Talking Point

Is bad publicity good for your share price?

A new study has come to the extraordinary conclusion that bad media exposure helps fuel a company’s share price.

The far fetched study, to be published in the forthcoming in the Journal of Financial and Quantitative Analysis, found that small time investors often overreacted and sold their shares in the wake of negative publicity, leading savvier institutional investors to pick up stock at cheaper prices. The increased trading activity by the institutions caused individual share prices to spike. The study was based on an analysis of companies which have appeared in Business Week’s Worst Boards list in recent years.

While I haven't seen the full study yet, it's difficult to swallow the conclusions that appear in the summary. The study ignores the fact that bad publicity impacts a company's ability to retain and attract quality employees and is a powerful turn-off for existing and potential customers. Indeed, the no brainer fact that that good publicity is better than bad makes this study totally pointless.

Give research a human touch

PR people love a good piece of research to support their communication campaigns. It’s probably one of the most overused tactics in the PR toolkit but still has its place when the statistics are given a human face.

This week our team faced the dilemma of having some great research on video late fees but nothing more than a few interesting statistics. A decade or so ago, a well resourced newsroom would have received these statistics and sent a cadet journalist down to their local shopping centre to find the human face to the statistics. I was one of them many years ago.

Not anymore. PR people are now expected to do some of the work journalists have performed in the past in finding what many in the business call “talent” to tell the story. People like hearing stories from other people with similar experiences. The research is simply there to back up what the person in saying and should never be seen as the sum total of the story.

Fortunately, we now have the tools available to us to easily find people with good stories to tell. By posting a simple question that asked people whether they knew of any late fees horror stories we were able to find enough talent to back up our research and get the media interested in our story.

Wise words from PR veteran

"'One of the scarcest commodities in public relations today is the scarcity of competent writers."

I couldn't agree more with this observation by PR veteran Harold Burson. Not knowing how to tell a story and commit it to paper (or cyberspace) through words is akin to a plumber not being able to fix a leaky tap. Clients looking for a strong public relations agency would be well advised to put writing skills at the top of the prerequisite list.