What Is a Press Release?

A press release is a piece of news or information that companies send out to inform the public about something noteworthy or of material significance. Press releases are often handled by a company's public relations (PR) department.

Companies issue press releases, which may be spread to a wider audience through the use of a newswire service, to announce things like a new product, quarterly earnings reports, an impending merger, or any other material information.

Key Takeaways

  • Press releases announce newsworthy events or disseminate material information to the public about a company.
  • A press release is produced by the company's PR department, and not reporters or journalists, so it takes a subjective interpretation of the announcement.
  • The two largest publishers of press releases are Business Wire and PR Newswire (PRN).

How a Press Release Works

A press release is written and sent out by a firm, and it is not the result of reporters conducting independent journalistic work. As a result, press releases may contain some bias or subjective interpretation that should be considered by investors and analysts. In fact, these days, it is sometimes difficult to distinguish between a press release and a story published by a news publication. The best way to identify the source is by looking at the first few words of the piece. This will clarify the company or origin of the piece.

The two biggest publishers of press coverage are Business Wire and PR Newswire (PRN). BusinessWire is a global leader in press release distribution and regulatory disclosure. Public and investor relations professionals rely on the service to deliver their news to target audiences and trusted sources.

On average, a newswire service publishes between 500 and 1,000 releases per day across various sectors, while providing additional public relations services. These include a diverse collection of communication tools tailored for investor relations (IR), company news, press releases, and disclosure requirements. Some areas of interest include investment vehicles, accounting and compliance, regulatory news, earnings and dividends, and the banking industry. This spans financial services, science and technology, and public policy.

Pros and Cons of Using a Press Release

Writing a press release is a great way to create buzz around products, partnerships, or any noteworthy news. It nudges journalists and reporters to cover the story and build trust with a growing audience. The ultimate goal for companies in issuing a press release is to gain instant exposure, build trust with existing and prospective customers, and increase traffic to their website or stores.

The benefits of press releases are clear but some limitations still remain. As a marketing tool, press releases alone can't support a marketing strategy. They are limited in reach and can come across as insincere or shallow. Companies produce the press release to showcase the good without any mention of the bad.

Example of a Press Release

For example, an earnings release will highlight key financial metrics for the recently completed quarter and commentary from management. The release includes headline revenue and earnings per share (EPS) numbers plus growth from the previous year and quarter. There is usually a narrative of why numbers came in where they did and if they met or exceeded their guidance. Stocks tend to move wildly after an earnings release because the new financial information hits the market causing a revaluing of the company.

In addition to financial figures, press releases list valuable contact information that can assist investors in their research, like the company's web address, and contact and address information.