Dejavu to 1999 - were you there?  Do you remember?  I do.

Yelp is saying its worth $838 million and talk has it that Facebook is worth $100 billion – yet this is all based on an advertising model that is not really proven.  Their filings don’t explain how they are going to diversify and reduce their reliance on this source of revenue.

This is a set-up if I have ever seen one.  Come on people, I mean Mr.  Institutional investor and Mr. Investment banker, let’s learn from our mistakes and not let another crash happen (maybe even at the cost of a “small” fee).

In honor of Valentine’s Day, and the week when we are forced to analyze our current romantic relationships (or lack thereof) it’s important to reconsider a few you may be taking for granted as a PR professional. Your relationships with the only people who can elicit the “yes, home run!” response at work.  You got it…reporters. Whether you like it or not, reporter connections are vital to your success, yet most of us make simple mistakes that can jeopardize a potential grand slam piece on a daily basis. Here is a list of the major deal breakers and key tips to get you better PR results by keeping your reporter relationships hot and steamy:

1. Do Your Research: Familiarize yourself with a reporter’s previous articles to find out what they cover, if they have recently written about the topic you are offering and if your pitch is relevant to their beat.  Chris Brogan, president of Human Business Works and a NYT best selling author suggests the 10 / 20 limit test; skim the last 10 articles and 20 tweets BEFORE you pitch a reporter. Reporters know when you have done your homework first.
2. Stop the Spam! Attention is Our Currency: In PR we work in the currency of attention. Every time we pitch we are training people to listen or ignore us. If you blast out a pitch every day, you are using all of your attention at once. Reporters remember numbers (and area codes) and, just like you do, ignore the “telemarketers” who constantly request their time and money. In her “Think Like a Reader” guide, Anne Wylie, President of Wylie Communications, points out that frequency is not an effective strategy.
3. Don’t Overkill It: Have a hook. Instead of giving a reporters ALL of the information on your story idea first, play a little hard to get. Entice them with the opening line and lead with why you think they would be interested (e.g. I read your recent article on XX and…). Give them the option to say yes first, then send the detailed press release with additional information, pictures and anything else they may need.
4. Read and React: Newsflash: It’s not always about you! If you asked your boyfriend/girlfriend for a favor ever single day of the week without giving anything in return, how would they react? Think of a reporter the same way and share some positive feedback instead of asking them to cover your client 100% of the time. Send a quick email or tweet letting them know you read and enjoyed their article (and give a reason why – without the overused “interesting” adjective). Nurture trust so the next time they see your name you won’t end up in the trash bin. Michael Smart, of MichaelSmartPR, recommends spending at least 1 hour on relationship building per week.
5. Keep a Little Black Book: In my short two year career at KCSA I’ve had a lot of loves (and a few break ups) with the media. My suggestion to those just starting out is to keep your own “little black book” of reporters that you have worked with in the past. Categorize them into beats and be sure to check in every now and again to see what they are working on, wish them a Happy Holiday and keep in touch. This way you will have a list of people to call when you do need that favor or one big hit.

So before you go to press the “mail merge” button, “spray and pray” or pick up the phone to interrupt someone’s busy day with an irrelevant pitch, remember if you treat a reporter like your Valentine every day of the year, you will be well on your way to earning the top tier media coverage – like that diamond engagement ring – every PR guru desires.

Yesterday morning I awoke to a headline that blew me away. Rodman & Renshaw, an investment bank that has been ranked as the #1 placement agent of PiPe and Registered Direct financing transactions every year since 2005 (according to their website), announced that they had purchased the assets of The Investor Relations Group, a NY-based investor relations firm focused on micro-cap companies (and from time-to-time a peripheral competitor of my firm, KCSA Strategic Communications).

My first reaction was to immediately share the news with my partners and colleagues. Within a few minutes, the responses came flying in. I can sum up all the replies, for the most part, with one word…. “Wow.”  Having lead a successful investor relations agency for more than a decade, I have worked with Rodman & Renshaw and many, many other investment bankers over the years. I have always had a good relationship with the firm, as do some of my senior executives, and we have made introductions to their bankers when we felt it appropriate for our clients. As a matter of fact, several of my clients, past and present, have completed PiPe or Registered Direct transactions as a result of our introduction to Rodman & Renshaw. Some have turned out well, others less so…. but that’s the market. As an old friend of mine used to say, “it tends to have its ups and downs.”

