Social Media in the World of Investor Relations

1 Stimmt AG | Social Media in the World of Investor Relations

December 2010

Helmut Kazmaier | [email protected]

Social Media in the World of Investor Relations


About Stimmt

Helmut Kazmaier Partner Electrical Engineer, with Stimmt for more than 5 years

Stimmt is a consultancy, focusing on

human behavior interactions between companies and customers electronic user interfaces

We are 12 people based in Zurich, operating for 12 years.


Before we start: some statistics on the topic

85% of financial service professionals under the age of 50 use social media (LederMark Communication, March 2010)

58% of institutional investors and sell side analysts in the USA and Europe think that social media will be relevant for their investment decisions in the future (Brunswick, September 2009)

Time to find out, what social media is all about


Social media in a nutshell

Social media in the context of IR | Examples

Opportunities, challenges and recommendations

Discussion

Contents


Conversation

Social media: democratization of information and their distribution channels

Monolog turns into conversation. Everybody can provide and distribute information. Interaction of conversation partners becomes visible to global community. The passive consumer also becomes a producer or «prosumer».

Information provider

Distribution channels:

• Print • TV • Radio • …

Active

Passive

Traditional Media Social Media


• Blogs • Micro Blogs • Social networks • Content Sharing

Monolog

»Prosumers» Consumers


Social media brings some major changes

Information monopoles are dissolved. Overall, social media foster democratization of information and increase transparency in communication.

Low barrier: everybody with a computer and internet access can participate

Low cost: distribution of information at marginal cost

Global spread: Information can disseminate through global networks quickly

Real time: information is available instantly

Mobility: information can be provided and consumed independent of location

Transparency: source information, its usage and conversations are visible


But what exactly are social media?

Source: http://social-media-prisma.ethrity.de

For the sake of simplicity we focus on a few tools:

Blogs

MicroBlogs

Social Networks

Content Sharing

Content Aggregation


In order to assess the opportunities of social media for IR, a quick look at the purpose of IR is necessary

Investor Relations (IR) is a strategic management responsibility that

integrates finance, communication, marketing and securities law compliance

to enable the most effective two-way communication between

a company, the financial community, and other constituencies,

which ultimately contributes to a company's securities achieving fair valuation.

Financial community

Goal Company

Fair valuation of securities

Source: http://en.wikipedia.org/wiki/Investor_relations

Dialogue

Social media’s potential is in supporting the dialogue between a company and the financial community. Also, social media can help providing relevant information efficiently and effectively to a company’s stakeholders as we will see later on.

Opportunity: Social Media





Discussion

Contents


This presentation focuses on three different applications of social media

Additional distribution channel

Embracing dialogue

Join the conversation


Increasing reach with social media tools: «fish where the fish are»

The same piece of information can be published easily on various social media platforms, thus making it available more widely and directing users to the companies web site.

IR information on company web site

Web site user

Only web site users get information

Social media platform

Users of social media tools., e.g. Twitter, can access information

Social media platform users


Making content available with social media tools is more convenient for members of the financial community

Instead of having to check various sources, users can aggregate information in a single tool. Information is pulled rather than pushed.

Content aggregation tool

Company A

Company B

Company C, no news

User, e.g. analyst


Example | Dell has created a whole blog dedicated to IR

Dell features its official content from its investor relations web site enriched with additional context, commentaries and opinions.

Source: http://en.community.dell.com/dell-blogs/dell-shares/b/dell-shares/default.aspx


Example | Sulzer using Twitter to propagate midyear results

The message itself carries very limited information. It links to the IR section of the Sulzer’s web site.

Source: http://twitter.com/#!/SulzerLtd

Source: http://www.sulzer.com/desktopdefault.aspx/tabid-609/


Example | Pfizer making presentations available on slideshare.net

Users can access presentations as well as subscribe to the Pfizer channel in order to be informed automatically if any new content is available. The presentations can also be embedded easily into other web sites fostering further distribution.

Source: http://www.slideshare.net/Pfizer


Example | GoogleIR shares video content on Youtube.com

As with the previous example the reach of the videos has been increased dramatically. Users can subscribe to the GoogleIR channel in order to stay up to date as well as embed videos into their web sites.

Source: http://www.slideshare.net/Pfizer


A few words on risk | Reporting positive analyst opinions

Will the company as well report the negative messages?

Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/


A few words on risk | Reporting positive analyst opinions

Coming from an official company account this tweet might be risky.



A few words on risk | Giving exclusive information

This message was not published on the company’s web site. Why was it published on Twitter?



