When will IR ‘get’ social media?

Posted on January 16, 2012

This article was originally published in Newsline, a publication of the Canadian Investor Relations Institute.

Credit: krisitnschellinger.files.wordpress.com

Investor relations people are not social.

Oh, don’t get me wrong; I know they are in real life. I’ve been to numerous CIRI conferences and have witnessed this firsthand. Great banquets, golf tournaments, galas and hospitality suites – IR has social down pat in ‘meat space’ (what the digerati call the real world).

I mean social media. In fact, let me take it further, most investor relations folks really don’t ‘get’ digital at all. They’ve mostly caught on to websites, sort of, and email is old hat, but Twitter, Facebook, YouTube? Hardly.

In and of itself, this is no crime. Personal participation in the latest thing is purely optional, though statistically most IR pros are on Facebook at home. What is difficult to justify is when a profession ignores a mass medium, engaging in the workplace version of hear no evil, see no evil.

Ignoring a medium that attracts 50% of the Canadian population is like ignoring newspapers.

I’m sympathetic to the plight of oldsters, confronted with a confusing and complicated set of new media. What a bother! Heck, I’m a middle-ager myself, an anomaly for my generation as a very early adopter. Many of my university pals are not active or even on Facebook. My friends, however, are not a random sample, so I have accepted that my personal use and business use of social media will differ. You should too.

From a business perspective we can see social media rapidly moving from bleeding edge to mainstream in other corporate departments. The Burson-Marsteller 2011 Fortune Global 100 Social Media Study reports:

In a short time, social media has gone from an interesting emerging communications trend to a critical part of the media landscape, and companies are reacting to that change.”

The study reveals that 84% of the Fortune Global 100 use one or more social media platforms in their communications.

That study isn’t IR specific, but it certainly indicates mainstream corporate adoption of social media. The question is, should IR use it and if so, how?

Closer to home, in its report Public Company Use of Social Media for Investor Relations 2011, Q4 Web Systems states:

Of the 629 companies in this report 626, or 96%, have a Twitter account. After a careful analysis of the content, we found that 67%, or 418, are using it to provide investor-related material … Almost all of the 629 companies are using Twitter, and two-thirds of them are using it for IR.

The second part of Q4’s report on Facebook use:

found that 45%, or 216 companies, are using it to provide investor-related material …

Of course use of social media does not necessarily indicate using it well.

Simply put, social media is about talking to people. In the complex and highly regulated world of disclosure, IROs are gun-shy about talking to people on social media. They tend to broadcast, treating social media like a newswire or other form of dissemination.

Broadcasting on social media does not add value (I can get disseminated info all over the web) and is seen as a bit spammy. What people are looking for on social media is the colour commentary, the backstory, the MD&A explained.

This is analogous to the Q&A in the quarterly conference call, or at the AGM, or at an investor conference.

One myth that needs busting is that social media will replace something in the IR communications mix. That’s unlikely and in fact unwise. I generally use words like amplify and extend when referring to social media and how it fits in the mix. As in, you can amplify the reach of your conference call by making it a podcast or promoting it on Twitter and then extend its shelf life by leaving it archived for an appropriate period of time.

The idea is to take the content, and the conversation, to where the people are. And sometimes that’s on social media.

Brunswick Research’s 2010 report Digital Media and the Investment Community identified the single most important information source from companies as being direct interaction with management (50% of those surveyed). At the other end of the scale were digital platforms: website at 2% and digital media at 1%.

But is a live Twitter chat with a CFO direct interaction with management or digital media? It’s both, of course.

We know social media is no silver bullet. We know other forms of communications matter more. We know there’s mass adoption by the public and corporations. We know social media impacts business journalists mightily. We know IR is uncomfortable with digital dialogue.

What we don’t know is when IROs will decide to get good at this and weave it into their communications mix.

Doug Lacombe is president of social media agency communicatto. Lacombe is a 20- year plus media veteran with deep digital roots dating back to the 1990s.

About Doug Lacombe

As president of social media agency communicatto, Doug is a social media speaker, strategist and consultant. A 20 year media and marketing veteran, Doug was one of the first in North America to put a daily newspaper on the web in 1995. Prior to founding communicatto inc. in 2009, he held senior roles in the newspaper, software, wireless, and newswire industries. Speaking and working all over North America, Doug is based in beautiful Calgary, Alberta Canada where he lives with his wife of 24 years, Sandra, and a spoiled Mexican rescue dog named Bug.

