Brian Pittman’s exclusive interview this week: Jeff Corbin, CEO, KCSA Strategic Communications; Author, "The Art of Communicating Value — Four Basic Steps to a Successful IR Program and Creating the Ultimate Communications Platform"
Consumers, the media and shareholders don’t care about marcom silos — and neither, apparently, do the rising number of firms billing themselves as integrated communications agencies. These firms recognize that the Internet, social media, mobile marketing and other developments are helping to erase traditional lines between communications disciplines — or, at least, requiring that practitioners in these areas work more closely (and faster) together. This represents either a great opportunity — or challenge — to firms, depending on their willingness to position themselves for change.
KCSA Strategic Communications is a classic case study of a firm that has embraced the integrated strategic communications shift. Read on to hear from its CEO, Jeff Corbin — who has developed financial communications programs for the American Stock Exchange and dozens of NYSE and NASDAQ listed companies — about what you must know about you, too, can profit by communicating your company or client brand’s value, regardless of your discipline, practice, job or place on the org chart:
What do most companies do wrong when they communicate their value story?
In 15 years of representing publicly traded companies, I have never met a company that thought it was overvalued. The challenge is to understand how a company is valued and why it is valued that way. How do they compare in relation to their competitors? If a company’s multiple (trailing revenue, EBITDA or net income) is significantly lower than its competitors, and everything else is equal, then a good case can be made that the company is undervalued. However, if they aren’t lower than its competitors, then a company can’t claim that it is undervalued. When this happens, then it is incumbent upon the company to explain to investors how it intends to grow at a rate faster than its competitors and therefore deserves a higher multiple.
Who does a great job of this? What do they do right?
Many companies communicate their value proposition properly and others don’t. Take a look at Intel recently. They came out during their earnings and said that they see slower growth in the personal computer industry. In doing so, they were acknowledging potential slower growth, which necessarily will have a direct impact on their revenue growth and earnings. This is transparency at its finest. In essence, Intel was saying to investors, "Our growth is going to slow because of the economy and we should not be valued as high as if the personal computer industry is going to explode." By saying this, Intel recognized the fact that its stock price might take a short-term hit because the law of the stock market says it should.
I watched the video on your site about "the end of PR," stating that there is no PR…just strategic communications. Is the same true about other disciplines like, say, IR?
The reality is that a company needs to consider all aspects of its communications, not just PR or marketing or IR. That said, investor relations is not going away. There is always going to be a need for a publicly traded company to communicate with its shareholders. If it doesn’t, then it shouldn’t expect investors to invest. Nevertheless, it is important for all companies to realize that marketing and public relations, if done the right way, should give rise to higher sales which then should translate into a higher stock price or valuation.
What are you seeing in terms of increased integration across PR, IR, marketing, advertising and so on? What market forces or even technologies are driving this integration … and what should readers be doing to facilitate or be a part of that?
For years we at KCSA have been preaching the virtues of integrated communications. A company needs to speak with one voice regardless of the audience it is communicating to. Unfortunately, only a few companies recognize this. We are still seeing very separate marketing and IR departments.
Typically, IR, for example, is part of the finance department at the largest corporations. But what is going on in marketing and sales is critical to how and what the IR professionals communicate. Recently, I spent an entire day consulting with a small public company on its communications. What I realized was that the company was providing its investor audience with conclusions about its growth plans. It was communicating significant growth over the next year, but failed to explain how it was going to get from A to Z. The vast majority of our day was spent discussing the sales and marketing effort the company was embarking upon. This was how the company was going to grow. The company is now communicating in a very different way, focusing on the means to the end (sales and marketing), rather than just the end. The proof, of course, will be in the pudding and whether the company is able to deliver on what it says it plans to do.
Social media has been quickly adopted by PR, marketing and other communications disciplines—but not IR. Can you speak to that, if integration is so key?
Social media is very inexpensive and is a MUST for IR professionals. The Internet and the various social media networks are a great means to disseminate information. And, video is increasingly becoming critical to a company’s communications, especially given the rise of video playing devices such as the iPhone and iPad. At KCSA, we recently partnered with Crystal Research, an independent financial research firm, to create InvestorTube.net, where companies can conduct professional, TV quality interviews by renowned institutional investor analyst Jeffrey Kraws. The videos can be news specific (quarterly earnings for example) or a corporate profile and then can be virally disseminated across the Internet and social media channels. We believe that this is just the beginning of the importance that video will play in company’s investor relations activities.
That being said, since social media is so new, companies are still trying to figure out how to take advantage of it. We are at the very beginning of a new communications paradigm.
It’s worth noting that you have a degree in government. What’s your take on the current regulatory mindset? What’s your advice about communicating value in this environment?
Politics aside, I am a bit concerned about the Dodd-Frank bill and what is going on in our government. A 2,300-plus (page) bill is absurd—no wonder the markets are so volatile. No one knows what the bill will mean in both the short and long term. Uncertainty breeds nervousness and nervousness breeds volatility in the markets. Take a look at the markets prior to the 2008 election. The markets were just as volatile then as they are today—and this was caused by fear of the unknown.
This being said, the regulatory mindset and environment should have no impact at all on how a company communicates. To the extent a company is performing according to its articulated plan, so be it. However, to the extent the economy slows as a result of the regulations about to be imposed on us, then it is critical that a company keep an eye on how this is affecting its business and keep investors informed in the event they see a problem arising.
What do you do in your free time? How might that inform the way you approach communications?
I have many hobbies and interests outside of work. The bulk of my extracurricular time is spent doing not-for-profit philanthropic work in New York City. Getting out there, meeting new and interesting people no doubt influences my thinking (and sometimes even lends itself to new business opportunities). Golf—no better way to network. Whether it be playing with public company clients, my staff, investors and other [industry] influencers, four hours on the golf course is a great way to learn and have fun (provided I can hit the ball straight). Then there is the gym. Every morning I need to work out to think about the day ahead, read about or watch what’s going on in the world and in the markets and organize my thoughts so that I can be as focused and productive as possible. Lastly, hanging with my wife and kids—they provide me with the perspective on life that sometimes I forget about when caught up in my work.