Welcome to 'The Evaluator', a Combination of News and Blog

Twitter Reveals Real-time Response to Cameron Speech

Mark Westaby — 2010-03-01T04:30:33-08:00

As I've said in previous posts, Twitter is a wonderful source of data for highly cost-effective, real-time market research; and yesterday's speech by David Cameron provides an ideal opportunity to demonstrate this.

The charts (below) show response to the speech given by David Cameron at the Tory party's spring conference on 28 Feb, 2010, in terms of popularity (a measure of positive tone) on an hourly basis. The top chart reveals a ding-dong battle between Twitterers on both sides of the political ocean. HMS Cameron's supporters fired the first salvos, with HMS Brown's responding shortly after, at 16:00, before unleashing a broadside at 20:00. HMS Cameron might have been holed but actually fought back with real aggression to quieten HMS Brown's guns, which fell silent at midnight. HMS Clegg's gunners finally woke-up at 23:00, by which time the battle between the dreadnoughts was virtually over.

But if the battle between HMS Brown and Cameron was won by the latter, what about the fight between their supporting vessels? The lower chart reveals that the Tory navy outgunned its Labour counterpart right up to 23:00 when the advantage swung back to the reds.

So what about the morning after the battle, now that the smoke has cleared? The latest position, taken just 20 minutes ago as I write, puts Cameron ahead of Brown by 3.5% to 1.1% though both trail to Nick Clegg, whose popularity currently stands at 5.8%. The story is different for the parties, however, with Labour on 2.3% compared to just 1.2% for the Tories while the Lib-Dems are on 2.6%.

There is, of course, a long way to go in this electoral 'war' but these latest results from Twitter reflect what's happening in the polls, with Labour coming back hard. They also show just how Twitter can be used for real-time assessment of consumers' views and opinions.

Charts show popularity -- a measure of positive tone as a percentage of overall coverage -- for the political leaders and their parties on 28 February, 2010

Brown and Bullying Update

markwestaby — 2010-02-24T02:07:29-08:00

Following on from yesterday's post (immediately below), we can reveal that Gordon Brown's popularity has indeed dipped following the 'sympathy' vote gained in the immediate aftermath of the bullygate story. At the same time, David Cameron's popularity has bounced back over the past 24 hours. Significantly, these developments cannot have happened as a result of the bullying story dissipating as the percentage of tweets on the topic rose yet again to 28%. This is twice the volume of the previous day and more than five times the volume on the day the story broke.

Interestingly, despite its leader's misfortunes, the Labour party has increased its lead over the Conservatives over the past few days, as the lower chart shows. This appears to be an ongoing trend that reflects the opinion polls.

Yet again, this example demonstrates the value of Twitter as an alternative and valuable source of data that can be tapped into on a real-time basis. While we're showing its use on a daily basis here, exactly the same analysis could be conducted more regularly, even hourly, making it a highly cost-effective real-time market research tool.

Using Twitter for Market Research: Brown and Bullying

Mark Westaby — 2010-02-23T03:22:20-08:00

One of the most useful applications for Twitter is as a source of data for market research, where it offers two major benefits over traditional methods. First, the data is available without the need for time-consuming and relatively expensive interviews. The second major benefit follows largely from the first, which is that Twitter can be studied as frequently as needed. Because Twitter updates so rapidly it is perfectly feasible to take findings daily -- or even hourly -- without the need to resort to panels.

Last but not least, as an online version of word-of-mouth -- widely recognised as one of the most powerful forms of influence available -- Twitter is a powerful medium in its own right; and understanding what is being tweeted is just as important as understanding what the national newspapers are saying.

The ongoing spat over Gordon Brown and 'Bullygate' offers an excellent example of how Twitter can be used to test the water of public opinion on an ongoing basis. The following charts show how the popularity of Gordon Brown, David Cameron, the Labour Party and the Conservatives has changed over the past few days since the (alleged) bullying story broke.

What's immediately obvious from the top chart is that while David Cameron's popularity on Twitter has dropped significantly over the past three days, Gordon Brown's has risen. This is not to say that Brown hasn't had a lot of criticism on Twitter over the bullying claims, which he has, but overall his popularity has improved while Cameron's has fallen.

The position of the main parties is less clear, as the lower chart reveals, though even here the Labour party has improved its position over the past few days. Indeed, as our Spin-Tweet dashboard reveals (see blog post immediately below), we are not surprised that the Labour party has been catching the Tories in the polls because we've seen this trend developing on Twitter.

