The value of insight in an instant world

In this new format of PRWeek, it seems appropriate to note the new challenges and opportunities for corporate or nonprofit PR pros.

In this new format of PRWeek, it seems appropriate to note the new challenges and opportunities for corporate or nonprofit PR pros. In the rapidly changing environment of how the public receives, perceives, creates, and interacts with information, there is great opportunity to add knowledge, context, and depth to the great public debate that has been accelerated by the Internet. The “big bang” of technology continues to explode, creating an expanding number of outlets and increasingly niche information.

Today's communication about everything is getting briefer and more instantaneous. It's hard to imagine anything shorter or faster than a text or Tweet, but something newer still is surely in the works. Even the venerated Wall Street Journal is moving to shorten its stories and to concentrate on breaking, immediate news.

Yet, for our society to operate at an efficient, optimum level, context and knowledge need to be added to the mix in order to help the public avoid reactive euphoria or panic that is excessive in response to any given situation. An important way to add value in today's diffuse and specialized information marketplace is to provide some contextual markers by which to measure the minute-by-minute news. Memories can be short in today's fast-paced environment: it's easy to miss a sign of a developing trend in the heat of the moment.

Just as one example, the issue of initial public offerings (IPOs) is a case in which reporting and public commentary too often ignore recent history and what may be developing in the future.

While IPOs are just one indication of the overall health of the capital markets, a great deal of attention is paid to their numbers by business reporters and commentators. The number and market value of new companies being brought to the capital markets increased dramatically as the tech bubble was growing, but, of course, many of those companies did not survive. Sarbanes-Oxley was passed in 2002, and another down year for IPOs followed in 2003, as both the markets and the overall economy recovered. Throughout this period, a common line of reasoning and commentary developed that Sarbanes-Oxley killed the IPO in the US and the market was never to return.

The IPO market came roaring back in 2004 and, subsequently, 2005, 2006, and 2007 were record-breaking boom years for IPOs, taking into consideration both the number of deals and the amount of capital raised. Now, we are in another down period, no doubt a direct result of the global financial crisis. Yet through it all – a recession, recovery, long period of highly leveraged growth, and now another recession with recent signs of recovery – Sarbanes-Oxley remained exactly the same.

Of course, there is always a backstory behind the breaking news headline. Although global IPO activity is down by about two-thirds, many economists indicate this is to be expected in a severe recession and that it might last for four to six quarters. At the same time, private placements of capital are filling in for the time being, and there is a lineup of companies in the IPO pipeline, waiting for volatility to calm and for company valuations to recover and rise. The financial services and energy sectors have remained strong in the US. Listing primarily domestic companies, China's IPO market continues to grow, and Saudi Arabia's market has emerged.

NASDAQ OMX CEO Bob Greifeld also takes the longer view. In a recent speech, he compared today's IPO market to what happened with the recession of the mid-1970s. The IPO market started to return in 1977, while the S&P 500 was still down. So, the IPO market led the recovery, with the overall market returning to prosperity in 1978 and 1979.

A similar pattern could emerge now. Greifeld notes that there are 98 companies with pending IPO applications to list on NASDAQ OMX. Briefly, Greifeld's take on some of the components that make for a successful company launch is, “You have to have a solid company with a solid story to tell, and they must be willing to enter the public markets for the long-term and not for a one-day pop.”

This sort of additional observation can help to balance minute-by-minute reporting and commentary.

Today, we as a nation are suffering from the effects of a series of bursting bubbles, exploding companies, haircuts, and bailouts. Deals that are too good to be true and the failure of companies that are too big to fail are taking their toll both on individuals and on the nation as a whole. An important antidote in the midst of all of this volatility is a solid perspective based on an understanding of historic patterns.

Of course, the measure of true success is to find opportunity in challenging times. For PR professionals, the opportunity presented by the changing information marketplace is to add context and insight.

Michael G. Oxley is of counsel at the law firm Baker Hostetler in the Washington, DC, office, and a member of APCO Worldwide's International Advisory Council. A former US representative from Ohio, he was chairman of the House Financial Services Committee and co-authored The Sarbanes-Oxley Act of 2002. This article was produced in collaboration with Peggy A. Peterson, senior advisor at Baker Hostetler.

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