Read this before posting

I was listening to Marc Maron’s WTF podcast the other day when he equated the word “content” to corporate detritus that clogs up the Internet and bombards people with useless information. I don’t think you can make a blanket statement and say that anything deemed “content” is rubbish, but I do agree that there is a glut of content on the Internet that lacks substance.  It is also becoming increasingly difficult to distinguish “sponsored content” from content that is published without strings attached.

For example, a story that runs on WSJ.com about the virtues of an organic diet could be defined as content, although a journalist most likely synthesized the information to present an objective sequence of thoughts about this particular subject. Juxtapose a WSJ.com story with a sponsored blog post on the Huffington Post about the merits of an organic diet, and the word “content” takes on new meaning.

But is there truly a difference between paid content and content that isn’t sponsored?

The unsponsored content found in mainstream media and trade publications has often been influenced by the very advertisers (or sponsors) and subscribers that pay for the content to be produced in the first place.  And yet, I have to agree with Maron that the word “content” is beginning to smack of something manufactured, manipulated, and ultimately, unworthy of a read.

At PondelWilkinson, we are often in a position to create content, whether it is writing a press release, posting an image on a blog, or publishing a tweet. We strive to ensure that the content we create is substantive; to do that, we think obsessively about every single detail, including word choice, the audience, and the best way to deliver the content.

To help encourage the publishing of quality content, following is a list of items to consider before hitting “post.”

  • Know your audience. The best way to ensure your content is connecting with its intended audience is to know who you are targeting.
  • Write with intention. Writing a blog post with a goal in mind, a thesis to prove, a point of view to express will help ensure the content resonates with readers.
  • Pay attention to detail. Word choice, grammar and focus matter when asking someone to read something, even if it is 140 characters or less.
  • Provoke interest. Let’s face it, anyone can write or publish something on the web. Ask yourself if what you are writing is provocative or original.
  • Review analytics. Almost anything published online leaves a footprint. Understanding what analytics matter and whether you are hitting the right target audience will help you know if your content is worthwhile.

– Evan Pondel, epondel@pondel.com

Nudge, nudge…wink, wink

Once upon a time I was an idealistic investor relations professional who assumed that when Reg FD (Regulation Fair Disclosure) was enacted in 2000, all public companies would follow the SEC’s initiative to the letter of the law.  No speaking to one before speaking to all, at least where material, previously undisclosed information was involved.

Did Reg FD have the impact the SEC was hoping for – a more level playing field? In 2001, CFO magazine quoted Boris Feldman, a securities attorney at Wilson Sonsini Goodrich & Rosati as saying, “Is the market better informed?  Of course not.  There’s more transparency, but less meaningful information.”  The article went on to say that in that year’s fourth quarter there were nearly 800 pre-announcements because “analysts are less likely to be told on the QT to shade their estimates.”  The Pepperdine Law Review in 2002 surmised that “the only thing that has changed is the amount of securities regulation operating on American markets.  The investors are no better off; the analysts are no worse off; the lawyers are the only ones who may have benefited.”

Although I could not find many examples of how Reg FD has benefited corporate disclosure or the investment community at large, there are many examples of the SEC’s enforcement of the rule. To name a few, in 2007 the SEC contended that Office Depot’s then CEO and CFO selectively disclosed to analysts and investors that the company would not meet analysts’ earnings estimates.  Office Depot paid a $1 million fine to settle the allegations.  In 2013, the SEC charged the former head of investor relations for an Arizona-based company for giving certain analysts and investors a heads up about an upcoming major development.  He paid a $50,000 fine.  Last year Bloomberg reported that since Reg FD’s beginnings, the SEC has brought 14 enforcement actions.

Today, the practice of meeting one-on-one with investors appears as robust as ever. In addition to non-deal roadshows, companies routinely present at broker-sponsored conferences with individual meetings sprinkled throughout the day, while one-on-one phone conversations between companies and their investors happen multiple times a day, every day.  What’s being said during these conversations?  According to a new article in the Wall Street Journal, Barry Diller, chairman of Expedia and IAC/InterActiveCorp, “analysts and investor-relations executives work together to keep estimates low.  ‘It is a rigged race,’ he says.”  The supposition is that companies send signals to analysts to ensure the companies meet or beat quarterly Wall Street expectations.  An analysis by the paper found that after the end of a quarter, earnings estimates often decline steadily.  The Journal looked at daily changes in analysts’ estimates at S&P 500 companies since the start of 2013 and compared them with what the companies actually reported for each period.  In nearly 2,000 instances, companies “would have missed the average earnings estimate if analysts hadn’t changed their numbers in the 40 trading days before the company’s quarterly earnings report.”

