A view I hear from time to time goes that you can’t use social media – blogs, podcasts, etc – for investor relations purposes. How can you talk informally, conversationally and openly, one notion goes, about subject matter that is either confidential, regulated or both. How can you engage in conversation with people who will ask questions you can’t possibly answer.
A similar argument is also often present about specific industry sectors. Pharmacueticals, for instance.
They’re actually the wrong questions.
It’s a given that you would not use social media (any media, in fact) as your communication channels to discuss and encourage interaction with people on topics that clearly you can’t or don’t want to talk about. Forthcoming financial results, for instance. Or changes in the executive leadership team. There is a wide range of specific topics about which communication is strictly controlled especially if you’re a publicly-listed company.
Yet does that mean we simply close all the doors on social media? I don’t believe so.
Investor relations doesn’t mean you only talk about the things you can’t talk about, if you see what I mean. There is an abundance of things relevant to your business, your industry and your market that you can include in your social media communication, especially if you take a strategic view of your business.
Look at IBM’s “The Future Of…” podcast series as a great example. They are produced by the company’s investor relations department. Yet the subject matter isn’t what you might traditionally expect to hear from such a department.
There are also events to do with investor/financial topics over which you have no complete control. Earnings announcements, for instance. You issue the press release and schedule a conference call with the financial analysts where the company spokesperson reads a script (that’s the part you do control). Then everyone has that starched and formal Q&A session that make for dire listening most of the time (and dire reading when you then read the transcript).
What if someone blogged that call and added a bit of personal spice and interpretation to things? Brian White at BloggingStocks.com did just that yesterday when he live-blogged Microsoft’s earnings announcement webcast. Read his post and then read Microsoft’s press release.
And the Microsoft earnings call isn’t the first that Brian has live blogged – he’s also recently done Google’s, eBay’s and Apple’s.
To be clear, I’m not suggesting social media instead of formal and traditional communication channels. Think of social media as complementary. They can (and will) be a mix of channels you as the company can use and well as people outside your company (which is precisely where you have no control at all).
So what are the broad possibilities with social media for investor relations? That’s a question For Immediate Release listener Anton Shihoff of Finavera in Ireland would like to gain some answers to:
In the IR space, I’m finding it more difficult to come up with some innovative ways in which these technologies can be used. Some of the obvious ones like quarterly results could be recorded, spoken by the CFO, and released as a podcast. We could look at one of the senior managers or me writing a blog looking at what we’re doing on an ongoing basis […] If you have any thoughts and ideas on ways in whcih we could use social media to help promote the company to an investor base, I would love to hear them.
You can listen to Anton’s full commentary in show #156 yesterday. It starts at 53:30 into the show.
As Shel and I love a challenge, we’ve earmarked Anton’s questions for discussion in episode #158 of “The Hobson & Holtz Report” podcast next Thursday 27 July.
If you’d like to contribute your thoughts and ideas, you can by sending email or an audio comment. Visit the FIR website for details on all the many ways you can participate in the show.
We would welcome hearing what you have to say. As undoubtedly would Anton.
Interesting. In an area like IR as you point out there are set rules that are applied to what we (PR people) do that are designed to ensure (or that try to ensure) fairness in the market. One of the most common rules that communicators fall foul of is selective disclosure and much of the regulations pertaining to Financial PR or IR is about trying to ensure that everyone has the same chance to have access to information that is share sensitive at the same time. Eventually I think social media will be viewed as contributing to this, but at the moment it is highly problematic for a listed company to do this on price sensitive issues as you point out. But if the measure of a good exchange or market is liquidity, regulation (fairness) and visibility, then social media will eventually contribute significantly to the last of these I believe.
Before Anton spends a lot of time and effort, here are some facts he needs to take into account:
Only 7.4% of analysts and portfolio managers say they use blogs as a resource when researching companies.
Just 7% prefer to receive information via RSS, far behind outright favorite email, which 77% said they prefer.
Only 3.7% of analysts cite podcasts as a source of information they like.
That said, our research finds that companies increasingly are offering RSS feeds for IR content and many are now providing MP3 downloads of conference calls.
Mostly, though, these are low-value activities in the grander scheme of things.
What is valuable?
1. A good, credible IR website focused on the needs of investors.
2. Detailed, transparent, clear disclosures.
3. Executive blogs, especially for smaller companies in niche industries with entrepreneurial managers close to the coal face who tend to be more authentic.
