For decades, investor relations teams and their PR brethren have had what I would consider to be an “Either/Or” relationship. Either PR and IR get along well, which results in an organization whose investors are happy due to strong financials and a strong brand. OR … you see a turf war where two teams compete for interviews, resources and campaign buy-in.
In the ideal scenario, a strong PR and IR team complement each other and understand that diverse audiences require separate but equal methodology. The rest of the time things become contentious. Leave it to technology and disruption to further muddy the issue.
ICOs, or Initial Coin Offerings, are a new breed of beast. The relatively novel fundraising vehicle is part tech, part finance and offers a blend of huge potential profits interlaced with massive potential scams. At day’s end, most analysts believe ICOs will result in a shifting strategy for venture, investment, crowdfunding and maybe, just maybe … global finance.
In this nascent stage, however, it is incredibly difficult to justify who is most qualified to handle their marketing and promotion. Three factors exist that must be taken into account as to who is better equipped to market ICOs, all of which are already a land-grab between PR and IR.
When an investor does her due diligence on a majority of traditional investment vehicles, she typically maintains a solid understanding of the financial ins-and-outs due to a familiar format. This has always played well to the investor relations camp as, at the very least, fundamentals can be marketed at scale. If an investor doesn’t understand the financial terminology, he probably shouldn’t be investing in the first place. Yet ICOs, while being financial by concept, have a top layer that consists of a staggering amount of technical jargon and concepts.
Ask the average doctor, lawyer or day trader what “Open Source software” is and you’ll often get a blank stare. This will deepen the second you bring up blockchain technology niche terms ranging from ETH to digital ledgers, to … ethereum. While investor relations may have a better idea of how complex financial concepts work, public relations groups have always been the team to convert complex technical ideas and terms into simple to understand product ideas. When it comes to taking ICOs to mainstream audiences, language may force IR and PR to mend their differences.
The lexicon and language must be simplified in order to garner wide spread appeal and buy-in. This is true across multiple audience types and not just investors. Given the novelty of the space in these early days, PR and IR will need to work together to bridge each other’s gaps. As more ICOs make their way into the world, language will shape their success.
The regulations and pitfalls
The PR generalist in most situations only has to worry about the regulations in her own niche industry—legal worries about legal, healthcare about healthcare and so forth. Sure, we all have to have some understanding of can-spam laws and paid advertising no-no’s, but the PR game in most fields is an overall light regulatory environment.
This is incredibly different than that of IR. Investor relations pros have dealt with regulatory concerns across the board that range across multiple government organizations and compliance needs. They must not only have expertise in their space, but also across the core financial regulatory landscape.
ICOs are currently unregulated, but this will undoubtedly change. This means two very important aspects are about to fall within the wheelhouse of investor relations. The first is understanding regulations as they arise, as surely there will be a novel level of complexity that will be best handled best by those with a map of the regulatory environment. Another clear wheelhouse winner is in IR’s ability to predict, manage and plan against financial fraud. IR has long been privy to understanding investment fraud, from empty shell games to the classic Pump and Dump. The PR generalist is just not equipped here, but financial fraud is already a part of the ICO market.
The ICO landscape is undergoing a lot of scrutiny and speculation as to proper promotion moving forward once the initial buzz has leveled. Many recent large offerings were simply orchestrated via social media and messaging platforms utilizing nothing more than a white-paper and social know-how. This is how buzzword capitalization is done in an early stage opportunity.
We saw it with digital investment offerings when the internet was in its early days and we’ve seen it across a range of new tech spaces that offered quick riches. When a new market garners intrigue, it doesn’t take much to focus that intrigue into profit potential. But this window is short. For all the ICO’s utilizing social marketing and quick-fire White-paper write-ups, investors, participants and backers will quickly wise up. When they do, the relatively easy promotion will have to turn into some truly powerful marketing that leverages team credibility, novel differentiation, thought leadership and multi-channel finesse. This depth falls onto the slightly more digital marketing-savvy PR folks.
IR has some incredible marketers, but their larger responsibilities mean they have to incorporate securities law, market analysis, broker/fund relationships and corporate governance into their skill-sets, which can overshadow the depth needed for pure play marketing techniques. The PR generalist in today’s world, on the other hand, have become digital masters by simply needing to focus on best marketing practices.
The end result?
It is possible that PR and IR have equal potential and responsibility to handle the ICO landscape. Both practice areas must leverage the strengths of the other, however, in order to provide best-of-class services. If the ecosystem becomes large enough, I believe we will in fact see consolidation and a range of new partnerships when it comes to agencies. IR and PR firms, while already cousins, will need to create novel inter-agency partnerships, consulting relationships and often merge if they hope to provide what this space needs to successfully prosper.