Social Media & Retail Investors: Cutting Time for IR Departments

Although there is some discourse regarding which type of investors that investor relations professionals should have focused communications with, it is clearly evident that social media targets potential and current individual investors, or otherwise known as retail investors.  Investor Relations tactics that target institutional investors are conferences with institutional investors, road shows, report preparations, etc.  Although theses are tactics that can be applied to the individual retail investors, typically IROs would not spend the time  engaging in tactics, such as one-on-one meetings with them because of the time limitations and efficiency of such activities with investors with small stakes in the company.  Like it or not, investor relations departments focus on the entities that are able to handle high volumes of the company’s stocks and/or securities. 

Investor Relations departments are using social media sites to respond to retail investors in the masses.  Annual reports, 10Qs, 8ks, etc are published online in the SEC’s EDGAR database for anyone to access making research for investing that easy for the individual.  Also, IROs are using sites such as Twitter, blogs, and Facebook to respond to individual requests.  Social media sites have made it very simple for investor relations professionals to respond quickly to individual investors because of the various web alerts companies have set up (such as this).  These web alerts track what is being said about a particular company and (at the discretion of IR departments) allows IR professionals to engage in platforms where the message will be amplified.  Examples of “amplified messages” are “re-tweets” on Twitter, status updates on Facebook, and discourse in major blogging communities.

My question regarding social media and investor relations professionals is will the frequency of IR activities will change based on the usage of social media for IR?

On the table below, Alexander V. Laskin, Ph.D., conducted a survey which explored how often investor relations professionals engage in certain activities. (full article can be found here). 

 Based on the table, the most frequent activity for IR professionals is “responding to requests…”  My opinion is that this figure representing the frequency may either increase dramatically, or decrease based on the usage of Social media for IR.

Reasons:

INCREASE:  Because social media creates a platform in which retail investors can air their questions and have the questions answered in a timely fashion, it may motivate them to engage with IR departments and keep online discourse moving; therefore making the IR activity of ”responding to requests…” an activity that is frequented often.

DECREASE:  Because social media encourages a discussion forum that not only investors and IR departments engage in, but also investors with other investors, the specific questions and requests made by investors to IR departments may decrease.  The availability of information on social media sites seems never-ending, and perhaps many questions can be answered through FAQs pages or forums.  In this situation, IR departments may find themselves correcting misguiding information online and answering specific inquiries.

Social media’s effect on IR is a subject worth exploring because it has a significant impact on communication with investors.  Although IR departments do not specifically focus on retail investors to communicate with, social media targets them.  If IR departments can tailor messages effectively using social media, not only will it cut time in responding to individual requests, but also will engage a audience (retail investors) without sacrificing time spent on other IR activities.

Investor Relations and New Media Observations

Midterm report based on observations of IR discussion on new and social media:

The report includes:

• Description of the issue
• Various opinions discovered on the issue
• Details of a few key opinions that dominate the online discussion
• Personal opinion on the issue based on the class readings and discussions

pdf – Investor Relations and New Media

Investor Relations @Twitter

I have been actively using Twitter for a good three months now, and I am a bit scared as to the amount of identity issues, phishers, spam, and hacks that get through Twitter’s security…and I’m not just talking about the fake Ashton Kutcher and Lady Gaga accounts…

See for yourself, do a search on “how to hack twitter” on Google and read all the sites that mock Twitter’s security and show step by step how to access “secure” accounts.  Whether or not these sites are legitimate beats me; however, the truth is there are many accounts of hacking, phishing, and spam on Twitter in the past and present.

One tweet that caught a few people’s attention was from Vodaphone, a mobile telecommunications company based out of the UK.  This tweet was an obvious hack based on its sheer ridiculous; however, a tweet like this shows Twitterers and companies the risks of having an account on Twitter. Even if the hack was internally based, how many employees have access to the twitter account?  Sounds to me like there are way too many gatekeepers with access to the public.  If it was my IR department, access to accounts would be securely in the hands of managing officers, not the staff.  This is merely one example.  But what about others? (to quote the article)

“It wouldn’t be the first time that a large company has had their account compromised on the network. Fox News, Facebook, the Huffington Post and Britney Spears were all subject to a nasty hack in January 2009.”

Fox News, The Huffington Post, and Facebook, now those are serious media outlets being compromised.  Britney, well, that’s a PR disaster for a different blog.

So what if a company or investor relations department is tweeting about important information, releases, figures, financials, etc?  What if some hacker wants to pull a fast one, phish for passwords, and then spread false information to investors? Should tweets have disclaimers? I would say so, or at least before any IR department wants to start using Twitter as a legitimate tool for releases.  Until then, I’d suggest investors stay on top of SEC filings and RSS feeds directly from the source.  Don’t take everything the little blue birdie says as fact.

Investor Relations Biggest Challenge in the World of Social Media

My parent’s always told me, be careful what you put on the internet, because once it’s on, it’s always on and will eventually be blown out of proportion.