So, having had a number of interactions with the firm and a good understanding of their role in the micro-cap/small-cap ecosystem, the first question that popped into my head was why would they do that?  The second question that came to mind was a bit more selfish – why in the world would I recommend Rodman & Renshaw to a client now that they are elbowing their way into investor relations and will be competing with us?

Well, the answer to the first question is laid out in the press release announcing the news. According to the release, Rodman & Renshaw can now offer The Investor Relations Group’s clients direct access to capital and all the benefits of their new capital markets platform. This new platform, which claims to eliminate the middle man and reduce the cost of capital for private capital raises, is a solution that will connect issuers directly with investors. Why a leading placement agent (i.e. a middle man) would want to launch a platform that eliminates the middle man is beyond me, but far be it for me to question Rodman & Renshaw’s strategy when it comes to the capital markets. You don’t make it to #1 for the better part of a decade by accident or by making bad strategic decisions.

Now the answer to my second question is actually pretty simple.  We are paid to be objective.  So, if Rodman & Renshaw offer my clients something that can’t be found elsewhere or I believe they are the best suited firm to meet my client’s needs, well, then it’s my responsibility to make an introduction (even if I know that at some point they will likely be pitching my client to leave us and use their newly-acquired firm).  While I think it stinks that I may have to subject some clients to a sales pitch from a competing firm (The Investor Relations Group will retain their name and operate as if it were still independent), I’m supremely confident that our clients recognize what sets us apart from the competition and after all, its about doing the right thing for the client. All the time.

And that’s why I just don’t see the logic for the banker or the IR firm in this deal. On dozens of different occassions in 2011 and two or three times in 2012, our clients or prospects have asked us to assist them in identifying a banker that can help with specific capital needs. Our team dives into the financials, speaks with management, talks with investors and learns the company’s story from “soup to nuts.” Then we research the sell-side community and identify the bankers that are most active in the industry. We look at their tombstones and we evaluate the performance of their company’s stock before and after their financings were completed. We make a short list and then we call the bankers to find the right person in the organization. We interview them for our clients. When all is said and done, we give our clients everything they need to make an educated decision about who to consider as a banking partner. Finally, we arrange the meetings, attend them and help our clients prepare the information that the bankers need to perform their due diligence. At the end of the day, we are a crucial part of the decision, our clients appreciate it and it really does make a difference.

IR firms like ours are hired to provide our clients with objective advice based on experience and expertise. If we were to only recommend our clients to banks that were affiliated with us or that had some recipricol relationship with us, then we wouldn’t have much value at all.  If you agree that objectivity is what makes investor relations counselors like myself and my colleagues at KCSA a valuable partner to our clients, then why would a public company want to hire an investor relations firm that is married to just one banker?

I don’t think they would.

On the other side of the coin, if I were running a public company, what are the odds that my banker will recommend the right IR firm to me if they own an IR firm of their own? Frankly, I think this is going to be very good for business. Sure, I may not get any referral business from Rodman & Renshaw ever again (they have recommended us in the past) but I have to believe that if there were any bankers referring clients to The Investor Relations Group, they will think twice about it now. As they say, “when one door closes, another one opens.”

Two year ago, social media was a “nice to have” in a communications plan.  Now – it’s a “must have.”  However, for Investor Relations professionals, the rules are different.  Actually – it’s more than that. The rules on best practices for using social media to communicate with investors have not even been discussed let alone set in stone. So when I discussed with my publisher the writing of a second edition of my book (Investor Relations: The Art of Communicating Value), I knew that I needed to address the issue of social media.

When I wrote the book back in 2004, the issues we faced were Sarbanes Oxley, RegFD and understanding the best practices for creating the IR section of a company’s website – one that would effectively communicate the company story to investors while complying with the then new paradigm of communications – i.e., the Internet. 

The new paradigm in communications, less than ten years later, is social media.  For the most part, all public companies now have an IR section on their corporate website (and if they don’t, chances are they don’t have much of an investor following).  This is not the case with social media.  Publicly traded companies are only beginning to test the impact of communicating with investors via social media channels.  Nevertheless, it is my belief that in the not-to-distant future, use of social media will be as mundane as having an IR section on a website.

Some very respected companies have already embraced social media with open arms.  Consider the success of Dell Computers.  It has embraced social media for investor relations and has created a thriving DellShares social community to support its IR efforts.  All of the sudden, in the blink of a Tweet, post or upload, vital company information can be shared with thousands of interested investors or soon to be interested investors. 