4. Employee blogs as they provide great insight into morale and management quality (witness MSFT).
5. Board of directors blogs — still haven’t seen one, even though it makes perfect sense.
6. Contextual information. IBM’s podcasts and features about different aspects of its business are a good use of available technology. But what works for IBM shouldn’t be seen as a solution for everyone. Sometimes you just need to explain what your company does, where it wants to go and how it will get there — in 15 seconds or less, no downloads, no flash.
Just some quick thoughts.
I think selective disclosure is a major stumbling block for many PR people, David. I recall a conversation I had two months ago with a company where what they would have liked to have done using social media became stopped in its tracks because of this point.
Their real problem, though, was that social media was the wrong communication means for what they wanted to do. So, like everything else, it also comes down to using the appropriate tool for the job.
I agree with you that tools like blogs and podcasts will eventually become standard parts of the communication mix, not the least reason being because of changes in market regulations that relax some of the more strict rules or interpretations on definitions of selective disclosure.
Until then, though, I think there are plenty of ways in which social media can play a successful role in investor relations and financial communication, such as suggested in my post.
Those are useful stats, Dominic, thanks.
You’re right in pointing out a key fact – people’s expressed preferences in how they prefer to receive information. I’ve seen much of these numbers before (in your blog, I think), yet they present no reason at all as to why a company should not use tools like blogs and podcasts (disclosure and other regulation aside for the moment).
You’ve actually highlighted what’s beginning to happen when you mention that “companies increasingly are offering RSS feeds for IR content and many are now providing MP3 downloads of conference calls..”
What they are doing is offering content in channels which complement their traditional channels. So they are additional means of communication that will appeal to some people. Not everyone but some.
With podcasts especially, the barriers to entry are so low that producing a recording of, say, an earnings announcement really is a no brainer. So you offer that alongside everything else.
And re IBM’s podcasts, again, these are additional channels that complement other forms of communication. So if you want that 15 second or less explanation on something, don’t use the podcast – use the appropriate channel.
“So if you want that 15 second or less explanation on something, donâ€™t use the podcast – use the appropriate channel.”
That’s the problem. IBM doesn’t have the 15-second overview. So if you want it, you won’t get it.
So they’re communicating to 3.9% of the audience and the rest are left wondering. Of course, everyone knows what IBM does — or think they do — but in Anton’s case who knows Finavera?
How many investors are going to give that company two-minutes, let alone 10-minutes to listen to a podcast. Studies show the average investor or analyst spends just three minutes reviewing a company’s annual report.
I’m not saying he shouldn’t do a podcast series, just that it’s only something you do when you’ve taken care of the basics first. And yes, ideally you’d do both. But if it’s a choice between the basics and a podcast series, forget the podcasts.
Not talking about the future, talking about right now. A company that hopes to do an IPO this year.
Dominic, can you give me a citation for those statistics? I’d love to share them on my blog, but don’t know where they came from. I assume a study was conducted by an association. NIRI, perhaps? IR-SOC? Thanks!
It’s on our website
You should subscribe :-)
Interesting you talk about “channels” in the same breath as “social media”. What’s social about a channel?
Ok, so if IBM doesn’t have that 15-second overview at all, Dominic, then that’s probably a communication gap somewhere. Or it doesn’t fit within their overall communication planning. Or whatever.
It certainly doesn’t mean that a podcast or other social media tool is therefore an invalid communication channel.
You paint a very black-and-white picture here with an “it’s either this or it’s either that” view. Why can’t it be “it’s any way you want it”?
I read your Feb survey when you first published it (I’m a long-time subscriber to your RSS feed). There’s nothing in there that says to me “therefore do not use social media.”
What it does say to me is that some people may like to listen to podcasts or read blogs. Not a majority, according to your findings. That’s fine – that majority will continue to use the content they say they prefer to have.
But for the 11 people in your survey population (ie, the 3.7%) that you report saying do like podcasts, for instance, well, that’s good enough on a volume basis. That’s a preference they have expressed so, with the low barriers to entry for podcasting, you can offer them a channel that meets that preference.
Re your point on choosing between the basics and social media, I’d say the real point would be that you employ the tools that are appropriate for the communication goals you want to achieve.
