We are often asked, especially by high-growth companies, what the ROI (return-on-investment) is on PR. In other words, the gain. The payback on what you invest in PR.
The answer, of course, depends on the context. Depending on the company, PR has different effect. But here in March 2023, Per Hansen of the Millionaire Club put it into words:
Communication is crucial for share price and funding opportunities.
(See link and quote below).
And yes, it’s one of the ROI factors we usually mention, and I agree that ultimately the share price is by far the biggest factor. Well-executed PR over 3-5 years can increase the share price 5-10-20 times. For most people, that’s a pretty crazy ROI compared to what you invest in PR.
The value added is mainly due to these three factors:
1) More hype about the company means more people are interested in ownership, which drives up the share price. Unknown companies rarely have multiple interested buyers.
2) Selling your company’s products becomes easier: More people want to buy, and at a higher price, because it’s a well-known company that they trust and want to be associated with.
3) Talented employees choose the company because it has a reputation for success.
So why don’t we just hurry up and get some publicity?
The value doesn’t come from press coverage alone, it starts from within.
Good press doesn’t in itself create better products, good customer service, sound values, sustainability. But it might be easier to get people to perform and have their hearts in the right place when the company is publicly known for something good. So you get up every day and look forward to contributing to the good that the company stands for.
But if you don’t tell the world about the good things you’re doing, no one will know about it, and the value creation and virtuous cycle won’t happen.
We can also call it “branding” – and it’s important to remember that your brand is not defined by what you say, but by the perception people have. If there’s a mismatch, you need to make an extra effort.
Well, you know:
If your company delivers great values, delivers on a strong brand promise – and tells the world about it – then you can expect a sharp increase in the value of the company when you need to raise money or sell in an exit.
So how do you get good PR?
Everything is PR: Job postings, LinkedIn posts, your ads, your annual report, product launches – everything is PR and should be considered in PR and vice versa.
Proactive PR and good press coverage is created by:
– Media mentions of everything possible, in business media, trade media, industry media, etc.
– Linkedin / blog posts
– You are quoted as experts
– Debate / opinions
PR is not just about flagship media like Børsen, JP and Berlingske. Think about it everywhere: Everything you do sends a signal to the world about what you stand for.
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Contact Jakob on +45 4038 4586 or write to jh@kempkjaer.dk if you want help getting your message out there – we start by clarifying strategy, opportunities and stories.
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And what was it that Per Hansen said?
According to Nordnet’s investment economist Per Hansen, who d. On March 27, 2023, in the Millionaire’s Club podcast, we find ourselves “in a world where financial news is being thrown around at a speed we haven’t seen before” with “a lot of momentum trading, a lot of people buying what’s going up and selling what’s going down, and then it becomes self-reinforcing”.
When financial news “thrown around at that speed (…) it places extreme demands on management and boards of directors” (…) “because there are a lot of people (…) who don’t understand that it’s crucial that the share price reflects the underlying value (read: the company’s) at all times, and rather slightly above than slightly below. Because if you suddenly find yourself in a situation where you (read: an analysis company) have an analysis done where someone says that “you’re cheating a little on the scales” or other things, it may well be that in 3, 6 or 9 months it will be refuted – but the damage is done.
That’s why if a company needs capital, the share price should be as high as possible – and the share price should reflect the underlying values. And a lot of companies simply don’t get it, and unfortunately, management and boards don’t understand enough of it. And I’m a little nervous that when we see someone becoming a little more aggressive in their communication at the same time, we won’t see a competence boost from management and boards who know that this only reinforces the need to be very sharp.”
The quote starts after 25 minutes here:
https://open.spotify.com/episode/3mo4zRgFM0skJPqAV6jTZY?si=MPvl0Q4HTyyfaKxaeJsHog
