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You can do everything else right.

You can research your market, develop an attractive concept, identify a brand proposition, create a quality product, construct an intelligent and targeted marketing campaign, and get seen in all the right prices. You can organize a supply chain, establish distribution and stockists, and get your pricing just right.

But if your company has a poor financial standing, question marks against its credibility, or a dubious corporate reputation it can all be for nothing.  Perhaps it will fail to raise the cash it needs for the new production facilities. Or maybe doubts over the longevity of the company will dent consumer confidence, hitting sales and making the situation even worse.

Either way, according to the practitioners, this is why financial Public Relations matters.

“A company’s ability to provide what we call an ‘Efficient Consumer Response,’ and the effectiveness of their advertising, marketing and branding effort can all be scuppered if the company is not seen as being stable, and isn’t able to encourage investment in its brands, in its property and its people,” says John Hobday, managing director for the (relatively) long-established FD Communications in the Gulf region. “Its absolutely critical, and it might seem far removed, but you will sell fewer products without a proper financial PR program.”

Having arrived here six years ago, Hobday was one of the first financial communications specialists in the Middle East. He’s seen the industry grow alongside Dubai as a financial centre, the Dubai Financial Market, and the emergence of the Dubai International Financial Center as the epicenter of finance in the Middle East. As such it has also become the focal point for Financial PR agencies in the Gulf.

THE BUSINESS OF REPUTATION. But what, precisely, does financial PR entail, and what does it aim to do? M Communications is one of the newer arrivals in this region. They launched with a soft opening in March last year, but have now beefed up their representation with the arrival of Nicholas Lunt as managing director in the region. Internationally, M Communications is a major player, and narrowly missed out the Dubai Inc project awarded to Finsbury earlier this year.
 
Lunt sums up the work they do succinctly. “All PR is about reputation management,” he says. “Financial PR is simply focused on reputation in the financial sphere.”

Reputation is important in many ways, but in the financial sphere it has one overriding purpose, as Lunt’s colleague Stuart Leasor explains. “Essentially the reason for carrying out financial PR is for a company to lower the cost of raising capital,” he says. “If you communicate effectively with the investment community at large, you make it easier to raise money. You encourage investors to stay loyal to you, and to understand why your company is doing what it’s doing. It allows your company future flexibility in financing going forward.”

It’s an aim that is simple and easy to comprehend, but the delivery of such an objective turns out to be a far more complicated affair. Financial communications agencies tackle one of the most complex, fast moving and unforgiving industry arenas – the international markets. Practitioners need not only the basic skills of the public relations industry, but also the confidence to challenge CEOs or CFOs and the numerical competence to understand what’s being discussed.

“You need to have the understanding on the financial side,” says Leasor. “But to be successful you also need to have the analytical abilities and the soft skills to understand why something is relevant and why it is newsworthy. It’s a combination of working out what the numbers mean, and where they fit together as part of the wider world.”

BACK TO BASICS. According to Leasor, the workload of a Financial PR agency centers first around getting the basics right; achieving transparency through regular and accurate reporting of financial information, and proceeding with honesty and accessibility.

“If you can set out a timetable and stick to it, give out the information that people want, make people in the know available to relevant journalists and analysts, you will have an immediate effect,” he says. “If you go and compare, anywhere in the markets, two similar companies with similar business models, those that are more transparent – unless there is some sort of external factor – will tend to have a higher rating from the investment community, than those that are not.”

Perhaps this is a hint to companies in the Gulf, which were only too happy to shout about their success in the good times, but which have been stung by a press backlash in the bad times, partly thanks to their own opacity. “People in the investment community give you credit if you are honest,” continues Leasor. “If you are unafraid, and you just come out and say, ‘This is what’s gone wrong, this is what we’re doing about it and this is where we’re going,’ you will do much better. People want to know that in every walk of life.”

These are simple tenets of communication that any discipline would believe obvious. So once the basics are fulfilled, what more can a financial PR agency offer? According to Leasor, after the basics its all about the details, and that’s what sets a good financial comms agency apart from the crowd.

“Why should the Financial Times write about a company?” he asks. “There are a hundred or so big companies in the Gulf region; banks, property, telecom… Why should the FT write about one bank as opposed to another? The creative opportunity is to differentiate that company. What is the story when I ring up the banking editor to say I think you should come and talk to XYZ Capital. Why should they do it? You need to have that insight.”

THE SPLIT. As with any form of Public Relations and communications work, workloads and revenue streams are based either on retainers or on special project work. However the volume and nature of project work (on corporate events such as Initial Public Offerings [IPOs], takeovers, mergers and more) is highly susceptible to prevailing financial conditions, as Hobday explains.