So what might be happening to explain the above? In the short-term Gordon Brown is benefiting from the sympathy vote from those who see him as a real person with flaws similar to many of us. The question is whether such sympathy will persist as this latest episode gets more wind its sails. Indeed, the volume of tweets associating Gordon Brown with bullying has increased three-fold, from 4.7% to 14.4%, over the past 48 hours.

So, despite the current sympathy vote the Labour spin machine must be hoping this whole thing soon dies down because the longer it drags on the larger the chance something will come out that might really be damaging to the PM; and what better way to monitor that than with Twitter. We'll keep you posted.

Twitter Predicts Opinion Poll Findings

Mark Westaby — 2010-01-13T02:52:34-08:00

On Monday we reported that "Gordon Brown's popularity on twitter increased over the [last] week but the big loser was the Labour party, whose popularity on twitter plummeted by 4.11%." Yesterday, 24 hours after our twitter findings were published, a Populus opinion poll widely reported in 'The Times' and 'The Scotsman' put Labour down two percentage points on last month while also reporting "some consolation for Mr Brown, with a sharp improvement in his personal rating � 41 per cent said they believed he was the best leader Labour could have at present".

Now, we're not saying that twitter can predict the future but the findings from our Tweet-tracker compare very favourably with those of this opinion poll and there's no doubt that twitter is a very powerful source of information for market research.

Perhaps the most telling words above are "last month", referring to how often traditional opinion polls are typically carried out and reported. A really huge benefit of using twitter for market research is its immediacy and cost-effectiveness. While it's only practical and cost-effective to run opinion polls such as those produced by Populus on a monthly basis, twitter can be monitored, analysed and report using twitter every day. In fact, we can do this hourly as demonstrated in our summary of what occurred on 6 January as the Labour coup unfolded on twitter in real-time (click here for more).

The real point, of course, is that while this example refers to politics it's just as applicable to any and every form of market research that might be required. This might be instant reaction to a new advertising campaign, a product launch or a crisis; and a major benefit of twitter is that it's capturing the spontaneous views and opinions of thousands of people in real-time.

All of this has major implications for the use of twitter as a source of market research data. Of course, some will undoubtedly point out that twitter is a biased sample and they're right. But, and this is very important, it's also the case that those who twitter are typically advocates whose views and opinions are highly influential and of great value to marketers. Indeed, twitter is the online equivalent of word-of-mouth, which is widely regarded as the most powerful form of marketing available, so understanding the sentiment behind what's being said is very powerful.

See the latest results for the party leaders' popularity on twitter up to last midnight, on the Spin-tweet dashboard, by clicking here.

Journalists Who Don't Understand Statistics

Mark Westaby — 2009-12-19T08:02:13-08:00

Over the past few days I've exchanged some interesting emails with David Reed, the editor of 'Data Strategy', around the research Spectrum conducted that revealed a lack of consensus among UK academics for man-made global warming (see 'Lab' for details). The exchange has been most enlightening, revealing Mr Reed's complete lack of understanding of basic statistics (as well as an inclination to rubbish anybody who dares to keep an open mind on a subject that he clearly supports with almost religious fanaticism). In itself this wouldn't be an issue -- after all there are plenty of journalists who write well about subjects in which they're not experts -- but it is a problem when the journalist thinks he knows what he's talking about but clearly doesn't. In such instances a journalist can easily mislead readers and given that Mr Reed edits 'Data Strategy' I find this very worrying.

In response to a point I made about sampling errors that had been conveniently ignored in his own publication's State of the Nation survey, Mr Reed emailed me with the following: "Surprising that you should want to take issue with data generated by an online surveying engine. No doubt it was designed by a qualified engineer [a dig at my engineering qualifications]. An answer that can only be given as yes or no, with no third option or ability to proceed without giving one or the other looks pretty binary to me. It's called a filter question. You clearly aren't bothered about including those in your own surveys." In other words, Mr Reed thought that a "yes/no" answer in a survey allowed no room for error, regardless of the size of the sample (in the case to which I was referring it was 124).