So how can we harness the power of social media while not leaving companies vulnerable to regulatory scrutiny with respect to disclosure?  This is what we will explore in the coming weeks and months both here in KCSA’s blog, and also at a Social Media Week workshop this Thursday, February 16 at 9:00am at KCSA’s New York Headquarters.  Space is limited; please RSVP here or email social@kcsa.com if you are interested in attending.

If you’re wondering why I’m advising you to steal something I wrote, you haven’t been paying attention to the complete 180 that has happened in marketing. Here are the top 5 reasons to get on the bus.

1. If you can remember the revolution, you weren’t really there
   If you’re still talking about the change that’s coming and how your brand will meet the challenges ahead, then the revolution has quite literally passed you by.  Brands that are thriving are not talking about social media and mobile and how information wants to be free, they are living it.  Leverage every communications vehicle available and let natural selection and a good dashboard sort out what works.
2. You trust no one under 30
   If you think Facebook is just for twenty-somethings until they grow up and get real jobs; if you think Twitter is a stupid name for a company; if you’re nostalgic for the good old days when the tools in your marketing bag were managing your SKUs and your GRPs and figuring out how many pages to buy in The Wall Street Journal this year; your competition has already stolen your market share and is probably tweeting about it right now.  80% of Fortune 100 companies use social media.  Get on the bus already.  This stuff is officially not a fad.
3. You make content, not copy
   Customers, both B2C and B2B, no longer demand value from what they are watching and reading, they’re just going to ignore you if you don’t deliver it and find someone who does.  Brands with content that informs, entertains,and draws people in will get customers to listen to them…once.  The brands that have figured out how to dialogue with customers and keep their content always, always, always new and interesting will keep them… for now.  We have to earn our customers’ loyalty every day.
4. The revolution will not be televised, it’s on YouTube
   If you think your brand is “different” and won’t really work in social media, on mobile or on YouTube, you’re wrong and you’ve just surrendered to the competition.  Consumers have moved on to a diversity of environments and information consumption patterns that change before the ink is dry on a media plan.  Marketing strategies must dynamically adapt, or die.
5. I’ll let you be in my content if I can be in yours
   Content ownership has not just become a quaint old fashioned concept, it has become irrelevant.  When I retweet you, you link to me, I comment on your post, you follow my blog and so on.  The new world order rewards sharing behavior.  The silent hand of the information free market drives up the value of what we say and do, and both of our brands grow stronger among our audiences as a result.  It’s not just nice to share, it’s best practice SEO.

Activate your brand’s presence in social and mobile, even as these outlets continue to define themselves.  When your brand leads the charge in digital for your category, you will be setting the standard, not adapting to your competitors.  Post on a wall, link in and tweet out.

As financial PR and IR professionals, our job is to maintain a steady read on the pulse of the market. We are obsessed with daily news from WSJ, FT, NYT, AP, Reuters, CNBC and the like. But another way to gauge the market is to actually speak TO the market itself.

For the past five years, we have conducted an annual survey of leading securities lawyers to get their outlook on the IPO market for the year ahead.

Those surveyed seem to approach this year like the past five with ‘cautious optimism’. Since the inauguration of this survey predates the financial crisis, and the markets have seen its all time high and low during this period, it is an interesting point that the year in and year out takeaway is virtually the same. Perhaps it is that ‘cautious optimism’ is the standard lawyers’ stance or because everyone is fearful of another IPO bubble and post bubble fallout of the late 1990s.

That said, there are few things that excite the business community (which includes lawyers, bankers, investors and media) more than IPOs and 2012 is no exception. Given the recent media frenzy, it is no surprise that 93% of the lawyers we spoke to said that the most anticipated IPO of this year is Facebook. Now we wait on the sidelines to see if market expectations meets reality and what type of wake the Facebook offering will create. Anecdotally we heard from the lawyers we spoke with that IPO pipelines are more robust than they have been in the last 10 years and institutional and retail investors alike are hoping for at least some market stability so that they can put money to work.

While the overall sentiment hasn’t changed over the years there are many other trends that have. Those most notable include:

Now it is time to sit back and wait to see how much anticipated offerings such as Facebook perform and whether the market will continue to be choppy or if we will start to see some smooth sailing.

I recently came across a video, Fresh Impressions on Brand Marks (from my 5 year old), that is absolutely fascinating – in that it provides incredible insight into the power of a visual brand, even at the earliest stages of human development.