“We’re probably split 50-50 between retainer and projects,” he says of FD’s revenue stream. “We lost some retainer work at the beginning of the year, which was expected. We’ve had some fees cut from good, long term clients that we’ve enjoyed good relationships with, which is very natural and we’re happy to listen because we understand what’s been going on. But one of the big things we’re doing at the moment is working on restructuring and refinancing communication projects. For example, companies borrowed a lot, the maturity of those debts is coming due and they’re unable to meet their obligations, so they’re going through a process of explaining that to the banks, and trying to reschedule some of the financing.”

By necessity, the mechanics of the client-agency relationship are different for financial PR. Whereas a branding or marketing agency’s primary point of contact with a client would be the marketing or communications officer, the financial PR agency generally deals with the CEO or CFO. These senior operators are privy to most sensitive information regarding the company, its finances and its future plans; the very details that the financial PR agency is likely to be called upon to manage in the future.

“That doesn’t mean that financial PR is better than other types of PR,” says Leasor. “But it has very different objectives, and that close working relationship, that trust that needs to be developed between the financial PR agency and the very senior leadership of an organization, is critical.”

Critical it may be, but it also presents a risk, according to Hobday. The financial PR practitioners can become disjoined from the wider marketing effort, and as a result the company’s image can suffer.

“So many firms don’t join up their various bits of communication,” he says. “Financial PR seems to fall under the remit of the CFO, and the rest of the comms falls under a chief marketing officer or communications officer. I think that’s probably the one trend in global communications that needs to change: you really shouldn’t separate the two. The work you do is no more important or more relevant; it all needs to be joined up.”

According to Hobday, FD tries hard to adhere to this ideal. The company, which has three offices in the region and is part of a global network, says their own work takes in elements of corporate PR, financial services PR, issues management and even a touch of consumer PR.

GROWING PAINS. In the Middle East, financial PR provision is still in its formative years, but it is having to grow up fast. This year has been particularly dramatic; after what seemed like just five minutes Buchanan closed down its regional financial comms operation, claiming it will return at a later date. Dubai Inc has appointed Finsbury, a London big-hitter, to represent the Emirate in the markets, and more generally there was a global market collapse, to which Dubai was clearly not immune. Despite these set backs, M Communications retains confidence in the region, as evidenced by its arrival and subsequent investment.

“Dubai has aspirations to be a leading financial centre,” says Lunt. “And if you want to be a key player in the world of financial public relations then you have to be in the places that aspire to be one of the globe’s financial hubs.”

Clearly other agencies agree, with Finsbury also thought to be setting up a regional office following its Dubai Inc. project win. Having arrived from London himself, Hobday is open to highly skilled and experienced practitioners bringing expertise to the region, but he cautions against over confidence, and laments the arrogance of one firm in particular.

“Local knowledge is absolutely critical,” he says. “I have been here over six years, that’s longer than any other financial PR practitioner, and I still learn everyday. There was a firm recently that came here and said, ‘We’re going to do IPOs, we’re bringing global best practice.’ And now they have left, saying, ‘We’ll come back when the IPOs come back. What a bunch of jokers. It’s crazy, there were never enough IPOs here, never, to sustain a PR agency.”

Hobday is presumably referring to Buchanan, which recently attempted a dignified exit to a Dubai project that specialized in PR for IPOs. Dissolving their local partnership with JWT MENA, Buchanan described its withdrawal as a “reshaping.” Hobday is scathing about the aborted project.

“To come and set up because you think you can make money from IPOs is not a concrete reason. That’s like when you get a CV across your desk and it says, ‘The reason I want a job with you is because I understand its tax free and the sun always shines.’ It makes my blood boil.”

M Communications claims to be more sensitive to differences in the local industry, and to understand the importance of local know how. Part of a global network covering London, New York, Tokyo, Seoul, Hong Kong, Dubai and Stockholm, the company says that it has no intention of trying to force a London PR model on the region. Instead it wants to develop a model specific for the Gulf; one that takes into account local PR challenges as much as global.

“You have to ensure the local element is properly taken care of,” says Leasor. “Companies who ignore their own local market and the regional market they’re in are extremely foolish because word gets around. We live in an international age and if someone in New York or London does a Google search, they’re going to see what a company’s local press writes, what local analysts are saying.”

THE FINAL RESULT. And in terms of results, while many general PR campaigns opt for the shotgun approach – the more press coverage the better (assuming its not negative) – for financial PR it is all about timing. The release of figures, announcements, or company information must be managed to minimize or maximize their impact on the markets. The complex and sometimes subtle nature of the work can make it hard to display tangible results, but Leasor says you know when things are done right.

 “All else being equal,” he says, “if you can raise the rating of that company, and suddenly the company’s share price is on a higher ratio than its peers, and it has gone up since you started communicating… If things like analysts notes are more positive… If the company wants to issue a bond, or more shares, and there are more people banging on their doors. It’s one of those things that you will probably not notice day by day. But you can look back and think, ‘My god, we’ve gone from here to there.’ That’s where it is tangible. And clients will notice that.”

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