To avoid the potential of selectively disclosing material information, in this case where revenues and EPS will land in any given quarter, many companies have adopted stricter quiet periods and formalized processes related to analyst and investor communication. The idealist in me wants to believe that more companies than not adhere to the rules and don’t give some an unfair advantage over others.  However, while I in no way condone running afoul of securities law, the hardened realist in me thinks there will always likely be some nudge, nudge…wink, wink.

– Laurie Berman, lberman@pondel.com

Turning the Tables: An Intern’s Perspective

PondelWilkinson is very lucky to have a fantastic intern on staff. Her name is Yukari, and she recently earned a master’s degree in strategic public relations from USC. Among many other duties, Yukari has been helping enhance PW’s social media presence, and as a result, our Facebook and Twitter pages are now chock full of great content. Since Yukari frequently asks the members of our staff questions to help drive our social media content, I thought I’d turn the tables on her to find out how she feels about working in the real world of strategic communications after finishing her schooling. Below is our interview.

Q: Why did you decide to study communications?

Yukari Nishi during  Career Day at the University of Southern California.

Yukari Nishi during Career Day at the University of Southern California.

A: I started my undergraduate career as a vocal performance major at Berklee College of Music. Then I had the opportunity to study in Tokyo, and that’s where I decided to transfer my major to communications. I’ve always wanted to do something creative, and after I took a PR class, I realized that it would be a good career to pursue. After I completed my studies in Tokyo, I transferred to Rutgers University and got my communications degree. This past May, I got my master’s in strategic public relations from USC.

Q: Do you think your education prepared you for the real world?

A: I definitely think that the program at USC prepared me for the real world. The professors that I learned from have both in-house and agency backgrounds, and the experiences they shared were really interesting and helpful. I wish I’d found PR earlier in my undergraduate career, but I probably wouldn’t be here today if I didn’t take the time to figure out what I really wanted to do.

Q: What qualities do you think are important to succeed in this field?

A: Networking skills are a must in this field. I also think the ability to adapt is really important. Especially at an agency, you have the opportunity to work with all types of professionals in many different fields, and it’s important to know how to deal with, understand and embrace those differences.

Q: Has anything surprised you about the field since you started working here?

A: Not necessarily a surprise, but more of a confirmation. I’ve heard from many professionals and professors that in an agency, no two days are the same.  Working at PondelWilkinson definitely confirmed that, and I’ve enjoyed learning different things every day. I come to the office wondering what type of projects I’ll get to work on that day.

Q: What are some of the more interesting things you’ve worked on since joining us?

A: I really enjoy creating graphics for different events, survey results and giveaways because it allows me to bring out my creative side. It’s important to be able to tell a story using graphics. I also like drafting news releases because during the process I get to learn more about the client and the client’s impact on its industry.

Q: What has been the hardest adjustment?

A: Pitching reporters is not easy. Speaking with journalists was pretty challenging at first, but now I’m getting a feel for how to approach them and better understand what kinds of things they need from me to make a decision on whether to cover our clients. Their time is valuable and you need to get their attention in a very short time frame.

Q: What advice would you give someone wanting to get into the communications field?

A: I would say that working on your writing skills is really important. A lot of writing comes with the job, and you can never get enough practice.  I also think it’s important to keep in touch with the connections you make, because it’s a small world and you never know how those connections might help you in the future.

We’d love to hear from you in the comments below if you have any other great tips to share for those just starting out.

– Laurie Berman, lberman@pondel.com

Saturday Mornings, a Frothy Latte and The Wall Street Journal

Ever since The Wall Street Journal started publishing on Saturdays, I have more-than-ever appreciated the print edition, relaxing unrushed with a latte to read just about every story.