There’s no shortage of scholarly research on this subject. The Center for a New American Dream reports that babies as young as six months of age can form mental images of corporate logos and mascots; brand loyalties can be established as early as age two;  and by the time children head off to school, most can recognize hundreds of brand logos. Let’s steer clear of the debate about the morality of marketing to children this young. Instead, focus on what these findings say about how early we can process not only the link between the mark and the product, but also the more subtle associations between the mark and our feelings and experiences, and the various attributes it is designed to evoke.

This video gets to the heart of the matter without a lot of “marketing-speak” or footnotes and citations from researchers, professors or other assorted experts / smarty pants. This little girl tells us all we need to know about great visual brand expressions:

1. Successful brand imagery and logos are strong enough to stand on their own, even without the brand name. At five, this little girl most likely can’t read but she knows that the stylized “D” is for Disney, the Starbuck’s logo means coffee, the Apple is from the Apple Store, and X-box is on the TV control at Ryan’s house.
2. A strong mark is closely wed to the overall brand experience. She associates the Pepsi logo with nights out for pizza, the Chili’s logo is spicy, and Gerber is for babies. The logo design is simple and the relationship to the product and service are clear.
3. A great logo elicits an emotional response. The symbol alone is enough to evoke feelings, memories and perceptions. The sheer speed with which she identified the Disney logo speaks directly to this. Also, the way she talks about the G.E. logo as the place where her grandpa works demonstrates the emotional relationship she has forged with the mark.
4. A strong mark draws associations with key brand attributes. Even logos she doesn’t recognize convey meaning. The Bank of America logo “looks like an American flag,” the Republican party logo “looks like a parade elephant,” the Google Chrome logo “looks like a beach ball,” and the Boeing logo “looks like outer space with a shooting star and a planet.” Without any knowledge or background on any of these companies, she’s able to draw very specific conclusions about what they are all about.

Visual recognition and drawing meaning from what we see are key survival skills that all of us begin honing right from birth. The response is automatic and that’s why it is so important that companies – whether they sell coffee or diapers – get their visual branding right.

EBITDA, net income, revenues, users — the numbers do not and will not lie.  After reviewing Facebook’s S-1 filing with the SEC, there is no justification for a $100 billion valuation.  Everything we are told is about the company’s historic business leading up to December 31, 2011.  Other than general ideas on how the company plans to diversify and move away from what is now essentially an advertising business model, there is no indication on how it plans to do so or how long it will take.  How can any investor invest in a $100 billion dollar company when such important information is conspicuously unknown?  I certainly wouldn’t.

That being said, after having read through the 500-plus page prospectus, and filtering out all of the excitement in the media, I have a few questions for Facebook, their lawyers and all the other professionals who contributed to this masterpiece:

• Where exactly does the $100 billion valuation come from?
• How will Facebook continue to monetize the platform?  This is not 2000 when people were investing in Internet companies without understanding how money was to be made.  Facebook talks of “building social platforms,” but what exactly does this mean?
• Essentially all (85%) of Facebook’s business in 2011 was from advertising – does an advertising business model on $1 billion in net income justify a $100 billion valuation?  If not, how does Facebook plan to diversify its business and how long is this going to take?
• What happens to Mark Zuckerberg’s voting rights?  He owns 28.4 percent of the company and he controls 57 percent of the voting rights.  Will large institutional investors even have a vote or is the structure of the IPO only allowing investors to enjoy the Facebook ride?

Having consulted for hundreds of publicly traded companies, my experience and gut tell me that while a HUGE opportunity exists to monetize the Facebook platform, the company has some unique (and some would say exciting!) challenges on the investor relations front.  Now is the opportunity for the company to select the appropriate metrics and use the right words to convince investors that it is worth $100 billion.

• It will be very hard for Facebook to sustain its rate of growth.  The company has grown several hundred percent over the past few years.  Its monthly active users (MAUs) has grown from approximately 600 million at the end of 2010 to 845 million at the end of 2011.  An analysis from Kenshoo Social (via AllFacebook.com) shows that the overall number of views of Facebook advertising has grown 47% between the third and fourth quarter of 2011. These numbers will be very hard to beat going forward (there are only so many Internet using individuals in the world), unless the company can explain how it intends to do so – either in its written communications or oral presentations.
• Facebook sells its audience – right?  Privacy legislation is only a matter of time.  How does Facebook plan to address this obvious issue and what does this mean for its future valuation?  It is incumbent on Facebook to explain this to justify being worth $100 billion.
• What are the external catalysts that might affect Facebook’s business (and eventually its stock price)?  Clearly another economic downturn won’t help the company assuming it is dependent on advertising revenue.  How about an earthquake that affects the company’s headquarters?   What happens if Mark Zuckerberg is no longer with the company – how critical really is he to the company’s success and who is sitting on the sidelines to replace him?

