days, but actually treat low-level employees extremely poorly. Anything that reveals hypocrisy can cause a lot of damage.

While a financial PR firm likely couldn’t cover up reveals of that nature, it could certainly make a company understand the urgent need to shape up and resolve its internal structure to show whatever it’s claiming to support.

To recap, then, financial PR is the art (and science) of protecting a financial company’s reputation and stock prices. It involves presenting and spinning regular financial results, consulting on big moves relevant to the general public, and generally supporting companies in protecting themselves from damaging leaks.

Kayleigh Alexandra
A writer and small business owner, Kayleigh Alexandra is an expert in all things content, freelance, marketing, and commercial strategy.

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