A few words on risk | A positive example

Strabag handles analyst recommendations properly. Also the negative ones are published on both Twitter and the company web site.



Using social media as an additional information distribution channel seems to be the most prominent use case today

Many companies start using social media as an additional information distribution channel to increase their reach. It is the least complicated use case and is a good starting point to gain some experience in this realm.

Increasing reach by providing content at various social media platforms

Potentially more focused distribution

Foster distribution of content by making it easily sharable

Link back from different platforms to own web site (good for Google ranking)

Very cost efficient

Necessary effort is quite reasonable




Embracing dialogue



Embrace the dialogue: From information distribution to two-way communication

Information is distributed to financial community. A feedback channel is opened allowing comments on and discussion of the information.

IR information

Financial community

Stakeholder inquiries

Access and discuss

Answer Company IR department


Example | TVI Pacific made Facebook the official corporate discussion forum

Stakeholders can comment and ask questions. The company’s responses are transparent to the whole audience. Thus not just the information itself but the way TVI interacts with its stakeholders characterizes them.

Source: http://www.facebook.com/tvipacific


Example | Shell uses Twitter to direct users to their events

Shell uses the opportunity to direct people from Twitter to their events, inviting them to interact with them.

Source: http://Twitter.com/#!/shelldotcom/status/18530442711


Example | WEG S.A. uses Twitter to gather questions before a conference call

WEG S.A. uses Twitter as an additional channel for stakeholders to send in questions to be answered later in the conference call.

Source: http://Twitter.com/#!/weg_ir


Example | Google moderator allows the community to gather and rate questions up-front

Next to Google other Companies like IBM, Barclays, Berkshire-Hathaway IBM or Exxon Mobile have given their shareholders the possibility to pose questions for the annual meeting online and also rate them in advance.

Source: http://irwebreport.com/20090408/web-shareholder-meeting-questions/


Example | Virtual annual meetings are not new, but Intel is the first company to include online voting

Intel’s idea to have the annual meeting exclusively online was rejected vehemently by its shareholders.

Source: http://irwebreport.com/20100331/virtual-annual-shareholder-meetings/




Embracing dialogue



Join the conversation: From 1:n to n:n communication

Communication becomes more challenging, since it takes place in an intertwined network of participants. The role of the information provider becomes less central. Control over information becomes increasingly difficult.


…

…

Users

…

1:n n:n


The new task is to position a company as a valuable, authentic and reliable partner in the global conversation

It is not just about messages but about behavior. The way a company interacts with the global community becomes increasingly important.

…

…

Being a good, trusted citizen*

Be honest

Respect the community

Be helpful

Create added value

Show don’t tell

*These are some of the general rules of social media.


Example | Using Twitter to answer direct questions

140 characters on Twitter are not always enough to give sufficient information, but directing stakeholders to the right contact person is also helpful.

Source: http://Twitter.com/#!/Microvision/status/18061379992


Example | Pointing to relevant 3rd party resources is a welcome service

Not just sharing own content but pointing to relevant content by other sources is considered being helpful and creating added value. This service makes a company’s Twitter stream even more attractive.

Source: http://Twitter.com/#!/Emulex/status/18618946907


Example | Clever tweet by Sulzer

Praising Roche shows that Sulzer cares, is listening and willing to engage in the conversation. On a side note Sulzer places an important messages in a modest way. Relevant messages that don’t focus on the sender are appreciated by the community and show a good understanding of the etiquette.

Source: http://twitter.com/#!/SulzerLtd


Example | Being prepared to have tough conversations

First thing is being aware of these activities. Not yet being a part of the conversation makes it more difficult to engage in the conversation and act as a reliable, trusted partner.

Source: http://www.facebook.com/pages/Boycott-ExxonMobil/304328864370


Example | Special interest communities aggregate finance information and opinions from everybody

Being aware of these offerings and monitoring activity in relevant sectors can give additional insight about what the financial community is up to.

Source: http://seekingalpha.com

Source: http://stocktwits.com





Discussion

Contents


Opportunities | Social media can help you getting the message out

This list is not exhaustive but gives an impression of how a company can benefit from the use of social media. It is also a basis for further discussion.

Increased reach, address new target groups

Word of mouth

• Better understand your stakeholders

• Get more direct feedback

• Improve your offering together with stakeholders

• Improve bonding with stakeholders and thus increase loyalty

• Counter fragmented media consumption

• Circumvent intermediaries and save time and cost

• Easy control and monitoring of success


Challenges| Social media is not just another communication channel

This list is not exhaustive but gives an impression of the challenges a company faces when engaging with social media. It is also a basis for further discussion.