I pointed out to Mr Reed that sampling errors have nothing to do with a question being of a binary nature any more than they are to do with who designed the 'survey engine' on which a study has been conducted. I also pointed out that far from reducing errors (supposedly by determining people with a specific viewpoint), filter questions are almost bound to increase them by splitting a sample into even smaller parts. Having responded to every one of my previous emails, Mr Reed failed to do so this time, presumably because he finally realised his expertise in statistics leaves rather a lot to be desired.

Who cares, you might say, but this is actually a very important point. So often journalists write nonsense because they don't understand the statistics behind a story on which they're reporting. I recall a fairly recent story around breast cancer, in which the risk created by a certain type of food had been reported to "increase the likelihood of breast cancer by 50%". On closer inspection of the research itself the risk had actually increased from virtually non-existent to 50% more than virtually non-existent. In other words the risk was still virtually non-existent, yet I bet many of the women reading the article would have been convinced they should give up the food in question.

The real shame about this is that I've no doubt Mr Reed edits a good magazine, but unless he accepts the limitations of his own expertise in an area fundamental to what it covers, he is in serious danger of misleading his readers.

Beware the Biased Journalist

Mark Westaby — 2009-12-11T08:52:13-08:00

Being involved in research means we don't always come up with the results people expect nor, frankly, want to see. But as our job is to report independently and without bias we have to accept this goes with the territory. It was, however, with a good deal of astonishment that I read an email from David Reed, the editor of 'Data Strategy' and an editorial contributor to 'Marketing Week' who responded to a press release we issued on the findings of our study into the 'consensus' behind man-made global warming.

Having accused me of being part of a right-wing plot to undermine the Copenhagen summit, Reed signed-off with "I hope you drown when the oceans rise" and "here's hoping your retinas get burned out when the ozone layer disappears". I've always been a fan of 'Marketing Week' but I might have to revise my views if this is the quality of editorial contributors they choose to employ.

I'm all for debating the findings of research but it would appear Mr Reed is not so prepared to have an open mind. This is worrying for readers of 'Data Strategy' and 'Marketing Week' who rightly expect balanced editorial.

Time to Cut Spin as well as Emissions

Mark Westaby — 2009-12-10T05:43:48-08:00

In communication terms it is difficult to conclude anything other than that the public are not being given the full picture on man-made global warming. From our study, reported on the 'Lab' page of this website, it is clear that the consensus agreement for man-made global warming among academics claimed by the Governmenht and international bodies is itself a lot of hot air, at least in the UK.

Whether this is by fault or design we cannot say, but we suspect it will be the former. In other words, while the Government and international bodies are unlikely to be deliberately misleading the public, they have clearly not done their homework and are making claims that simply don't stack-up in reality.

This tells us, yet again, that the public are not the mugs too many politicians take them to be. People can see through the spin and, if anything react negatively against it, which is probably why recent polls have suggested that the majority of the UK population does not believe in man-made global warming.

Remember, too, that we have no axe to grind here. We're neither for nor against the man-made global warming lobby. We are, however, very much in favour of good communication, which means determining the facts and communicating them honestly and responsibly. In today's highly cynical world, this is the only thing that people will believe; and rightly so.

Something else this tells us is how useful social media can be as a source of information on opinion, which can change very rapidly. After all, just a few weeks ago the Climate Research Unit at the University of East Anglia was one of the world's leading centres in its field, with millions of pounds in funding. Now, rightly or wrongly, its reputation has been severley damaged and will most likely take a very long time to recover. Nothing makes the point more strongly about the need for organisations of any type, shape or size to ensure that they monitor, analyse and manage their reputations on a continuous basis.

Is Auntie Getting the Message on Balanced Reporting?

markw — 2009-12-03T07:02:36-08:00

Regardless of your views on man-made global warming, something that cannot be doubted is the BBC's clear bias towards its supporters. This might be about to change. Two days ago the 10 o'clock news had a remarkably balanced piece, which included an interview with a man-made global warming sceptic.

There are two possible reasons for this. First, the hacking of the UAE's computer and shady emails from its Climate Research unit have cast serious doubts over the validity of the data used by man-made global warming advocates. But second, this also coincided with publication of research into public opinion, which revealed that the majority of the UK population remain to be convinced about the link between global warming and man's contribution to it. Has the penny finally dropped with the BBC that audiences are far more inclined to believe balanced reporting than obvious spin?

Let's hope so.

