For a new technology business, the decision to commit to a PR agency or in-house PR consultant is a consequential one. It’s also occasionally controversial. Celebrity entrepreneurs like Mark Cuban have warned ambitious startups against spending on an outside PR firm. Cuban sees PR spend as wasteful and premature for most early-stage companies. He figures the founder should be able to do the job on his own – possibly an unrealistic idea for people who aren’t Mark Cuban. Others in the VC community argue that PR is essential to a successful fundraise, and they preach its ancillary benefits for talent recruiting, business development, and M&A. B2B companies in particular stand to gain from the right PR campaign, because B2B PR often involves vertical and trade press, which is easier to penetrate than mass media. For consumer brands, of course, PR can strike a spark that lights the fire of mass appeal. But can a PR campaign pay for itself?
A new study has identified a link between positive PR and capital raised, at least for some businesses. Data-driven UK consultancy Hard Numbers teamed with global research company CARMA for a look at the possible impact of media coverage on fund-raising for tech startup businesses in the UK.
The study focused on the critical Series B fundraise on the theory that the B round “is one of the most significant events for scale-up businesses” and a key inflection point for most startups. It examined 120 companies who raised a Series B round between January 2018 and July 2020 and compared the size of the first and second funding rounds. For the same period CARMA analysts looked at content generated by and about those businesses in the UK.
Companies with the largest increase in funds raised between rounds A and B also generated the most media coverage. The study documents an average of 206 pieces of media coverage for the high-fundraising businesses, as compared to 176 pieces for those with a “medium” increase in funds raised and only 146 pieces of coverage for companies that saw the lowest delta between funds raised between Series A and Series B. (I’m presuming the vast majority of coverage analyzed was positive.)
Not surprisingly, the data showed the most pronounced differential between fundraising rounds in the B2C sector. Other high-performing verticals when it came to monies raised were business productivity software and fintech.
It’s all interesting, if not definitive. The Hard Numbers study was limited to the UK, and the sample, while impressive, isn’t very large. Also, correlation doesn’t necessarily mean causation. The results could simply mean that companies that are more mediaworthy will naturally attract greater investment for similar reasons, i.e., their business models or positioning simply warrant it. Of course, the study’s authors are natural champions of PR for early-stage businesses. But it comes as no surprise to me. I’ve always thought good PR is like money in the bank, but the maxim may be more literal than not. And there are plenty of other reasons for a new company to invest in PR.
We see this in our own small PR agency, but for a high-growth startup, employer branding is essential. Tech businesses in particular are navigating a red-hot talent marketplace for engineers, IT professionals, sales people, and many more types of positions. A reputation for being a great place to work, driven by PR as well as good word of mouth, is a priceless asset when it comes to recruiting the best.
Earned media isn’t the most consistent generator of business demand for a company’s products or services; for that, direct-marketing and sales work more reliably, and they scale better than a PR program. But the splashy PR generated by big stories in key media outlets like TechCrunch or VentureBeat come with enormous credibility. That means influence.
The strength of A-list media domains translate to very real SEO value. A single big-hit PR placement in a top-tier publication can boost a company’s search results to the first page for months or even years. That can confer a tangible advantage over competitors. And who else is likely to be influenced by search results? VCs, of course.
Funders aren’t the only ones influenced by positive media coverage and page-one search results. Media are, too. It’s a well-known “secret” among PR people that media often follow other media. In particular, broadcast outlets follow print media. Each will develop their own angles and commentary, of course, but it’s a beautiful thing when media coverage snowballs, gaining acceleration and momentum as time goes on. Those earned media stories can be merchandised for recruiting, sales, and funding presentations.
Earned media isn’t the most consistent generator of business demand for a company’s products or services; for that, direct-marketing and sales work better. But the splashy PR generated by stories in key media outlets like TechCrunch or VentureBeat come with enormous credibility.
That’s why most organizations bring on PR agencies, of course, and it holds true in the startup world. But it’s a mark of just how valuable many startups and their stakeholders view the right PR campaign that it’s not even the top reason on their lists.