Isn’t that a bit hair splitting, David? I don’t say the channels themsleves are social. Then again, probably my juxtaposition of words isn’t the best.
(In)effective communication :)
Because it is black and white. It’s a strictly regulated area of communications, one that has gotten more complicated with each year I’ve been involved in it.
Your most important communication objective in IR — unless you’re suicidal — is to comply with securities laws. So if the choice is compliance and a nice-to-have activity for 3% of the target audience, I’d foget the podcasts. It’s a no brainer.
It would be irresponsible for me to suggest to Finavera, a company that has yet to go public and which has no experience yet complying with securities regulations, that they can do as they please. They really cannot.
But let’s say they are comfortable with the compliance aspects. Should they blog or produce podcasts that will reach less than 10% of their audience or should they first do the things that reach 90% of their audience?
I tell my clients to do the things that will give them maximum impact for the lowest input. Podcasts don’t qualify because they fall short on the impact side of the equation due to audience size. There are so many better things they could do first.
When I have clients who are already complying and already have sophisticated online communications programs (including RSS), then we start looking at things like podcasts and blogs.
Sometimes we have clients who get ahead of their audience and jump to the bleeding edge before they’ve done the basic high-impact things they should do. That’s not a good thing because it can make a company appear out of touch.
In a nutshell, we tell them to take advantange of every possible tool available to them, but to do so in a logical, structured and planned way with a clearly defined strategy and objectives.
When I read your comments, Dominic, I feel as though I’m trying to peer through a smokescreen!
It surely must be quite clear to you that I am not suggesting or advocating that any organization would want to consider a particular communication channel if using such a channel, or communicating in a certain way, would fall foul of any regulation or law.
So any notion of suggesting to Finavera that they simply throw caution to the wind and do what they want is plainly silly.
Let’s move away from this red herring and focus on your points about communication objectives and tools.
I advise my clients to do the things that are likely to be the most effective in terms of achieving a communication goal, whether that’s to do with financial communication, IR, PR or employee communication. That may not be the same as doing it for the lowest input if by that you mean effort, budget, etc (is that what you mean?).
And to be clear, if regulations or rules are issues that must be considered, then they are factors in the communication planning.
If I understand you correctly, you’re saying that audience size is the primary consideration. Not so.
Audience size is, largely, irrelevant. It’s who the audience is that’s far more important (as is often so with blogging).
And while it’s usually impossible to know who that audience is when they have the means to get hold of your content (via RSS, for instance) without having to tell you, there are many measurement means at your disposal to help you discover who the audience is.
Of course, you can always offer your MP3s as downloadable audio requiring registration and all that, so you would know who’s downloading your files. I have no problem with that if making available content that way could measurably contribute to the overall success of your communication.
As for impact, much depends on what that word means. Creating relationships? Stimulating dialog? Promoting a desired action by the listener?
We come to your last paragraph –
That’s remarkably similar to my nutshell!
It seems to me that our destination appears to be the same but it looks as though we have wholly different roadmaps.
And yours are informed, well-researched and based on years of experience advising many of the world’s most recognized and awarded IR departments.
Cute, Dominic. And your point is?
My point is that you donâ€™t know what youâ€™re talking about. Your original post is weak and lacks substance and strays from the topic. You havenâ€™t offered any concrete ways, other than one stale example of IBM, of how you think social media can be applied in the investor relations arena.
You mention BloggingStocks live blogging earnings calls. Whatâ€™s that got to do with companies using social media? BloggingStocks is a network of blogs about public companies. It has nothing to do with companies using social media for investor relations. So that example is not germane to Antonâ€™s question. He wants to know how he can use blogs, not how bloggers are using them.
Then, for some reason, you go on to talk about earnings calls and control:
What has this got to do with the topic. Using blogs or podcasts or RSS in IR is not about control of lack of it. You have more control on a blog or podcast than on a conference call. And by the way, companies have control over who gets to ask questions on the conference call, so itâ€™s not a free for all as you suggest.
The issue is equal access to the same information. It is about avoiding selective disclosure of material nonpublic information.
Immediately after I posted the stats on analysts and portfolio managersâ€™ use of RSS, Podcasts and Blogs, you suggested that I was saying you shouldnâ€™t use them. Actually, I said emphatically that you should use them and provided several suggestions for how they could be used to add value â€“ including board of directors blogs. Thatâ€™s an original idea. Again, what have you actually offered in terms of concrete or even modestly useful suggestions?