Durrants Acquires Metrica

markw — 2009-10-27T03:46:13-07:00

Metrica, the media evaluation company I founded, was acquired by Durrants at the end of last week. It was an interesting few weeks leading up to the sale and wasn't the best time to be posting blogs, which is why things have been very quiet on here.

Anyway, everything's now done and dusted and I have to say that I'm delighted for both parties. For Durrants it's a very good strategic move as it positions them as a world-leading evaluation company while for Metrica it brings the critical mass required to compete on a global basis. It's also great for clients because it integrates the back-end delivery of monitoring with the front-end delivery of evaluation.

I am, of course, biased but if I were a competitor in the media evaluation world I'd be pretty worried by this development. Metrica's brand is one of, if not the most respected in the evaluation industry and Durrants is probably the best known name in monitoring with a very significant customer base. Combined, they create a powerhouse that should have the media evaluation industry looking over its shoulder.

So what does this deal mean for the industry? I think it signals what's likely to become a significant trend towards consolidation as traditional monitoring companies seek to add value to their increasingly commoditised products. As has happened in the PR agency business there are likely to be just a few major players within the next couple of years or so, one of which I am sure will be Durrants-Metrica. Others are likely to be MBPrecis and TNS but what about Cision? They seem to be moving more towards a Vocus-type service and are in danger of missing the boat, having made what look like fire-sale deals (not least to Durrants) and with a brand that seems to have lost direction.

Beneath these major players we're likely to see an increasingly small number of independents squeezed from below by numerous press cutting companies positioning themselves as evaluation suppliers.

These are interesting times for the evaluation industry and now that I'm no longer involved directly through Metrica it will be fascinating to see how everything develops!

internet advertising outstrips TV

karenw — 2009-10-07T05:37:16-07:00

Last week, Internet advertising spend overtook TV advertising spend for the first time in history (Telegraph 30/9). So those who manage advertising budgets have shifted focus, recognising their best chance of turning ad viewings into sales is to get people clicking through online. That's why Internet ads amounted to �1.75bn in the first six months of 2009 - 23.5% of all ad spending.

But Google Adwords and online adverts alone are still not enough to maximise the potential of customer attraction online. Marketing managers need to boost their results not only in paid search, Adwords and sponsored links, but also in organic search.

So although the emphasis for ad budget ihas rightly shifted from more fragmented media, it would be foolish to become focused narrowly on paying for Internet exposure. This can be generated even more effectively by other elements of the marketing communications mix, for example PR campaigns. Look at the results achieved by Jaguar recently during the launch of the XJ - this was a PR-driven launch yet the amount of online buzz it generated was incredible. In fact, Jaguar captured close to 10% of the total online buzz around a group of 37 car brands during the 3-week period around the launch. The coverage was driven by a mix of a cool lauch event, celebrity endorsement, management commentary and online reviews. A terrific online result - without the ad spend.

Time for the Industry to Recognise the Value of Automated Analysis

markw — 2009-09-02T14:55:55-07:00

A recent edition of �CorpComms� magazine has an interesting feature on human versus automated analysis, which deserves further scrutiny. I�m not against human analysis � I founded Europe�s largest independent media evaluation company, Metrica, on the back of it. However, it�s time that the PR and evaluation industries woke up to the enormous benefits that automated analysis can deliver rather than dismissing it as simply having a �role to play�, presumably a minor one as they see it in the greater scheme of �human analysis�.

The big issue that proponents of human analysis always throw at automated systems, rolled out yet again in the CorpComms piece, is that of �false positives� (or false negatives), ie that automated systems cannot tackle human nuances. It�s an appealing argument, of course, because it implies that if an automated system can�t address something so apparently simple, what hope does it have of doing anything else correctly? Appealing though it might be, however, this argument completely misses the point that automated systems can be designed and implemented in a way that not only avoids the problem of false positives, negatives or anything else come to that, but can also produce analysis that is far, far more accurate than humans can achieve. It can also do it millions of times faster and at much lower cost.

In fact, while the human brain might be apparently good at spotting nuances it is remarkably poor at the cognitive processes required to analyse large volumes of text consistently and accurately; and if you don�t believe me, just try analysing the FT one day. I can guarantee that before you reach page five you�ll have forgotten how you were analysing page one. Automated systems, on the other hand, can analyse a whole edition of the FT in less time than it takes you to turn a page and with a consistency that would make Glen McGrath green with envy (with apologies to non-cricket fans, who are probably not aware of Glen McGrath�s metronomic bowling accuracy).