So wouldn’t that be the case with investor relations and disclosures on social media sites?  Once something is posted online by a company, eventually the information is going to be perceived in infinite ways by billions of people, especially on social forums such as Twitter and Facebook.  Sure IROs can monitor information being said about companies; however, they have no ethical way of controlling what people say (unless companies go to the extremes of deleting bad comments that consumers and investors leave on company sites).

This is one of the very reasons companies use 3rd party social media sites to disclose information and encourage honest feedback without investors and consumers being turned off to the idea of communicating on forums that companies have control over.  Although this creates honest 2-way communication, IROs now have no control over the information flow about a company once information is disclosed on the internet.  IROs were considered “media gatekeepers” of company information, an maybe still are; however, sites like social media platforms have almost totally bypassed IROs’ control.  Once something is released on heavy traffic forums, there is no going back.  Investors take in the material that IROs give to them, but you better believe that they are aware and participating in other forms of discourse that investor relations departments have no control over.

In order to fully understand the challenge that social media presents investor relations, we must understand the purpose of investor relations regarding disclosure of information to the public.  Investor relations is communications between corporations and the public/investors regarding business decisions, progress, and results.  In conjunction with this goal, investor relations also serves as image building to promote the company. So, one could look at an investor relations practitioner as an information gatekeeper, deciding which information to provide the public with (in regulation with Reg. FD, Securities Act of ’33, Securities Exchange Act of ’34, etc).  Once information is released to social media sites, investor relations practitioners’ hands are tied and have no control over the discourse that will follow.  They are strictly limited to answering queries honestly and perhaps (if needed) play damage control.

Another challenge is the potential for rumors online about a company.  Sure, a company can make an official release or disclosure attempting to quiet malice rumors or silence untrue claims about the company by online blabbers, but anyone that has been a victim of a rumor knows how hard it is to clear up a rumor 100%.  This is a challenge that an IRO wouldn’t suspect to be in the job description, and to be honest, I was hoping that rumors died in high school…guess not.

Like my parents warned, once something is posted online, people will twist it and take it for something that it’s not.  Things don’t seem to change, even in the corporate world.  Once something is online, investor relations practitioners lose control of the information flow, especially on 3rd party social media sites where people engage in discourse more openly and honestly without corporate oversight.

“Feed” Your Investors Information

After reading IR Web Report’s post on February 10th regarding  IR website vendors not  implementing a  “push on their clients’ RSS feeds,”  I became curious.  Could it be that the IR website vendors such as Q4 and Shareholder.com don’t push RSS feeds to investors because the companies themselves do not push them on investors?

It is my understanding that good investor relations requires companies to divulge all public information to investors in a fashion that makes it easy for investors to access that information.  Not only is making a concerned effort to release public information to investors a legal standard dictated by the Regulation FD of 2000, but it also is just good IR practice.  Keep the investors informed.  Think of it this way, instead of wasting resources by responding to general inquiries from investors, publish and make all public information easily available at the single click of a mouse.  The best way an IR department can keep investors informed with up to date information and company releases is through the use of RSS feeds in which investors can subscribe to, FREE.

I indulged myself in a casual convenience sample survey of three different company investor relations websites, based on products I can see from the comfort of my desk in my dorm room.  My research goal was to see how readily available and convenient the respective company’s RSS feed was in relation to the company’s investor relations homepage.  The three companies I chose were Dell, Sony, and Hewlett Packard.  Conveniently, all three companies are tech competitors, making contrasting and comparison easy and relevant.

First up:

Dell’s investor relations site is sleek.  There is up to date information published on the homepage of their investor relations site with everything from events, financial news, financials, and corporate governance information.  There is even a search tab on the left hand side allowing investors to search and sort desired releases and news.  The site is user friendly and very easy to navigate; however, that is not what my little perusing was intended to find.  I want to find how easy it is to subscribe to Dell’s RSS feed.  On Dell’s investor relations site, there is NO direct link to the RSS feed.  So, I searched for “RSS feed” in the search tab at the top of the page.  No such luck.  The search initially came up with a list of Dell products and drivers, completely irrelevant.  I finally found a link to Dell’s RSS feed under a tiny gray tab labeled “about Dell” which a font color that was almost transparent. 

Sony is pretty much in the same boat.  Sony’s IR website is packed with relevant up to date information but the RSS feed is nowhere to be found directly off the main site ( it is not even posted under the “about Sony Global” link).  However; when I searched “RSS” in the search tab on the top of the site, the first result was in fact the RSS feed.  Well, done Sony!  Only TWO clicks fewer than Dell’s!  A pretty cool feature that Sony’s RSS feed offers is a categorized RSS feed that specialize in different company dynamics.  Perhaps that puts Sony TWO ahead of Dell in the RSS feed department; however a direct link to the RSS is a tool a convenience that investors should have from the IR website.

Lastly, I looked at Hewlett Packard’s IR page. BINGO.  I scrolled to the bottom on the page and what did I see?  BOLD LETTERING, that said “INVESTORS TOOLKIT.” Thank you HP for agreeing with me on the importance of making RSS feeds easily accessible to investors.  Company disclosures are updated in real-time on the RSS feed making it one of the single most important tools for an active investor who wants to be knowledgeable of every public release a company discloses.  The rest of HP’s IR site is very resourceful, offering email alerts, IR contacts, Q&A’s, and general overviews.

