Why — and for Whom — Promotional Press Releases Matter

In 2022, Coca-Cola used two types of press releases to disclose firm information. The first, issued on their website and through Business Wire, announced the release of a short, animated film with the help of Bill Nye, highlighting “that recycling is critical to ‘closing the loop’ – using and reusing the materials in plastic bottles again and again.” The second announced the firm's quarterly earnings, as well as its suspension of operations in Russia.

While firms use both disclosures for internal benefit, these two communication forms have names and different impacts. One is for promoting Coca-Cola's public image – promotional press release – and the other is for communicating with its investors – a standard press release.

Although it is known that firms benefit from self-promoting, the questions are why should firms do so through the promotional press release channel, and how does the effect of such differ in high versus low visibility firms?

In “Promotional Press Releases and Investor Processing Costs,” Caleb Rawson (University of Arkansas), Brady J. Twedt (Texas A&M University), and Jessica C. Watkins (University of Notre Dame) search to answer these questions and uncover the effect of promotional press releases on firm pricing efficiency, disclosure processing costs, media attention as a channel, and how firms use them as a disclosure channel.

The Strategic Release

Press releases are a primary disclosure channel for communicating with firm investors, while promotional press releases are a bit more intriguing and complex. They focus on awards, brand promotions, corporate giving, and other events to convey positive firm images.

In their promotional press release, Coca-Cola and Bill Nye announced their partnership to address the global plastic waste crisis, their goals with sustainable packaging, and their commitment to the cause. By using words like responsibility, inspiring, and advocating, this release uses numerous tactics to self-promote and convey positive images to the public. And they are not alone; nowadays, more than a third of all firm press releases – 28 per year for the average publicly traded firm – are promotional.

A seasoned investor relations (IR) professional highlights the benefits of utilizing promotional press releases, saying, “Customers, suppliers and even employees read firm-issued press releases. These are not IR’s primary audience [on average], but it helps the firm when all the stakeholders hear about positive achievements.”

Yet, what does this disclosure channel really look like and how does it work to “promote” firms?

Promotional press releases contain more positive and emotional language and less specific and financially oriented language, as the goal is to appeal to the public. They are also significantly less value-relevant, especially because they focus on appealing to investors. Lastly, their main objective is to create favorable firm impressions among stakeholders.

As an example, McDonald's issued a promotional press release in 2016, announcing their “Why Waste Me” charitable campaign, which uses emotional language about food waste, homelessness, and poverty. With this positive news, they encourage action and discussion, inform their audience, and, in turn, attract the press.

Playing off this, these release types have two key attributes: they attract and amplify medic coverage – a crucial channel for reaching stakeholders, and they use a specifically unique and emotionally charged language.

Firms thus use promotional press releases to attract stakeholder attention, like exciting events, news, or recounts, positive and emotional images and language, investor-focused content, sharing their broader objective, and using the media for wider reach.

The Complexities of Promoting

Promotional press releases are intended for more than a broad audience of stakeholders. For a firm, it is vital to hold investor awareness, impacting if and how much they invest. What’s more, investors provide vital contacts, opportunities, and expertise to the firms that successfully attract them.

However, a firm’s effort to gain investor attention through promotional press releases would be fleeting if not for the involvement of journalists and the media. As seen from the Coca-Cola and Amazon examples, firms pay press wire services to disseminate releases through the media and other channels, allowing for greater amplification and, thus, larger audiences.

If firms have recent high levels of promotional press releases, it may reduce journalists’ awareness costs of the firm and its disclosures, directing more attention to investor-focused releases. This means that attention, price efficiency, and information processing costs depend on the level of releases and media coverage.

This attention increase is especially true – and greater – for less visible firms. Because they have weaker information environments, they are likely associated with greater investor awareness costs and have the most to gain.

Attracting Audience Attention

Rather than simply providing means to communicate with investors, firms use press releases to self-promote and improve their public image. Taking it a step further, there are several proven and intriguing benefits for firms that utilize promotional press releases, underscoring their unique characteristics and usefulness compared to other forms of corporate communication.

Coca-Cola, for instance, extensively uses promotional press releases to appeal to audiences and investors with exciting and emotional language, like in its announcement of the Olympic and Paralympic Games Campaign.

This strategy decreases processing costs and increases investor attention and efficient pricing. However, seemingly, this effect of pricing efficiency is not the same for more visible firms with lower awareness costs and more investor-available information, like in regular press releases. If your firm is a less visible firm or is in an industry, such as utilities, energy, or healthcare, that has a low concentration of promotional press releases, this study shows that your firm may have more to gain from a change to its press release strategy than expected.

As the promotional press release is wholly concerned with increasing public appeal, professionals of any industry looking to highlight positive achievements and attract all-around stakeholders should set their sights on this effective method.

After all, “attitudes based on emotion are more accessible in memory and are more likely to attract attention,” Rawson says. “Because promotional press releases use more emotionally charged language, they may be more likely to attract stakeholder attention.”