AR 101 series: Measuring Analyst Relations

The measurement question tends to be close to the top of the issues list for most AR practitioners: not a surprise as the majority of AR managers are increasingly asked to justify ROI for budget and headcounts. However, it is notoriously difficult (i.e. costly and complex) to measure the impact of analysts on sales, either directly or indirectly, and derive a dollar value for AR contribution. As a consequence, common metrics include activity, published reports and anecdotal evidence. Those metrics are usually used to support objectives assigned to AR. Those objectives largely depends upon the functional reporting line, either communications, marketing, sales or sometimes directly at board level.

Empirical evidence suggests the following AR models:

• Outbound: pushing information out to analysts in the hope of generating reports. Usually observed when AR reports into communications, and the most common case.
  - Pros: messages and resources aligned in support of the overall communication strategy, synergies between AR and PR in terms of resources and career planning.
  - Cons: may bring an emphasis here tends to be on "clippings" by measuring the number and not quality of reports published, tends to ignore impact of relationships on sales and adopt a short term approach. As Duncan puts it in On the folly of rewarding A, while hoping for B, there's potentially a risk that AR managers focus on the analysts publishing the most or being most frequently quoted in the press.
  
• Transactional: pulling targeted analysts into a relationship with the firm. Where AR depends from marketing or sales, the focus tends to be building the sort of rapport that leads to sales recommendations, providing sales with 'silver bullets' report reprints and on speaking engagements, plus of course tactical engagement in sales situations (for instance outsourcers benchmarking).
  - Pros: good alignment with AR objectives, tends to offer more flexible funding.
  - Cons: emphasis on gaining collateral rather than recommendations may badly impact the relationship by treating analysts like an extension of the sales force.
  
• Insight: primarily using analysts to develop internal understanding and direction. Where AR's primary customer is the board, it tends focus on using analysts for strategic advice and promoting execs profiles.
  - Pros: tends to be a win-win relationship.
  - Cons: Trades off winning recommendations and volume; focusses on supplier-centred analysts rather than those advising buyers.

Recommendations:
1. AR managers should not lose sight of the key objectives for the function: create a positive external environement for business, by developping relationships with key influencers and helping to ensure accuracy of research.

2. Focus should be put on using balanced metrics to measure AR not only on raw clippings and quotes , but also by weighting them to reflect the importance of the analyst; by surveying all analysts [including those who may not often be names in the media]; and through independent perception audits.

3. AR need long term objectives and can contribute positively to developing corporate strategies by using analysts to coach execs. Do not let short-term tactics waste this potential.