New communication rules need to be learnt and followed

Often unclear: Comply with securities law, e.g. endorsement issue

Control over information – bad news also spread fast

Well informed, challenging stakeholders expect adequate responses

Engagement has to be serious

Communication processes are much faster

Fragmented target audience is difficult to reach all at once

Unwanted messages can lead to loss of authenticity and trust

Target audience might not yet fully trust social media channels


Recommendations | Social media should neither be ignored nor rushed into

Although first steps can be taken easily with little risk, serious engagement should follow a long term strategy and clear goal set.

Start listening Get a feeling for different social media tools See how the community uses them See what they say about you

Monitor Systematically monitor relevant channels Identify information hubs and opinion leaders Start feeding your messages to these channels

Engage Share your content: news, press releases, videos, photos, etc. Invite stakeholders to interact with you on social media platforms Engage in the conversation with other participants With long term focus: Actively shape your position and reputation by

your messages and value adding interactions





Discussion

Contents


Effective social media engagement doesn‘t happen by chance. Stimmt.


Best Practice Recommendations Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010

Appendix


Best Practice Recommendations Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010; q4websystems.com Only share material information that has already been disclosed through a Reg FD approved method. Social networks can be used to establish your company as thought leaders in your industry;

share industry-related information as well as any other supplemental information to help provide more background and context about the company’s business and market opportunity, e.g. videos that showcase corporate assets.

If people ask questions that are not IR-related; use this as a customer service opportunity and direct them to the appropriate channel.

If you are using social channels for IR already, use them consistently e.g. if you share one press release or event – share them all, over every social network you use.

If you choose to automatically update Twitter via a feed for press releases, include additional tweets about news, events, or excerpts from specific news items (people like to hear from humans more than feeds).

If you have a Facebook account be sure to stay on top of any questions asked over this channel. if you have YouTube and/or SlideShare accounts, you should take the opportunity to post an additional presentation or

video with a relevant member of the company talking about a recent event such as a quarterly call to provide more context to help in the understanding of what it means to the company.

Invest time in your profile pages on each social network: include a detailed company profile and link to your corporate website. You may also want to provide the name of the person responsible for administering the account and their contact information – this helps people know that there is an actual person /“official” spokesperson behind the account.

Listen and monitor the conversation to see what is being said about your company and where – not only on the channels you are using, but on other networks such as wikis and social forums such as StockTwits or Seeking Alpha.

Display the link(s) to your social networks on your corporate website in the Newsroom, IR or Contact Us sections. It may also help to list the social channels your company is using on other material such as press releases or corporate

presentations. If your company has more than one social network account (for example, some companies have more than one Twitter

account), mention which one is the “official” corporate account and list the other ones in your profile section. If you have a social network account dedicated to IR – proactively reach out to shareholders and ask them to submit

questions for upcoming quarterly calls or the annual meeting. This is a good way to find out if you are dealing with any current or potential shareholders.


Best Practices for Twitter Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Ensure the investor focused Twitter account is in sync with the corporate/investor website; content should be posted

simultaneously to the website and Twitter. Include a detailed profile of your company and link to your corporate website as well as your background image with

further information including the name of the person(s) tweeting on behalf of the company. If you have more than one Twitter account, clearly indicate what each account is used for – it is also helpful to indicate the

person responsible for each one. Ensure that you use the channel consistently – if you tweet one press release tweet them all. Similarly, if you have posted specific IR-related material in the past i.e. notice of a conference call or an analyst day,

ensure you do so each time. Also, it is always best practice to provide a link back to the associated material, especially if it is housed on your corporate

or IR website. Having a separate Twitter account for IR is a good best practice as it helps followers keep track of all IR-related

information by following one account. It also lets them know that they can ask IR-related questions on this specific account. And it helps your company monitor and stay on top of the questions they receive so they can use this information to

update company material, messaging and FAQ’s. If you have a Twitter account dedicated to IR, be very clear that it is an ‘official’ IR account for the company. You should also let people know how they can submit questions; recommend providing the investor relations email

address or another way they can get a hold of you or the main IR contact. If you live-tweet events, be sure to use specific #hashtags to help people who can’t take part in the live session and need

to do a search later. We also recommend limiting the number of #hashtags in each tweet, as it can confuse the context of the message Further, if you live-tweet your earnings, try and be consistent from one quarter to the next e.g. #eBayQ210. Twitter is limited to 140 characters, but at the very least a shortened disclaimer should be provided which links back to the

full disclaimer (which should be housed on your website).