Of course, human analysis proponents will refute such points by emphasising the training and quality procedures they put in place to reduce inevitable human errors; but, just as they�re quite right to do this, so must they recognise that good automated systems can be designed � and used � to produce remarkably accurate results. There�s a place for high quality, human and automated analysis in measurement and evaluation and the sooner everybody understands and recognises this, the better.

The Answer to the PR Measurement and Evaluation Standard Debate

markw — 2009-08-06T07:03:16-07:00

Despite PR industry demands for a measurement and evaluation standard over many years, nothing has emerged beyond the dreaded � and now thankfully discredited � �advertising value equivalent� (AVE). There is now, however, a metric that I believe meets all the necessary criteria to become a true and proper industry standard, which not only enables all PR activities to be measured and compared with each other but also with any other form of marketing and communication activity.

That metric is Internet search. Let me offer ten reasons why I believe Internet search should become the standard measure for the PR � and indeed other � marketing industries:

1. Internet search is the most important source of information for the vast majority of people across all audience types, making it a �critical� measure of fundamental importance to communication and marketing activities

2. It is easy to understand

3. It does not vary according to how it is measured

4. It is universal and readily available to and easily accessible by anybody and everybody on a global basis

5. It is free

6. It is a measure of outcome, not output

7. It can be measured geographically and will, increasingly, be measured demographically

8. Changes can be measured over small time intervals

9. Data is available quickly

10. Data is the same regardless of what it is driven by, from (different) marketing activities to natural causes

Of course, there are inevitably some downsides, but relatively few. Some, for instance, will say that searches could be automatically generated, but any metric is open to misuse; and, in any event, search capture and analysis will continue to become increasingly sophisticated and correspondingly harder and harder to abuse.

The benefits of search as a PR industry measurement and evaluation standard would be great. Any and all PR activities � from traditional media relations to social media, events, sponsorship conferences and exhibitions � generate search data. This is readily available, free, from Google Insight and Google Trends and is just as valid for public, private, charity or any other sector or geographical region. Very importantly, the same data is also generated by all forms of marketing, from advertising to direct marketing or social media, enabling the results from different marketing activities to be directly compared.

RE: The Answer to Advertising Value Equivalents (AVEs)

Nicholas Byrne — 2009-06-16T03:47:30-07:00

Hi Mark

I agree that AVE is incredibly floored. Hardly anyone pays the published advertising rates, the content is often totally incomparable to an advert and sometimes the content appears in a location where advertising cannot be bought (for example the BBC). However, I disagree that AVE should be discounted altogether.

Taking the example of BA and swine flu that you yourself gave a few posts back, if the board at BA just used their share price as a marker for how well the comms department was doing then the comms director would be in big trouble. However, how could anyone blame swine flu on Julia Simpson?

The share price is an excellent marker for showing how well a company is doing (in fact it is the only thing that matters to most listed companies) but not everything to do with the companies performance is down to the communications professionals. As such the comms teams performance should be measured by a variety of metrics across a range of parameters.

And one of the metrics should be AVE for a very good reason. PR and IR compete with marketing and advertising activities that can very clearly demonstrate how much it cost to reach a particular audience with a particular message. AVE is horribly, horribly flawed but when used in conjunction with demographics it is the only thing that gives the board something to be able to decide how the budget should be split between PR and advertising.

AVE will tell you nothing about the "influence of the conversation" on the audience and the wider media landscape, but it is a necessary evil in the tool kit for comms professionals that operate in a full marketing mix environment.

As such I would never condone the total abandonment of AVE figures, I would just recommend that people recognise them for what they are and use them in conjunction with a range of other metrics (most importantly, sentiment and demographics).

The Answer to Advertising Value Equivalents (AVEs)

markw — 2009-05-27T09:11:59-07:00

I�m amazed that the PR industry is still arguing over AVEs (advertising value equivalents). There is a key metric that enables PR to be measured in financial terms, which is the share price. Using real-time online news analysis it is perfectly feasible to determine the change in share price and market value generated by PR and IR activity to very high levels of confidence, typically + 99%. Until the PR industry embraces this type of measurement and throws AVEs onto the scrap-heap it cannot expect to be taken seriously in the board rooms of our largest companies.

