Many public relations agencies decelerate both their growth, and that of analyst firms, by failing to show the value created by analysts and by analyst relations.
That’s the finding from what is almost certainly the most extensive research project studying the international analyst relations market. To share the insight, and to help grow our own market, we’re using the insights to introduce an Analyst Value Review service for agencies and analyst firms wanting to build market momentum.
Over the last semester, 40 teams of business-to-business marketing students at one of the world’s top management schools have extensively studied our market. A few days ago, for example, I met several teams to discuss reports in five areas: on value propositions; brand communications; sales strategy; the configuration of the AR offer; and sales channels.
Value: Agencies are using price as their main signal of the value they create. Few agencies are able to communicate the business value of analyst relations and, as a result, clients use price as the indicator of which agency to choose. Different agencies might offer monthly retainers, and buyers assume (often incorrectly) that price is a signal of value delivered rather than the true value of the AR delivered. Higher price agencies differ in their great client service and higher cadence of communication rather than either in widening outreach to underestimated analysts or better outcomes from the relationships developed with analysts. This especially hampers the relationship between vendors and second-tier or long-tail analyst firms. As a result, incumbent agencies face a substantial risk of client churn which they mitigate by raising switching costs through over-servicing and cross-selling.
Communication: Few agencies have analyst relations as part of their brand communications and, almost universally, the lack of market education makes it hard for client-side PR directors to become advocates: they struggle both to make the case for analyst relations and to show how their agency is a trusted expert. In many cases, AR programs show long-term unrealised potential for growing analyst value, especially in helping vendors to identify underestimated analyst firms, most often through focusing more on the quality of communication, by extending AR globally and by communicating the increasing value of analyst firms.
Strategy: Agencies’ business development activities struggle to proactively identify firms that are missing out on analyst value. Generally, prospective clients ask for stand-alone analyst relations more than agencies offer it to them. Many firms consider analyst relations only when analysts firms’ salespeople contact them. Agencies generally have the opportunity to target potential clients that can realise high additional value from AR with minimal risk to the additional investment involved. In many cases, agencies could benefit greatly from a series of small changes to anticipate and communicate the impact of analysts on clients’ market. Despite some agencies stressing the volume and quality of their relationships with analysts, analysts generally don’t see agency professionals as peers with valuable insights on their markets. Analysts in second-tier and long-tail firms often see agencies as bottlenecks or as opponents. Agencies can make better use of analysts’ insight in their own business development.
AR offer: The configuration of analyst relations services offers very little flexibility. Generally, the media relations model of a fixed monthly retainer focusses agencies on outreach to analysts rather than in better communicating targeted analysts’ impact on their clients’ markets. Very few have the ability to better enable their clients’ sales or to help clients to access wider analyst insight. As a result, agencies tend to have AR teams with a small number of large clients focussed on relatively few analyst firms. In turn, that means that agencies’ AR teams can suffer greatly from the loss of one or two clients. Firms have built up AR expertise only to lose it when after a client loss, and AR teams get dispersed back into the wider PR community. This configuration locks agencies into a vicious cycle in which AR cannot stabilise and grow.
Channels: Agencies have few channels for selling analyst relations. The clients of AR teams are often the agency’s media relations team rather than the end client. Few agencies are helping their clients become aware of new analyst firms, and few analysts understand how to grow awareness of their agencies by working with agencies. The average analyst on Twitter follows just two or three analyst relations professionals and rarely recommends agencies to vendors. The IIAR, which is a fruitful intermediary connecting agencies and vendors, has relatively few agency members. Few agencies have attempted demand generation for AR, and many of those no longer have a notable commitment to AR. Few agencies are engaging in AR debates on social media, for example, promote analyst content not related to their own clients, or are helping clients to develop measurable impact from their analyst relations. Generally, agencies are not developing their analyst relations business and internal AR teams often struggle to access their parent firm’s business development resources.
Since the start of this year, Kea Company’s Stephen Miller and I have assisted teams at one of the top 100 business schools (roughly on a par with Michigan State, Vanderbilt or McGill). The research teams hit the ground running because we shared with them our knowledge of the market. However, we found the teams went far beyond our observations partly because the school has deep research-driven expertise in B2B marketing and market creation. They were able to leverage leading-edge academic theory and conduct their own research. Although some teams had divergent perceptions of the risks in the market, their finding do suggest that agencies seem to overlook issues of key account management, market creation and market segmentation.
Personally, I was especially intrigued by the discussion on pricing. For many reasons, pricing in Europe and Asia is not only lower than in North America, where prices have a wider range. For many buyers, there is a ‘floor’ for quality but no sense of higher levels of relationships value being created above that floor. As a result, price decides once the provider is established to be above the ‘floor’. This suggests substantial opportunities to disrupt and reshape the market by proving the capacity to create higher value in analyst relationships, for both vendors and the analyst firms.
Our offer to agencies and analyst firms
The Analyst Value Review aims to maximise the impact of the relationships between agencies, analyst firms and their mutual vendor stakeholders. To ensure that vendors get the maximum value from their analyst relationships, Kea Company strategists conduct a structured check-up with review clients to identify opportunities. These checkups include topics such as: measuring changes in value created from vendor-analyst relationships; building marketing communications partnership between agencies and analyst firms; identifying firms with the greatest analyst value deficits; creating more valuable vendor-analyst relationships; creating channel partnerships between agencies and analyst firms.