Best Practices for Facebook Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Ensure the investor focused Facebook page is in sync with the corporate/investor website (or blog); content should be

posted simultaneously to the website and Facebook. Provide a detailed company description as well as any other information your company would want current or potential

shareholders to see. Include a link to your corporate/IR website and provide other relevant links i.e. an ‘information’ tab. Indicate this is the company’s official Facebook account, along with the contact name and their information so people

know it’s a company-administered account. Use the channel to consistently provide information released over Reg FD channels and link them back, wherever

possible to your corporate or IR website. Regularly monitor the channel to ensure that inquiries are being handled properly – particularly the discussion board. Spell out the ‘Terms of Use’ or ‘Discussions Policy’ – particularly for posted comments that are in poor taste, derogatory

etc. and that the company has the right to remove such posts. We have seen one company demonstrate complete transparency by implementing a ‘removed posts board’ where

offensive posts were removed and the reasons why were given. Provide your disclaimer (or a shortened version) linking back to the full disclaimer, which should be housed on your

website. Use Facebook to post supplemental information about the company such as videos that showcase corporate assets or

highlight community-related activities e.g. charitable events etc. If your company is getting a lot of IR-related or direct questions from shareholders, provide a synopsis of the information

and inform people through other corporate social channels i.e. Twitter. Have a variety of tabs – that encompass various aspects of the business such as news, videos, careers/HR, employees

etc. Providing a mosaic of information will help current and potential shareholders get the complete picture about the

company.


Best Practices for IR blogs Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Provide insight into news, industry developments and the company – don’t just regurgitate information in press releases

or other company materials. Use the blog to solicit questions from shareholders in advance of a company event such as a quarterly earnings call or

annual meeting. Post videos, which will help provide additional commentary around company events such as a quarterly earnings call or

annual meeting. Provide a “Discussions Policy” and the company’s disclaimer (or a link to where the disclaimer can be found on the

company’s website.) Although not seen very often, posting the bio and avatar of the main contributor(s) to the blog can help companies give

shareholders a more personal touch. It is also useful to provide contact information (even it is housed someplace else on the corporate or IR website) for the IR

person/department.


Best Practices for Youtube/Slideshare Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com If your company is not currently using YouTube or SlideShare for IR (but are planning to do so in the future), go in and

officially register your corporate account. While some third parties legitimately post real company information, having an ‘official’ account will help users find the

‘voice of authority’ on your company in these channels. If your company is using YouTube or SlideShare for IR, fill out your profile summary – this will also help people recognize

the company’s official YouTube or SlideShare account. Even if you don’t use YouTube or SlideShare, you should actively monitor these sites – as you may discover a protest

account. While we don’t advocate addressing every negative comment, knowing the account exists is important. Your social media policies should help you determine which negative comments need to be addressed and how best to

do so. If you are using YouTube or SlideShare, be sure to repurpose the video e.g. embed it on your IR website and if you use

other channels like Twitter, be sure to let your followers know you have posted a new video and provide a link. Similarly, if you have a Facebook account, we recommend having a separate ’YouTube/Video”’ or ‘SlideShare’ tab, which

helps increase awareness of your company. Posting presentations on YouTube and SlideShare makes it easy for interested parties, such as the financial media,

institutional and retail shareholders, to share company videos/presentations as the embed code is easily extracted and can be cut and pasted virtually anywhere.

SlideShare now offers companies the option of customizing their account, which provides more control over the design of their channel.

We have seen a few companies put links to the other social networks they are using on their SlideShare profile – this is a good practice, as it helps ensure that people know of other options where they can view company materials and engage with them.


Best Practices for LinkedIn Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Company profiles are automatically populated on LinkedIn - so you should regularly monitor your company’s information

to ensure it is correct. A new feature was recently launched by LinkedIn which allows anyone to follow a company and receive updates to any

company changes such as personnel which reinforces the point to monitor the site to ensure accuracy of the information. In spite of LinkedIn’s limited use for IR, if your company has a presence there, get familiar with the channel and the

information posted on your company – as more investors begin using the channel, you may receive questions about something they saw on LinkedIn.

LinkedIn is evolving quickly and with the high number of professionals using this channel, it is likely that company specific services will continue to emerge.

Our recommendation is to keep a close eye on the evolution of LinkedIn as it will only grow in importance to investor relations.

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Social Media in the World of Investor Relations