Ah, some of you will say, but there are many PR activities that benefit companies without necessarily affecting their share price; and, anyway, what about companies that are not listed? To answer this let me refer to another part of the same PR Week article, which quotes Edelman�s CEO, Robert Phillips, as saying: �The [PR] model of the future must be able to analyse the depth, resonance, importance and influence of the conversation.� The piece then continues: �But of course no such model currently exists�. Loathed though I am to disagree with PR luminaries such as Robert Phillips, disagree I must. Not with his sentiment, with which I agree 100%, but with his timing, because �the [PR] model of the future� is here, now.

It is perfectly possible to determine �the influence of the conversation� using a statistical technique called regression analysis, which is well proven and used extensively in many industries. The problem with PR professionals is that few understand technical analysis and therefore view it with suspicion. This is not only terribly short-sighted but also responsible for holding the industry back because it�s one of the few techniques that can actually prove the value of public relations activity. The sooner PR and IR professionals embrace the sort of analysis that management consultants deliver with their eyes closed, the sooner the industry will get the credit it deserves � and craves � from the boardroom.

goodwill is short-lived for FTSE star performers

karenw — 2009-05-21T11:37:58-07:00

Not many companies are in the fortunate position of posting solid financial results in the current climate. So you'd think that those who manage to out-perform market expectations would generate enough positive sentiment to have the Investor Relations team laughing all the way into the weekend.

However, any IR and management team that believes the impact of positive news lingers can think again amid the continuing doom and gloom of the FTSE. Our analysis of Sainsbury's announcement of its annual results demonstrated this very clearly. Even though Sainsbury announced underlying profits up 11.3% and a fourth consecutive year of like-for-like sales growth on 13 May, the market registered only a short-lived spike in positive sentiment for the retailer, which would have been a disappointment to the management team, if they were paying attention to the sentiment and not just the share price.

Ironically, the online commentary picked up on the one negative in the release - that profit before tax (instead of underlying profit) was actually down �13m.

Just shows then, that IR departments need to have an eye on underlying sentiment when relying on underlying profit to carry the day!

Companies wanting to ride the wave of positive sentiment obviously have to do more than simply come up with the goods in the financial sense. In addition, they need to look at ways of shoring up underlying positive sentiment on a continuing basis. Food for thought for IR departments around the country, who need to be aware that while they are congratulating themselves on a great result and possibly a short-term share price improvement, the overriding negative market tone may wipe out the value of even the best good news they can deliver, within a day or two.

Revealing the �413 million Impact of Swine Flu

markw — 2009-04-30T02:54:18-07:00

Swine flu fever has gripped the country in more ways than one. Our analysis reveals that the virus wiped a combined total of �413 million from the value of FTSE 100 travel and leisure companies British Airways, TUI Travel, Carnival and Thomas Cook in just three days. Carnival has been the worst hit in financial terms, losing �187 million from its value followed by British Airways, TUI Travel and Thomas Cook which lost �156 million, �41 million and �29 million respectively. However, the biggest loser in percentage terms is British Airways, which has lost 8.3% of its value. Carnival, TUI Travel and Thomas Cook have lost 4.7%, 1.4% and 1.3%, respectively.

How did we arrive at these values? Through our real-time financial analysis tool, Fin-buzz� (www.fin-buzz.com), which we�ve used to capture and analyse the levels of market sentiment on Swine flu from the web since the outbreak began, on an hour-by-hour basis. This data was then compared with share price for BA, Carnival, TUI Travel and Thomas Cook to determine the resulting relationship between sentiment and market value using a well-established statistical technique commonly used in business and academia, called regression analysis. The findings were conclusive, with confidence levels ranging from 99.68% to 99.99% across all of the companies.

Chart shows online sentiment for FTSE 100 travel and leisure companies as the swine flu story unfolded

Obviously the biggest potential impact from something such as Swine flu has to be measured in human terms but this doesn�t remove the fact that the financial impact can also be huge. For BA our analysis provides compelling evidence that over 90% of the airline�s drop in share price can be explained by the impact of Swine flu over the past two to three days.

This type of analysis proves the real impact of PR and investor relations on a business, in financial terms that are meaningful to all, including the FD and CEO. Of course, IR/PR professionals cannot prevent Swine flu but gaining an in-depth understanding of the real impact of this type of news on companies� share price and market value means they can be better prepared for when something similar happens again; and one thing IS for certain � it will.