"The Cure for Decision Fatigue,” a Saturday Essay in the WSJ.“

“The Cure for Decision Fatigue,” a Saturday Essay in the WSJ.

Aside from major news, which all of us see from many media, it seems like on Saturdays, the Journal always publishes some interesting pieces that go largely unnoticed by other publications. This past weekend was no exception.

There was a near full-page feature about where to go for the best ice cream sundae in New York City (the Brooklyn Farmacy & Soda Fountain); a story about walking in Los Angeles’ new downtown Arts District; a column about the rise of the “polypill,” an all-in-one capsule that will lower your cholesterol, take down your blood pressure and reduce your blood sugar at the same time; and a practical treatise touting the benefits of wearing seersucker swimming shorts.

With my business hat on, however, the one that caught my eye was the “Intelligent Investor” column by Jason Zweig. I had spoken with Jason during the week as he was researching his column, which focused on how, over the recent years, America’s individual shareholders have essentially disappeared from view.

Jason pointed to an antiquated SEC rule, dating back to 1934, stating that if a company has fewer than 300 shareholders, it can deregister and “go dark,” saving the company certain costs and also eliminating the communications transparency that shareholders, and I and my colleagues as professional corporate communicators, all hold near and dear.

In part because of technology, most investors for many years have been buying shares in electronic form. They hold those shares in brokerage accounts, rather than seeking share certificates from the issuers. The actual record holders in essence have become the brokerages. One record holder possibly could represent thousands of individual investors.

The practicality of the brokerages forwarding to their customers all the news that an issuer distributes is just about nil. Moreover, if a company goes dark, requirements for widely issuing any news is significantly reduced. As is the point of Jason’s column, if an issuer wants to tune out almost completely and deregister, it would be pretty easy. That’s a frightening thought that over time could significantly diminish valuation for all holders.

Fortunately, most of the companies going dark are not main stream, and in our observation, are typically quite small and usually not of the highest investment grade. Perhaps, however, it is time for the SEC to look at this rule and increase that 300 minimum number for the benefit of all shareholders.

Nice piece, Jason. Hopefully you haven’t given any ideas to too many issuers! As to other stories in Saturday’s edition, there also was an interesting one headlined, “The Cure for Decision Fatigue.” Perhaps I should have had a cappuccino instead of a latte?

—Roger Pondel, rpondel@pondel.com

Gearing Up for the IR Community’s Largest Gathering

On Sunday, I’ll be heading to the 2016 NIRI annual conference in San Diego to learn about the latest developments in our industry, hear informative (and I hope entertaining) speakers and meet like-minded people to gather intelligence about what makes a successful IR program.

The sessions I’m most interested in follow:

  • Overview of Key Corporate Governance and Regulatory Issues – And What You Need to Know to Keep Activism at Bay. Those who follow this blog know that we’ve written about activism in the past, including this post about the rising tide of activism. Although it was written nearly eight months ago, the message is still relevant today. A recent Wall Street Journal article reported on the creation of the Council for Investor Rights and Corporate Accountability, or Circa, which is the “first coordinated effort by activists to make their case to lawmakers and the American public that their investment strategy helps, rather than harms, companies and the U.S. economy.” There are some major heavyweights on the Council, including Carl Icahn and Bill Ackman.
  • Breaking through the Noise: Latest Trends in Quarterly Reporting. Without trying to give away my age, I have now been involved in nearly 90 quarterly reporting cycles. If I add the fact that for the majority of that time I’ve been at an agency serving a multitude of clients, I bet I’ve written more than 500 earnings releases and conference call scripts (kind of crazy seeing that in black and white). Oftentimes, it’s hard to get excited about a process that generally lacks creativity in how the news is delivered. Recently, however, we’ve seen video earnings calls from Restoration Hardware, use of social media as a primary disclosure outlet from Netflix and formal remarks being posted on IR websites to allow for Q&A-only calls.
  • Short Attacks: The New ‘Wolf Pack’: Best Practices for Preparing and Defending Against a Short Attack. I’ve been intimately involved in an organized short attack this year, and it’s anything but fun. A recent Supreme Court Ruling, as reported by Bloomberg, could make naked short selling much more difficult for those trying to manipulate the stock market, while Carson Block, an activist short seller, told Business Insider, “I think we’re helping people.”