In my opinion, (and apparently Hewlett Packard’s as well),  RSS feeds SHOULD be stressed by the company to investors because they contain every public disclosure/announcement/news a company has to release.  IR website vendors like shareholder.com and Q4 probably do not stress RSS feeds (according to IR Web Report) because, based on my (very very shallow) surface level research, 2/3 companies do not have direct links to RSS feeds from their own IR sites.  To me this is kind of unsettling because why wouldn’t technology companies such as Sony and Dell integrate basic technology such as RSS feeds on their IR websites, considering its one of the easiest ways to communicate company information to investors.  Not to mention, it is so convenient to investors to subscribe to an RSS feed and have news delivered to them; it makes one less thing for them to investigate.

Get With It, or Get Out!

I am a college junior and I would have no idea how I would stay in close communication with the world if it was not for social and new media.  You can call me ignorant, but before you do, think about it.  If it wasn’t for social and new media, there would be no “real-time news” without commercials, or “instant 2-way communication” without having to pay long distance.  The convenience doesn’t stop there…

Social and new media are so important forms of communication that companies and institutions are encouraging their employees to embrace social media to become more interconnected with their audience.  Why is this? Let me give you a little of my opinion:

• According to marketingpilgrim.com, over 80% of Americans use social media monthly. This not only gives a figure of how many people have engaged in social and new media, but also how many people are active members of social media sites.
• It’s virtually free,  the only costs for companies is to have their PR or IR departments to monitor the sites.  So for a simple price of a single salary, an employee can engage in 2-way SYMMETRICAL communication with an overwhelming sized audience looking for information.
• Social media is the future of corporate communication.   Everything from customer service/relations to employee inquiries can be web-based on social media sites.  And just wait, in a few years, it wouldn’t surprise me if blogs replaced the traditional resumé.

Because social and new media is so convenient and plentiful with viewers (ex. Facebook directs more traffic than GOOGLE!!!) a company would be foolish not to have a team dedicated to monitoring these social media services to preserve brand image and encourage company-investor/company-customer relations and communication.  If the audience is there, engage in that medium.  Be available to your public.  Encourage brand presence in new mediums.

On a personal level,  I have grown up in what one could call the “internet generation.”  I remember my parents plugging in our first AST home desktop computer and dialing up to AOL, where I could browse in the “kid safe” intranet and wait for Disney.com to load for 2 hours before a single graphic would show up.  Today we see a different internet, one that has evolved tremendously and is now dominated by social media.  I know I spend over 4 hours of my day at my computer on social media sites such as Facebook.com and 24 hours on social media sites via my Blackberry.  If company wants to contact me, they know where to find me.  FISH WHERE THE FISH ARE.

Social and new media’s audience…now that’s a BIG FISH!

(photo credit: http://www.jawshark.com)

Hi, Is Audience there? Where Can We Reach Them?

Companies spend immense amounts of money building a brand image.   Preserving the brand name and image would be the responsible thing to do, considering no one wants to see millions of dollars go to waste.  This brings up the question as to how can a company preserve their brand image?

The answer is simple.  A company can start by monitoring the one place where people become interconnected to state their opinions: the internet.  The best place to start monitoring would be social media sites such as Twitter, personal blogs, and Facebook.   Investor Relations professionals monitor the internet and social media sites for a few reasons such as:

• 1. to see business trends

• 2. to monitor key audiences for opinions, criticisms, complements, and rumors involving literally any aspect of the company

Once this has been done, the Investor Relations Professional can create a dialogue with the audience, encouraging 2-way symmetrical communication. Companies in the past have engaged with audience based on how large their impression was (via compete.com as well as other indicators of online traffic). This still may be a helpful tool in deciding whether or not an audience is “worthy” of a response; however, with the viral spread of communication via the web, no audience to too small to engage in.  Here’s why… take Twitter for an example,

• When a company or individual sends a “tweet” engaging with a particular audience, chances are, that “tweet” will be “re-tweeted” or sent out to more individuals, and then “re-tweeted” to more individuals, and so-on and so -forth.  Before you know it, the message that was originally published to one board now appears on 20, 60, 400, 2000, etc. boards… I suppose you could call it the Pyramid Scheme of Social Media.

67% percent of the global online population is using social media, making social media sites a bulls-eye for IR professionals to toss their message to enhance brand image and investor/consumer faith as well as engage with their audience.  An important function of social media sites for IR professionals is the neutral nature of social media sites making it them the perfect forum for 2-way communication between companies and audiences.  Dominic Jones, of IRWebReport.com, points out several advantages of this forum in his blog posted on Feb. 10, 2010.

Lastly, it is incredibly important for Investor Relations professionals to monitor and engage with audiences through social media because it costs little to nothing.  Accounts on Facebook and Twitter are free, and the ability to reach outstanding numbers of people through a free  “post” or a free “tweet” is priceless and shouldn’t be taken for granted.