The Risky World of Investor Relations

markw — 2009-04-23T07:59:58-07:00

Imagine you're on a ship, a very large ship such as an oil tanker or a massive cruise-liner. Next, imagine that your very large ship is approaching the English Channel -- the world's busiest sea route -- and that just as you're entering it the captain tells you and the crew that the ship's lost all navigation aids, radar and communications. In other words, you're entirely on your own. He also tells you that exactly the same has happened to all the other ships in the Channel. At the same time you notice the ship rolling on a gathering swell as a fairly strong storm hits the area.

Of course, you're expecting the captain to drop anchor and get things fixed before continuing, especially as the weather's getting worse, but no, he carries on as usual. Apparently, he tells you, he has a good 'instinct' for the shipping in the Channel; and, anyway, there's not really that much he can do about it. You, on the other hand, have decided to do something about it and head for the nearest lifeboat while donning your life-jacket.

Sounds ridiculous? Of course, but it�s pretty much how companies manage their share price. Instead of the very large ship, imagine a very large company; and instead of the English Channel, imagine the London Stock Exchange (or any other stock exchange come to that). You're no doubt one step ahead of me by now, so instead of all the other shipping in the vicinity imagine all the other companies with which your very large one is competing.

Now I'm not a betting man, but if I were I don't think I'd get very good odds for getting through the Channel in the above circumstances without an accident. After all, ours isn't the only very large ship sailing through; and, as we all know, changing the course or stopping an oil tanker cannot be done on a sixpence (or whatever the equivalent happens to be these days). Just to make matters worse, let's imagine this isn't a one-off incident but a matter of daily routine. Just like the real world of investor relations.

Now where is that life jacket...

For information on Spectrrum's investor relations evaluation use the link below.

http://www.fin-buzz.com

The impact of News on Market Value

markw — 2009-04-17T09:23:06-07:00

Ask a group of CEOs whether news affects share price and most, if not all will say �yes�. Ask them by how much and most, if not all will say �I haven�t a clue�. Isn�t it rather odd that in a world where business can do some amazingly clever things � from creating drugs that fight deadly diseases to enabling telephone calls from the South Pole � such a simple question still cannot be answered? We thought so; and that�s why decided to do something about it.

On the Fin-buzz website you�ll find a white paper covering analysis Spectrum carried out on Rio Tinto�s share price just before Easter, 2009 (use the link below to go to this). If you follow the markets at all you�ll probably be aware that Rio Tinto is having a few issues regarding a stake that Chinalco, the Aluminium Corporation of China, is attempting to take in the company.

As with most major financial transactions involving large multinational companies, this has been getting rather complex with the Australian government and another huge company, BHP Billiton, also involved. In summary, the Rio Tinto share price has been buffeted for some time over news and rumours around this deal. More recently it appears that the company has been looking into a possible rights issue should anything go wrong with the deal.

What arises from all this is, OK, we can see that these stories and rumours are having a significant effect on Rio Tinto�s share price but which is seen as being good for the company and which bad; and, by just how much are they good or bad? With a company of Rio Tinto�s size these are hardly trivial matters. Its market capitalisation at the time we conducted the analysis was well over �20bn, so even a small percentage difference in share price would have a massive impact in terms of the actual money involved. In fact, what the analysis did reveal was just how large the impact of news can be on the value of a company. In this instance all �2.5bn of it!

If, at this point, you�re shaking your head in disbelief, DON�T! One of the bizarre things about stock markets is how fickle they can be. At one end of the scale they�re highly complex networks involving billions of pounds of IT, software and hugely expensive people implementing sophisticated strategies while at the other they�re little different from the street markets you�ll find in many British towns on a weekday afternoon. Companies take years and spend fortunes on systems and people to wring an extra drop of margin from, say, their supply-chain in order to improve shareholder value by a fraction of a per cent yet do nothing to understand the impact of a news story that could wipe 10% off their value within a few hours of breaking. Extraordinary!

One reason we�ve reached this strange state of affairs is that people struggle to understand intangibles. It�s why advertising is so highly valued and news isn�t. An advertisement might only be a package of creative ideas but it is, nonetheless, a package. It has boundaries, whether these are the physical layout on the page of a newspaper or the start and finish of an ad in the commercial break. News, on the other hand, rarely has boundaries. It nearly always has a start but rarely a finish. So people struggle to understand its value.

