Guest Post: Revenge of the Nerds III – Investor Relations Meets Social Media
By: Teresa Basich
Today’s guest post is the first in a three-part series by Rob Berick, a senior managing director of Dix & Eaton, a communications consultancy that specializes in investor relations. Rob regularly writes on the capital markets and investors relations on his blog and on Twitter @robberick.
While much has been said, written and blogged about social media’s value in cultivating relationships with customers and generating market opportunities, there has been much less attention paid to the potential of such media as a tool to engage investors, who are using the Web in growing numbers for their investment due diligence.
Believe it or not, there is a growing contingent within the investor relations (“IR”) ranks that believes social media platforms offer public companies a cost-effective channel to further differentiate themselves with investors.
In fact, some corporations are already using innovative ways to communicate with shareholders and raise awareness with potential investors – from using Twitter as a way to further disseminate major corporate announcements or solicit questions in advance of an investor event, to conducting facility tours or product promotions via YouTube , to creating truly interactive annual reports. (Author note: Despite what you might think, investors love things besides numbers. We nerdy IR types call such things “intangible assets.”)
Over the next three weeks, we’ll take a look at this growing trend. Consider me your correspondent from the mythical land of IR–where capitalists roam like free-range chickens and recent MBA grads have the unalienable right to tell the most senior members of management teams how best to run their businesses.
For many companies, social media tools not only help to stretch their investor communications budgets, they are also helping to level the playing field in the competition for investor awareness. I’ll give you some real-world examples of companies putting social media to work in their IR programs in my next post.
Before that, let’s take a few minutes to discuss how to get started, as social media programs are not “one-size-fits-all” in any context, let alone in an IR effort. Before developing a social media strategy, your company should first determine which tools would be most effective in achieving your specific objectives. There are several questions to ask:
- What are you hoping to accomplish?
- How will you measure success?
- What sites are your target investors using, and what are they saying about your company, if anything?
- Who are the influencers within those communities?
- What online tools are your peers using to reach investors?
Armed with answers to these questions, you can determine if social media is right for you and, if so, which channels would be best to use in your effort to further engage with investors while amplifying your value proposition (read: why now is the right time for investors to own your stock).
As I said earlier, we’ll take a closer look at some of the brave explorers among the IR ranks next week. In the meantime, I’d love to hear what questions you think those in the IR ranks should be considering as they evaluate the pros/cons of social media strategy.
[...] This post was mentioned on Twitter by coryhartlen, Rob Berick, Craig Comeau, dhertz, radian6training and others. radian6training said: RT @TeresaBasich: Guest post from @robberrick of Dix&Eaton is up on the @Radian6 blog! Talking SM & investor relations http://bit.ly/d8my1C [...]
I'm very interested in the investor relations focus of this series. My company, Xero <a href="http:// <a> (www.xero.com),” target=”_blank”> target="_blank"> <a href="http:// <a href="http://(www.xero.com),“” target=”_blank”>(www.xero.com),“ target=”_blank”> <a href="http://(www.xero.com),” target=”_blank”>(www.xero.com), IPO'd on the New Zealand stock exchange very early on in the company's life and as the Community Manager I'm often asked how I deal with questions raised via social media platforms that are related to investment in our company. Since we've been active on Twitter (a couple years now) we've mostly had comments and questions from customers relating to our product (online accounting system) and not so many regarding investment. I'm very aware of our responsibilities as a public company in terms of insider trading and this potential for keeping information very close and secretive goes right against social media best practices of being open and honest. I'm really interested to see how others in this situation handle questions purely related to investment – how do you ensure you're not breaching insider trading laws when answering queries, how do you answer something related to investment without essentially 'brushing' the person off because you can't advise whether now or later is a good time to invest and other than tweeting or blogging updates from your company's annual meeting what sort of communication would be specific to investors?
I'm looking forward to the rest of this series – thanks for posting it!
Regards, Catherine
Catherine – you are most welcome. You are asking yourself all the right questions in terms of the disclosure implications of social media. I hope the examples you'll see later this week (and the tips next week) will be helpful to you. As with any interaction with investors, the conversation via social media must stay on only information already in the public domain. In many ways, it's no different than a 1:1 meeting or call (other than it's conducted publicly). So, just as you wouldn't answer certain questions if posed on the phone (e.g., "is now a good time to invest in the company?"), you wouldn't answer that question via social media (i.e., "I can't comment if Xero is a good investment opportunity for you personally, that's a decision you have to make with your financial advisor after reviewing our materials. Please let me know if you have specific questions about the company you'd like to discuss.").
Does that help?
Yes it does – thank you! As I say, we haven't really had many questions that I'd define as investment-related so in the rest of your series I'm keen on seeing examples of these types of questions that other companies get asked.
I'm very interested in the investor relations focus of this series. My company, Xero <a href="http:// <a> (www.xero.com),” target=”_blank”> target="_blank" rel="nofollow"> <a href="http:// <a href="http://(www.xero.com),“” target=”_blank”>(www.xero.com),“ target=”_blank”> <a href="http://(www.xero.com),” target=”_blank”>(www.xero.com), IPO'd on the New Zealand stock exchange very early on in the company's life and as the Community Manager I'm often asked how I deal with questions raised via social media platforms that are related to investment in our company. Since we've been active on Twitter (a couple years now) we've mostly had comments and questions from customers relating to our product (online accounting system) and not so many regarding investment. I'm very aware of our responsibilities as a public company in terms of insider trading and this potential for keeping information very close and secretive goes right against social media best practices of being open and honest. I'm really interested to see how others in this situation handle questions purely related to investment – how do you ensure you're not breaching insider trading laws when answering queries, how do you answer something related to investment without essentially 'brushing' the person off because you can't advise whether now or later is a good time to invest and other than tweeting or blogging updates from your company's annual meeting what sort of communication would be specific to investors?
I'm looking forward to the rest of this series – thanks for posting it!
Regards, Catherine
Catherine – you are most welcome. You are asking yourself all the right questions in terms of the disclosure implications of social media. I hope the examples you'll see later this week (and the tips next week) will be helpful to you. As with any interaction with investors, the conversation via social media must stay on only information already in the public domain. In many ways, it's no different than a 1:1 meeting or call (other than it's conducted publicly). So, just as you wouldn't answer certain questions if posed on the phone (e.g., "is now a good time to invest in the company?"), you wouldn't answer that question via social media (i.e., "I can't comment if Xero is a good investment opportunity for you personally, that's a decision you have to make with your financial advisor after reviewing our materials. Please let me know if you have specific questions about the company you'd like to discuss.").
Does that help?