When coverage correlates with cash – the impact of media on fund raising for companies

By Darryl Sparey, MD and Co-founder, Hard Numbers.

For many in the PR industry it is perhaps the Holy Grail to be able to demonstrate a link between media coverage and real business outcomes, beyond brand awareness, to cold, hard cash.

This week Hard Numbers and research partner CARMA released a report on the potential impact that media coverage has on fundraising for technology start-ups – Coverage and Capital – which I think goes some way to doing just this.

Our team looked at a sample of 120 companies that raised a Series B round of funding between January 2018 and July 2020, and looked at the size of both their first funding round, and their second funding round. CARMA then sourced online content generated in the UK by these companies over a two-year period.

I was amazed that the results were quite as clear as they are, but the research showed that the companies which saw the highest increases in funds raised also generated the highest volumes of media coverage – an average of 206 articles over the time period we looked at.

These companies typically saw upwards of a 5,000% increase in the amount of investment they attracted between their first raise and their second raise. This compares to 176 pieces of media coverage for businesses that saw a medium increase in the funds they raised, and 146 pieces of media coverage, on average, for the companies that saw the lowest increase in their funds raised between Series A and Series B.

When we looked at the data from B2B and B2C businesses, the impact of media coverage on fundraising was most pronounced in the B2C sector.

Within companies addressing the consumer market, those generating the highest volume of media coverage saw, on average, a whopping 35,635% increase in funds raised between their first fund raising event and their Series B.

As we were producing the report, I also sought the views of a number of senior marketing and communications professionals at high-growth businesses like Cytora, Papercup, Crowdcube and Curve, as well the CEOs of HelloDone and phos.

Each of these have case studies in the report, but the themes from their feedback are as follows, which I think are of real relevance to communicators:

  • Media relations can drive a lower Cost Per Thousand reached (CPM) than other similar channels. Early stage businesses are often unable to invest in expensive above the line activity or large sales teams. While pay per click and paid social may seem like they offer a low initial cost of entry, and more demonstrable ROI, they don’t have the same effect on raising awareness, and the investment there doesn’t offer a way to be merchandised across other channels. PR is a great place to start for any business looking to invest to grow.
  • Media coverage drives credibility for early stage businesses. Time and again, the word I kept hearing when speaking to people about the findings of the report was “credibility”. For early stage businesses, third party media coverage is outside validation of their business. Early stage investors need a reason to believe, and media coverage is a great way to help achieve this.
  • Third party media endorsement helps create categories. Research from Harvard Business Review found that 76% of the value in any market is captured by the “category kings”. These are companies like Salesforce, Facebook, Zuora, AirBnB and others who create a new category for themselves and condition the market to understand this category. PR is, again, both a highly cost-effective channel for doing this, and a primary way a business can establish the validity of a new category.
  • Media coverage helps drive the “marketing flywheel”. When businesses get third party media coverage of their product or service, recent client wins or new partnerships, they can then use this across their social media and other owned channels to then drive further awareness and interest in the business. Social media is a beast that needs to be continually fed to stay relevant in their prospective customer and investor’s algorithmically sorted timelines, and media coverage helps provide some of the food!

I hope that the findings of the research report are used by others across the communications industry, from in-house to agency professionals alike, to help make the case for investing in PR to early stage businesses. I also hope that the stellar case studies included in it provide a useful “playbook” for how to maximise the return on investment in PR and media relations, too.

If you want to learn more, you can download the report here and I’ll be chairing a discussion on the findings of the report for the PRCA’s AMEC Measurement Month event next week.

Leave a Reply