Later you demonstrate a complete lack of understanding for one of the core principals of investor relations communications when you say:
To say that in an investor relations context is astonishingly poor form. Broad dissemination is absolutely critical. It is never who, but how many. Thereâ€™s a law about this.
Then a short while later you get it wrong again and show that you donâ€™t have experience in this field. You say:
Let me get this straight, no problem with making people register to access the information if doing so can â€œmeasurably contribute to the overall success of your communication.â€
Huh? How can discouraging people from using your content measurably contribute to your success? Please tell. The very same survey that I referred you and Shel to on podcasts, RSS and blog use by analysts and portfolio managers, said that one-third of investors and portfolio managers dislike having to register to obtain information. Or didnâ€™t you read that far? Thatâ€™s not the only study which says people dislike registering for information they are otherwise entitled to.
Finally, lets look at the IBM podcasts, because thatâ€™s really the only example you have to offer.
Are they really successful and what do they achieve relative to the effort that goes into them. Now the important thing to remember about IBMâ€™s â€œThe future ofâ€ podcasts are that they are unique content. They are not existing content â€“ like an earnings conference call converted to MP3 and delivered via RSS.
They are custom produced and involve an investment of time by fairly senior people in the company. Time is money, as they say, so these podcasts are not free by any stretch.
Ben Edwards at IBM who produces them tells me theyâ€™ve had well over 300,000 downloads or something, and I still say thatâ€™s a waste of time. A very big chunk of that usage is people just downloading out of curiosity, not because theyâ€™re actually interested.
But more importantly, could that time have been better spent. Could IBM have reached 2 million people with a more interactive, more inclusive communication activity for the same or lower cost? Yes, they could have if they had wanted to. Instead, they opted for a one-way channel that involved minimal risk. Excuse me if I donâ€™t fall off my chair.
There you go, your one example of how Anton can use social media is not a good one, and it isnâ€™t even social.
That’s quite a soapbox you’re on, Dominic. But thanks anyway for your subjective words of wisdom.
I can see no value in my responding with a tit-for-tat commentary here. So just a couple of response points.
I’m afraid that you continue to miss a clear point on using social media in the investor relations context. IBM’s use of podcasting illustrates how you can without falling foul of regulatory and related issues. It is a very good example. But you still say it’s a waste of time.
Again you miss the point in focusing part of your subjective critcism on what I said about audience size for podcasts being irrelevant. Audience size is irrelevant even in the IR context if the information the recordings contain is broadly available elsewhere and in other formats. That is the case in the IBM example. No selective disclosure there. If there had been, you can be sure we’d know about that by now.
I thought things were pretty clear that no one is suggesting doing anything that would contravene regulatory requirements.
Re BloggingStocks and live blogging, well, it is relevant. You’re going to see more of that, both by third parties as in this example as well as by employees within organizations. You’d want to include such activity in your overall communication planning, eg, in how to engage with those bloggers.
You had a good tip on executive boards blogging. I did note that although I didn’t comment on it here. You might recall my posting about that topic in January 2005 (“Using blogs for informal relationship-building with shareholders“) referencing your two reports on it on IRWebReport.com.
Anyway I appreciate all your comments, I really do. This essay as well as your earlier ones. Fodder for the discussion on social media and IR that will be a theme in FIR this coming Thursday. I hope you tune in.
I have been following the argument quite closely about the use of social media in the IR context. I have personally decided to maintain an Investor Relations blog for the blog-marketing company I work for, Really Big Networks and I am confident that it will only benefit the company in the long-run. I agree it is vitally important not to practice selective disclosure through the blog by addressing the ‘unanswerable’ questions that will inevitably be posed, but I believe that the value in blogging comes from the interaction of other stakeholders who are viewing your site and commenting. The network a blog creates through its viewership is extremely valuable to the company in terms of gaining a broader insight into the minds of its stakeholders. If an IR manager, such as myself, has an opportunity to discuss industry-related topics with his stakeholders, and perhaps even address investor concerns raised by the release of publicly-available information (such as minutes of the AGM’s or annual reports) I believe that he has just strengthened the credibility of the company he represents.
Daniel, many thanks for sharing this information about RBN and your plans. We’ll reference your ideas in the podcast discussion on Thursday.