Tags: broadcasting, Brunswick Research, Canadian Investor Relations Institute, CIRI, communications, communications mix, digital dialogue, digital media, facebook, investment community, Investor Relations, ir, Q4 Web Systems, Social Media, social twitter, YouTube

http://ezramarbach.blogspot.com/ Ezra

Doug:
Take a look here:
http://www.mediabistro.com/prnewser/five-investor-relations-predictions-for-2012_b31462
Greatest barrier to consistent IR adoption of social media is usefulness — “we’re still waiting for IR’s killer app”.
Enjoyed your article.
–Ezra
http://www.q4blog.com Darrell Heaps

Nice post Doug, thanks for quote stats from the last Q4 report. We’re working on this year’s report and you’ll see that the numbers just keep going up. In terms of when IR is going to “get it” I think there are a lot of IROs that do get it and are currently working on incorporating it into their programs.

Having said that, I think social IR is evolving differently than the consumer side of the web. When you say “Simply put, social media is about talking to people” I don’t think this is accurate when you look at how social media is being used in the capital markets. Yes, talking between people is an aspect, however it is not more important than the ability of companies to consistently publish (yes broadcast) content to their investors and the market in general. Whether it’s a series of tweets during a live earnings call, a video of the CEO talking about the quarter, or a blog post talking about the companies strategy. This consistent stream of content has distinct value as it is distributed throughout the web, raising awareness for the company and it’s message. Whether or not public conversations are happening between the company and it’s investors does not devalue this benefit in my opinion.

In our research, we find there is very little open communication between companies and investors across all the social networks and media sites we monitor. I believe this is the case, not because IROs don’t get social media, it’s that investors don’t want these conversations to be public. Look at the real world, investors want direct access to management, not an open forum where everyone can see what they are asking. Because of this unique dynamic I believe social media and investor relations is evolving in it’s own direction.

Ultimately, IROs are using social media because it helps them achieve their goals. Such as building their shareholder base, reducing volatility, etc. many of which are be achieved without public conversations happening.
http://ezramarbach.blogspot.com/ Ezra Marbach

@Darrell

Surely you’re referring to “institutional” investors who “don’t want these conversations to be public”. But retail investors who have no access (no 1-on-1s at investor conferences, limited access on earnings calls) surely DO want these conversations to be public.

In my experience, many small-caps would have public online conversations if there were a great forum to host them. Small-caps rely on retail investors to get them to a certain level that institutional folks would show interest. In a world inundated with financial content it’s hard to stand out. On my blog I’ve written extensively about these sort of public online conversations taking place. Motley Fool has shown us what’s possible.
http://www.communicatto.com Doug Lacombe

@Darrell – I failed to distinguish between large cap and small cap and agree with @Ezra that conversations, or at least explanations of strategy, are desired by retail investors in small cap companies.

Large cap companies can absolutely benefit from and “get away with” broadcasting in monologue mode for quite some time. Howard Lindzon, StockTwits founder (as I know you know) also argues persuasively for a broadcast or dissemination model on social media for IR, though he does so from the vantage point of a hedge fund manager.

On the other hand I note that my client Encana had almost no Twitter followers for the year they did earnings release tweets only, but once they opened up to a holistic mix of messaging and conversation they built a very robust following. Audience building is a natural consequence of good, balanced publishing AND conversation.

I don’t know that it’s an either/or zero-sum proposition. Any size company can start by broadcasting IR messages and then slowly engage in controlled chat/live-tweet/respond to blog comments experiments.

So when you say “I don’t think this is accurate when you look at how social media is being used in the capital markets.” I’d reply, you are correct, but how it is isn’t necessarily how it will or should be.

Ultimately I think both retail AND institutional investors will expect responses to their inquiries on the social web, as they do for email and phone messages now. Building those skills now while expectations are low and the honeymoon is still on seems a wise choice to me.

And I don’t see IROs building those skills at a rate pursuant to the decline of other media and the rise of social media. It’s time to catch up.
http://www.q4blog.com Darrell Heaps

@Ezra – yes, I was speaking about institutional investors rather than retail. I agree that retail is looking for anyway to speak with management. We’ve seen this in a couple of cases and it’s been helpful for smallcaps to open up to dialogue with their retail shareholders. I agree that some of the things Montley Fool have been doing are interesting.

@Doug I think we’re saying the same thing in a different way. When I say broadcasting, I’m not suggesting a stream of press releases, totally agree that this is not useful. I’m suggesting a mix of content being shared and retweeted that covers all aspects investors and stakeholders would be interested in. https://twitter.com/#!/encanacorp is a great example and you can see from their feed that there is very little two way conversation happening, but yet the channel is very useful for stakeholders. I would assume if questions came in through this channel they would respond, but that doesn’t seem to be happening.
- http://www.communicatto.com Doug Lacombe
  
  Indeed @Darrell – @encanacorp converses on Twitter as needed/intermittently but it certainly isn’t a major focus nor a time sink.