There will be lots more to see, hear and explore. If you’ll be in San Diego next week, look for me so we can exchange war stories.

– Laurie Berman, lberman@pondel.com

 

IR 101 for Private Markets

CrowdWith the first quarter of 2016 the slowest period for initial public offerings since 2009, market watchers are wondering if the trend will continue in the year ahead. So, where might investors look for new opportunities? Try private markets, or specifically, companies utilizing crowdfunding as a financing method.

Starting May 16, the general public will have the opportunity to participate in the early capital raising activities of start-up and development-stage companies through crowdfunding. You can read all about it on the Securities and Exchange Commission’s website.

What isn’t discussed on the SEC’s site is how these companies will communicate effectively with their investors. Many of these companies are likely on tight operating budgets, and the idea of allocating funds toward investor relations is not exactly a priority.

However, now that the general public has the ability to participate in a stage of investing usually reserved for institutions, management teams need to ensure these new investors are communicated with regularly, as well as treated with the same dignity and respect as a Fortune 500 investor.

Following is a top-10 list of IR advice for companies going the crowdfunding route:

  1. Initiate some form of periodic communication with your investors, perhaps in the form of a quarterly update letter, podcast or even blog post.
  2. Select a representative from the company or an outside consultant to handle incoming inquiries from investors.
  3. Utilize presentations, fact sheets, video and social media to help investors understand the company.
  4. Consider hosting an investor call on a periodic basis to foster transparency and an open line of communication.
  5. Develop an investor relations page on your website to keep investors posted on recent news and the company’s progress.
  6. Consider hosting an annual meeting that investors will actually attend. The event could generate more support, as well as more funding for your company.
  7. Keep investors in the know about relevant industry news, so they, too, can become experts.
  8. Under promise and over deliver. Managing investors’ expectations is key, especially for early stage companies.
  9. Stay away from divulging too much information about your company’s future financial performance. Again, this harkens back to under promise over deliver.
  10. Treat investors as owners not strangers.

Bottom line: Professionally crafted communications form a foundation to attract and retain investors, regardless of an issuer’s size, but even more so for early stage companies, as they go to market for the first time and build their organizations.

– Evan Pondel, epondel@pondel.com

Recent News Snippets

newsprintI’ve seen a lot of interesting content over the last few weeks with implications for the investor relations community. So instead of penning new content, I’ve decided to summarize some of what I’ve read.

From ISS Corporate Solutions on non-GAAP metrics: “To date, most institutional investors seem to be comfortable with non-GAAP metrics.  According to the 2015-2016 annual ISS policy survey, only 11 percent of investors (and 1 percent of companies) responded that compensation metrics should only be based on GAAP measures.”  From Compliance Week: “Three-fourths of companies in the S&P 100 reported non-GAAP earnings in 2013, exceeding their reported GAAP earnings by an average of 12 percent points.”

From Canaccord Genuity on activism: “Shareholder activism and unsolicited activity, particularly larger transactions, remain elevated,” and “Activists have also become more sophisticated in identifying their platforms and running their campaigns – often generating significant positive attention from mainstream media.”  From Nasdaq: “Put yourself in the activists’ shoes and look at your company the way they would; assess your vulnerabilities as an activist would, communicate with and listen to shareholders; look for the manner in which questions are asked which may signal concerns that management should be effectively addressing; keep communications open and focused on how the company is managing both internal and external environments; provide regular updates to the Board; remain informed and plugged in with key industry members and peers; and actively monitor trading activity,” among others.

From Heartland Advisors on micro-caps: “In our view, micro-caps often have more in common with private equity investments than other publicly traded stocks.  For example, the biggest payoffs from micro-caps often occur upon the sale or merger of a holding.  Similar to private equity, they also require longer holding periods to fully reap the benefits of the asset class.”

From Sheppard Mullin on raising capital: “Although primarily a transportation bill, the FAST Act also made changes to the federal securities laws,” and “Overall, the FAST Act’s changes to the securities laws will help facilitate raising capital.”  The FAST Act (Fixing America’s Surface Transportation Act) shortens the period of time that an emerging growth company must wait before beginning its road show from 21 days to 15 days after publicly filing its registration statement, and allows emerging growth companies to omit certain financial information in registration statements on Form S-1, among others.