This has to change. As the Rio Tinto analysis demonstrates, it is possible to determine the impact of news on market value; and the figures involved � hundreds and even billions of pounds � mean this can no longer be ignored. Read �The Impact of News on Market Value� at the link below.

http://www.fin-buzz.com/white_paper.html

Lies, Damn Lies and Journalists

markw — 2009-04-07T08:19:37-07:00

In The Times today, David Aaronovitch wrote a piece on the shortcomings of research used to generate publicity (see link). In my experience the problem lies not so much with the research as with the journalists who cover it. After all, if the research to which Aaronovitch refers was so flawed, why was it published by the media in the first place.

Have you ever tried explaining statistical sampling and significance to a journalist? It�s virtually impossible. Not only do they not understand it, they have no desire to understand it. When I�ve been asked about the sample size for a piece of research I�ve lost count how many journalists have commented �that doesn�t sound very big�. I�ve often been tempted to ask what they think would be a �big enough� number but have so far always managed to resist. Like most people, journalists think that doubling the sample size would halve the error. When trying to explain, first, that this isn�t the case; second, that it would not make economic sense to run a study based on a sample that would halve the error; and, third, that the subject of the research didn�t justify halving the error in the first place they just think you�re trying to blind them with science.

In his piece, Mr Aaronovitch talks about ATL, the organisation that generated the research into pupil behaviour about which he is scathing. Commenting on the ATL study method he writes: �First it somehow generates a completely random sample of 10,000 members, all of whom it e-mails with survey questions such as �has pupil behaviour got worse or better in the last five years?� Second, when it feels that there are enough answers in (1,000 in this case), it simply closes the poll. I called one of the country's top pollsters to evaluate the ATL's method. He laughed. In the first place, he said, unless efforts were made to ensure that the original sample was representative (his organisation uses 16 variables) then the whole process �was not statistically valid�. This combined with closing the poll arbitrarily meant that the sample was merely of those �most motivated, active or randomly available�. His summary was �it is impossible to calculate a meaningful result out of it�.

Now, 1,000 responses is pretty good in anyone�s book; and generating such a sample is perfectly �representative� providing the research explains what it�s representative of. Of course, it might not have done so but that�s not the point Mr Aaronovitch is making, in which case all he�s doing is highlighting his own ignorance on the subject. And what about the �expert� pollster�s view that the sample was most motivated, active or randomly available.

Coincidentally (and I am not making this up), I was actually contacted last weekend to participate in a piece of research for one of the large polling companies. It could well have been the polling company for which Mr Aaronovitch�s expert works but, whatever, it will have to remain anonymous to protect the guilty. I wasn�t able to do the interview because I was too busy but had I done so who is to say that I wouldn�t have been typical of the most motivated, active respondent. I would most certainly have fallen into the most �randomly available� category; and had I given the interview how could Mr Polling expert be sure that I was answering truthfully in any event?

Last but not least, what does Mr Aaronovitch and his expert pollster have to say about research panels used by the big polling companies? These people are actually paid to give their views, or at least rewarded through air miles or something similar. If that�s not bias, what is. http://www.timesonline.co.uk/tol/comment/columnists/david_aaronovitch/article6047121.ece

Demanding More for Less from Evaluation

mwestaby — 2009-04-06T09:15:10-07:00

The world of evaluation faces dramatic change, with the economic downturn forcing PR and marketing professionals to reconsider how they allocate budgets. Evaluating ROI, we're frequently told, is critical to the justification of marketing activity yet there's little doubt this will also come under budget scrutiny. It's paradoxical that the very thing that can help to prove marketing ROI is one of the first to face budgetary pressure.

The argument used is that there's little point spending money on evaluating PR and marketing programmes if that money could be used to make a programme "go further". The fact that nobody can be sure where "further" is without evaluation seems lost on the people making these decisions. Whatever, the fact remains that senior management are demanding more for less and that includes evaluation just as much as anything else.

The answer to this conundrum has to be technology. All facets of marketing can now take advantage of powerful computing and sophisticated software to answer complex questions in a more timely manner at lower cost. Crucially, it can also do this with greater reliability and accuracy.

We'll be exploring these issues in much more depth through this blog. Many of them are controversial and we make no apologies for that. The world has always had to adapt and change to meet the demands of new economic realities; and what we face today is no exception. The only difference is how such demands are met.