Public Relations: Advertising’s Red-headed Stepchild


Gregg Castano - PR: The Small Cap Company’s Underappreciated Secret WeaponGregg Castano, CEO, Castano Communications Consulting

I’ve written several pieces recently about the importance and value of effective public relations for small cap companies. But there’s another key market segment that could also benefit from an increased focus on public relations – SMB’s (small and medium sized businesses).

Unlike the EU, the United States has no official criteria for identifying an SMB (called SME’s in Europe). However, Stamford, CT-based Gartner, one of the world’s leading research and advisory firms, defines it as a business with 0-999 employees (0-100 = small, 101-999 = midsized). SMB’s can also be defined by annual revenue, and Gartner classifies businesses with revenues of less than $50 million as small and businesses with between $50 million and $1 billion in revenue as medium-sized.

For small cap companies, which are publicly traded entities, of course, effective public relations most impacts shareholder value. For the private SMB, the rewards are somewhat different but no less impactful to the business.

There are multiple important benefits that SMBs can derive from a good, sustained public relations program. To me, the most important of these is that PR enables an SMB to tell its story to a broader audience than advertising, which is usually reserved for narrower vertical markets. From that, other good things flow.

Foremost among those “good things” is that when an SMB can get its story told via earned media, it raises the all-important brand awareness quotient. Brand awareness is perhaps the most vital outcome of effective storytelling, because being known is the first step towards being respected, admired, liked and trusted.

While listed small caps have the fallback of investor relations to achieve at least some connection with the public, privately-held SMBs do not, as they are not legally obligated to communicate with shareholders. In one sense, this is helpful because it excludes them from costly, burdensome and often restrictive regulatory responsibilities, freeing up money and resources for other communications activities.

The problem is that most of these companies do not direct those funds or resources to public relations pursuits, but rather to advertising strategies. While advertising is a necessary ingredient in the communications stew, it should not be the primary component, because it is not as potentially effective or cost-efficient as public relations.

Colorful Virgin Group founder Richard Branson agrees, and he ought to know. Virgin Group controls more than 400 companies. Branson once stated that “a good PR story is infinitely more effective than a frontpage ad”.

Enough said. The fact is that SMBs can get far more “bang for the buck” from a solid and persistent public relations effort than is possible through traditional advertising. But apparently, nobody has told them.

The silver bullet that PR can offer that the other disciplines cannot is “earned media”. When a story is covered or discussed by an objective third-party journalist or social media influencer, the public is far more inclined to trust that content than they would a bought-and-paid-for advertisement.

Of course, earned media is not easily achieved, which is why it’s called earned. You must work for it. Since most senior executives at SMBs lack the expertise, inclination and bandwidth to tackle these tasks, it’s essential to employ a professional public relations practitioner or agency to help. Their job is to develop the message, define the target audience, create and deliver content, and most importantly, persuade respected journalists and/or bloggers to write about the SMB in a positive light.

To many, if not most, C-Suite denizens, this all sounds difficult and costly. Isn’t it easier to just hire an ad agency to place ads in popular industry publications and call it a day? Yes, it’s easier, but far less effectual and economical than a successful PR campaign.

With limited budgets and minimal name recognition, most SMBs do not have the luxury of squandering communications dollars on ineffective strategies. The practice of public relations has been proven to provide the most value and the greatest impact on public awareness, perception and approval of brands, yet it lags well behind advertising as a means of establishing a rapport with the public with which it seeks to bond.

With today’s perpetual squeeze on budgets and hyper focus on ROI and analytics, the time is right for SMBs to embrace public relations as a primary engine of brand-building.

Leave a Comment