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Data-Driven Investor Relations

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Big Data has been a buzzword in tech circles for the past three or four years now. In fact, as the technology curve goes, it’s reached its interest peak as a concept. But while Big Data is about to fall out of favor with angel investors, the concepts it promotes can be easily applied to other business verticals. The investor relations industry can benefit from a big data revolution of its own. Too often, we’ve all made decisions about strategy based on little more than heresay and the apparent ‘experience’ of senior executives. With more data at our disposal than ever, how can we use it to inform our decisions? Data driven investor relations is the answer.

“Sometimes it pays to know what you don’t know.” – unknown

The Situation

Despite the valuation of businesses and financial instruments being exactly what investing is all about, there remains no efficient way of doing it. We’ve all seen goodwill numbers that leave us scratching our heads; a result of trying to value the intangible… and of the inflation that tends to come with sales. Differences of opinion keep things interesting, and are essential to markets. Increasingly, serious, modern businesses use data-based analytics as a starting point for valuations, and to inform most aspects of their operations. Once the knowable is known, it can inform the necessary conjecture and estimation, and lead to better results.

The trend towards informed decision making in business and the public sector is well established. Some of the most well-reviewed and best selling business books (such as Nate Silver’s The Signal and The Noise – Why Most Predictions Fail, but Some Don’t) are about using data to inform analysis, limit risk and operate within the tolerances of modern business. Properly informed ventures can dissect failed endeavors that were built with data-based information, and be confident that it was either the unknowable and uncontrollable that proved to be unmanageable, or a flawed input that can be corrected. In the process, they can gather more data, improve the model and decide whether or not it’s worth trying again.

Unknown Website Value

Do you know the true value and exposure of your IR website? This goes beyond simple Google Analytics, visitor numbers and document downloads. Inbound investor relations tools allow IR Smartt to provide actionable intelligence on the analysts and investors who are visiting your company’s website. You don’t need to know how many page views you got this month; that kind of metric can be used to provide monthly or yearly comparisons, but it doesn’t get to the heart of the issue. What you need is a real-time list of analysts who have visited your website, what they’ve looked at and when they left. This kind of data can be cross-referenced with your Thompson One database to determine: do I need to call this person? Were they on our last earnings call? Do we need to escalate this to the CFO?

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Counting on Media

Much like company valuations, public and investor perception of any given company, product, or industry, is difficult to reliably understand. Human opinions are fraught with subtleties, shading and fickleness that couldn’t be reliably analyzed even if it could be properly collected. Fortunately, using sophisticated search algorithms, a willing company can build a business intelligence program that reliably tracks the frequency of discussion of any given item or topic across multiple mediums. This information provides a reliable starting point from which one might gauge interest and begin the process of media analysis.

When IR Smartt monitors media for our clients, we’re able to break the data down by medium, giving IR departments a look at where they’re getting traction and with what aspect of their news. In addition, we provide highly detailed analytics on media and advertising values, something few IR firms have the capacity for. Depending on client needs, we adjust the granularity of the reports and pick out when the company is mentioned by certain analysts, in particular types of stories, or amongst specific types of online communities. We use this data to inform social engagement and content strategy programs. Companies use this monitoring to inform their IR activities, their PR activities and their analyst relations. It’s not uncommon for additional search strings to be added to ongoing monitoring as companies learn more about what gets traction and what doesn’t.

For example, if you’re overly concerned about a negative-leaning SeekingAlpha article, would you find it valuable to know that your company’s own blog doubled its traffic on the same day? Would you want to know that the blog post you put out clarifying some operational metrics got more online impressions than all of the industry analysts covering your company? Once you understand your company’s own reach, it becomes easier to put out the inevitable management-side freakouts over negative online publicity.

Human Analysis

How many times a company is mentioned at the same time as their competitor, their flagship product, or the top analysts that cover them (for example) is a simple matter of counting. The significance and tone of the mentions, however, is a matter of human impression. While computers can do a crude job of seeing whether or not text is ‘good’ or ‘bad’ based on positive and negative values given to the associated words, language is uniquely human. Our clients find that a quick perusal of the aggregation of mentions that we provide with each report gives them a very good and quick overview of the most pervasive opinions.

Common Oversights

As companies use data to make decisions, so too do investors. The earnings call is the central point of information exchange between public companies and the investing public. This regular update helps companies keep their message consistent, keeps analysts and investors interested, and ensures they’re addressing the questions and concerns of the relevant parties.

For all the time and energy that goes in to quarterly earnings calls at public companies, surprisingly few devote any resources to monitoring the consumption and reach of the call as part of an enhanced earnings call marketing strategy. Some of the most successful work we’ve done for clients – both in-house IR departments and IR consultants – has centered around using our media monitoring products. Our IR tools track the pre and post call discussion that surrounded the call, then use our earnings call visibility package to ensure they’re getting as much traction as possible in the channels that matter to them the most.

data visualization wins investors

Tim Howard

Tim is our CEO at IR Smartt Inc. He leads the strategy and business development teams, driving the company forward. Tim's previous professional experience included extensive work in Journalism and Online Publishing.