At Seeking Alpha we see the Internet and social media as critical tools for any investor relations effort. The diificulty is finding an effective and targeted high-quality community website to communicate with investors and initiate discussion. We think SeekingAlpha.com is that solution. And the mode of communication? Earnings conference calls (more importantly, transcripts of those calls). The article below which we recently posted explains why publishing transcripts for free online at SeekingAlpha.com is so important for communicating with investors. Alternatively you can access it here: http://seekingalpha.com/article/12369
We’re also seeing evidence that money managers, sell-side analysts, investment bankers etc are increasingly using blogs and the Internet to research stocks —- especially small-cap stocks. Since we rolled out our opt-in e-mail option recently hundreds of fund managers have signed up to receive articles daily. (They’re signing up under their real names and e-mails — so it’s been easy to verify their identities.)
We also informally polled some of our institutional readers recently and found that they use the Internet for 90% of their small-cap research. And that makes sense considering that RegFD limits the opportunities companies have to communicate. Again, the internet is critical for any investor relations effort.
In conclusion, conference calls help companies tell their stories. And at Seeking Alpha, transcripts help put companies’ stories on investors’ radar screens. Also, our contributing bloggers (many of whom are investment professionals) have been known to write articles on companies whose transcripts were posted on Seeking Alpha (see Hollywood Media – HOLL – for example) thus increasing high-quality discussion of the company’s stock. They might have never discovered the company had it not been for Seeking Alpha and the conference call transcript.
The article on Seeking Alpha I referred to above:
Seeking Alpha is the only site on the Internet to publish hundreds of conference call transcripts for free each quarter.
Why do we feel it’s important to do this?
Companies present their case to investors on their conference calls. Since the introduction of Reg. FD, companies are not allowed to communicate with investors via non-public or privileged-access channels. As a result, the volume of communication between companies and investors has fallen sharply. The most important forum left for most public companies to “tell their story” to investors is their quarterly conference call. As a result, conference call transcripts are the best way for investors to discover and research new stock ideas and to track the progress of companies they are already invested in.
Conference calls alert investors to key investment issues. The question and answer session at the end of every conference call is an opportunity for analysts to question a company about anything surprising, impressive or concerning. The Q&A session in a conference call therefore gives an instantaneous view of what analysts will focus on in their earnings coverage reports. Because Q&A sessions are unscripted, they offer a rare occasion for investors and analysts to question companies about what matters to them.
Transcripts are more useful than audio recordings. Audio has one key benefit: you can hear a speaker’s tone of voice, confidence or hesitation. But aside from that, transcripts are far more useful. First, multiple companies often conduct conference calls at the same time, so the only way to track them all is to quickly read transcripts. Second, transcripts are more usable, allowing investors to focus on key sections and skip, for example, the standard legal disclaimers at the start of each call. Third, transcripts can also be printed out and read anywhere, whereas audio requires a phone or PC connection. For these reasons, institutional investors have long preferred transcripts to audio versions of conference calls.
Freely available transcripts provide access to journalists and bloggers. Seeking Alpha is the largest community of stock-market bloggers on the Internet. We provide transcripts for free so that money managers and other bloggers can quote from them and discuss them without fear of copyright infringement. Journalists also take advantage of our free transcripts; they have been quoted and linked to by publications as diverse as The New York Times and The Motley Fool.
Transcripts on web pages are more useful than transcripts in Word or PDF format. By publishing conference call transcripts on regular, open-access Web pages, Seeking Alpha allows other sites to link to the transcripts, and allows search engines to point users to the transcripts. As a result, the conference call transcripts on Seeking Alpha are read not only by stock investors, but also by investment bankers, private equity investors, sell-side analysts and potential partners. Seeking Alpha welcomes this readership because we pride ourselves on being the Internet destination of choice for investment professionals, serious retail investors and industry experts.
Thanks, Ezra. Your comment re money managers, etc, using blogs and the net to research stocks is particularly interesting.
So it’s pretty clear that the internet generally is an essential means for anyone in the IR field to find and use information.
In the conext of the discussion in this post and all the comments, what your comment I referenced means to me is that a company with a blog enables investment pros such as you mention to find information about a company in a way that fits with how they want to use the net. It can also mean that those pros could engage in conversation with a company.
If that helps build a closer relationship and aid understanding by both sides, well, I see no downside from that.
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