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Quantifying The Effect Of Public Relations On Corporate Earnings

The Opportunity

  • A public relations services and measurement company desired to show how their data and tracking services could be used by large corporations to measure the impact of publicity events on earnings.
  • The PR services company was rich in data but needed help with analysis.  In particular they needed to use the techniques of statistical modeling that could help the them create and present this story for their marketing messaging.

Our Approach

  • The company had an extensive database of public awareness measures, drawing from both traditional and social media.  These measures were similar to those found in advertising, such as reach, recall, and story count.
  • To their existing data, we added historical earnings data from top Dow Jones Industrial corporations.
  • We built econometric models to understand publicity-related drivers of earnings, and cluster analysis to understand differences in response.

The Impact

  • We found publicity can indeed impact earnings, but not in all instances.  Importantly, the impact varied substantially by corporation.  Some corporations are more resilient to negative publicity than others, by an amount we were able to quantify.
  • Through the cluster analysis we were able to group corporations into four segments based on the impact of publicity on earnings.  This allowed the PR company to profile corporations in terms of the attributes of the publicity-earnings relationship, and target specifically identified corporations in each segment.
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