These are all important questions that investors deserve to have answers to before parting with their money and I would submit that it would be imprudent to buy shares of Facebook until understanding the full picture of the company.

This is an exciting time for the stock market and investors.  It’s been a long time since we’ve had a blockbuster IPO from a “generational” company that has the ability to establish the way companies and business do business in the 21^st Century. All I am suggesting is that a $100 billion valuation shouldn’t be accepted at face value.  I am sure there will be many more questions that will arise over the coming months with respect to the company’s valuation – this blog is just the start.

Dear Younger Anne,

How are you? I know it’s been a while, but I have been super busy the past few years.  You look GREAT in your profile picture by the way! Anyway, the reason I am writing is to give you a friendly piece of advice about the public relations world that will really help you down the road.  Take a business course.  Take Econ 101. You will need to know statistics! Don’t blow off MATH!

PR is all too often swept up in the Liberal Arts category that includes courses in journalism, sociology, history, literature, languages, basic communications, etc.  All great and valuable classes.  However, as PR professionals, it’s often our job to consult on corporate communications strategies – not just on one brand or product.  How can we do that if we are not sure how the company is actually run?

When I first came to KCSA nearly 10 years ago I came from a consumer shop with no understanding of B2B PR or the inner workings of how a business works. Words like “IPO,” “earnings,” “capital markets,” “reverse shell,” “secondary offering,” were Greek to me. Heck – I didn’t know the difference between a stock and a bond!

Thank God I had wonderful, patient mentors here to show me the ropes (note the hue of the tip of my nose). I was literally taught how to read The Wall Street Journal (there’s a method to it!  You can get through it in 25-30 mins! I promise! Tweet me and I’ll show you how!).  I watched CNBC, studied the business section of The New York Times, BusinessWeek, Forbes, the Financial Times and read books like Where does the Money Go?, Naked Economics: Undressing the Dismal Science and The Quants, How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It.  Granted, I was just a young sponge soaking up everything, but looking back now – it would have helped enormously if I had an academic business core to build upon.

I’ve interviewed men and women your age and asked them if they’ve had any business, econ or statistics courses. And their answers always surprise me – “No, it wasn’t a requirement” or “No, because you can only take classes in the business school if you are a business major.”  Ummm – what?  It may be a while since I’ve been in school – but if you’re the one paying – why can’t you decide what classes to take? Even if it’s not counted toward your major – be bold and take it anyway!  (like one class will matter in the grand scheme of your student loans!).

This is not an anti-“PR Major” rant – it’s merely a rant on how to better prepare young PR professionals like you for the big bad business world out there. At the end of the day, until PR becomes incorporated into business schools, you are on your own when it comes to getting a basic business education.

So, dear younger self, know that you have a fun and fulfilling career ahead of you! It will be full of learning and growth, meeting great clients and reporters,and learning how to deal with the not-so-great clients and reporters. So soak it up and learn as much as you can along the way. Get out of your comfort zone. Oh – and don’t get your hair braided on that spring break trip to Jamaica…you looked like an idiot.

Love,

Wiser Anne

In his State of the Union address last week, President Obama called upon Congress to help him create more jobs in the U.S.  He proposed a mix of higher taxes on very wealthy individuals and companies that outsource jobs, lower taxes on companies that keep jobs in the U.S., and expanded efforts to make college and technical-school education affordable for all.

Naturally, Fox News wanted to ask its viewers whether they thought Obama’s recipe would “backfire.” The network invited some of its regular business-minded panelists, including Ben Stein and I, to debate the matter on its weekend “Cavuto on Business” show.

I see little harm in Obama’s proposal. But see if you can follow the catch-22 in the logic of my exasperated debate opponents. They argue that the higher taxes would only threaten the current rate of economic growth, roughly 2.9% in the fourth quarter of 2011—laughably low, in their view. Then they bemoan the fact that Obama has failed to give more Americans the technical skills they need to compete for high-paying jobs as machinists and technicians for high-tech manufacturers and so on.

Hm. Am I the only person left wondering how, without higher taxes on the companies and business owners, I would benefit if the U.S. government spent more on high-tech education— would we pay for all that schooling for U.S. laborers?

I guess, as always, we’ll just stick the workers with the bill.