From Forbes on board responsibility: “Two years ago virtually no company had proxy access, now more than 200 companies give shareowners a voice during board elections,” and “Proponents who put in proxy proposals have informed me that there has been a shift in terms of activity in this proxy season.  At this time last year,  they were strategizing with other proponents as to how to maximize votes.  This year, they’re spending more time having rational, reasonable conversations with issuers about the technical details in regard to what type of proxy access the issuer will adopt.”

Have you read anything interesting lately? Please share with us in the comment section below.

– Laurie Berman, lberman@pondel.com

Watch What You Read

Photo credit: Getty

Shopper with Lord & Taylor bag. Photo credit: Getty

Perhaps it was trumped (pun intended) by bigger news, but the Federal Trade Commission recently announced its first-ever enforcement action involving a subject near and dear to the hearts of professionals in the investor and public relations business—the unfortunate, increasingly blurred lines between real and paid-for news.

The FTC action received almost no media coverage, which was too bad. The case involved retailer Lord & Taylor, which ultimately settled, over what appeared to be a legit story about the company’s clothes, published on the fashion website Nylon. But it was really an ad.

With print publications, such trickery is rarely an issue. We all have seen that smallish line saying, “Paid Advertisement.”  Online, however, that’s not often the case.

While there is nothing wrong with online advertising, readers should be made aware that the content is sponsored.

In a press release, Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said, “Lord & Taylor needs to be straight with consumers in its online marketing campaigns. Consumers have the right to know when they’re looking at paid advertising.”

So shame on Lord & Taylor, and perhaps even a bigger shame on Nylon. The real message resulting from the enforcement action is: Readers, watch what you read these days, particularly online, because it is becoming more difficult to tell the difference between ads and articles.

– Roger Pondel, rpondel@pondel.com

 

The Public Relations of Lobbying

Influence is the common denominator between public relations and lobbying. One influences opinion, and the other, government.

While these disciplines sometimes work in tandem, they are separate and distinct. In New York, however, that may not be the case. The New York State Joint Commission on Public Ethics (JCOPE) earlier this year issued an advisory opinion that expands the definition of lobbying to include aspects of public relations.

The lobby of the House of Commons. Painting 1886 by Liborio Prosperi.

The lobby of the House of Commons. Painting 1886 by Liborio Prosperi.

Whoa nelly, says the Public Relations Society of America (PRSA), the nation’s largest and foremost membership organization for public relations and communication professionals, which blasted JCOPE in a statement, saying the opinion “will lead to more confusion as to what lobbying is, circumvention based on the ambiguous standards articulated, and less trust in government.”

While the current advisory opinion is being challenged in court, JCOPE’s new interpretation of the New York State Lobbying Act, ambiguous as it may be, says consultants engaged in “direct” or “grass roots” lobbying on behalf of a client must comply. Believe it or not, this includes traditional PR tactics, such as message development, drafting press releases and contacting media.

The definition of a lobbyist usually revolves around compensation. According to the National Conference of State Legislatures, there are more than 50 versions of lobbying laws in states and territories,  ranging from definitions of lobbyists to payment thresholds for compensation or reimbursements.  New York’s current threshold is $5K annually.

Excluding media was probably a good “PR play” by JCOPE, no pun intended. Just think of how top-tier outlets like the New York Times and Wall Street Journal and hundreds of others would react if they had to register as “lobbyists?” It also would be interesting to learn how a reporter would feel if he or she was included in a PR firm’s “disclosure” for its “lobbying” activities.

The reality is media outlets frequently meet with public officials. But should a person who simply set up a meeting between a client and an editorial board qualify as a lobbyist? Common sense says no. The difference is that editorial boards have their own guidelines and choose what they cover or report on. Lobbyists, on the other hand, go directly to the source to sway opinion.

PR practitioners basically are connecting the dots, middlemen so to speak. Aside from helping point stakeholders to pertinent information, or connecting people with similar or disparate points of view, we help clients define messages and better articulate their narratives. But it’s always the client’s message, never that of a PR firm.

– George Medici, gmedici@pondel.com