Investor Relations and Social Media

ReachingShareholdersOnline:TrendsandBestPracticesinOnlineCommunicationandSocial

MediainCorporateInvestorRelations

PresentedbyDavidA.Hogan,APR

Instructor,AbileneChristianUniversity

The2009AnnualConferenceoftheInternationalAssociationofOnlineCommunicators,Washington,D.C.,

October1‐2,2009

AboutthePresenter

DaveHogan,APR,isexperiencedincorporatecommunicationsandinvestorrelations.HehasservedasaninvestorrelationsofficerforthreeU.S.publiccompanies.HogancurrentlysplitshistimebetweenteachingpublicrelationsintheDepartmentofJournalismandMassCommunicationatAbileneChristianUniversityinTexasandworkingasdirectorofinvestorrelationsandcorporatecommunicationsforFirstFinancialBankshares,Inc.(Nasdaq:FFIN).ActiveintheNationalInvestorRelationsInstituteformorethanadecade,HoganisamemberoftheDallas/FortWorthNIRIchapterandisaco‐founderandformerofficeroftheGreaterCharlotte(N.C.)NIRIchapter.Heisanaccredited(APR)memberofthePublicRelationsSocietyofAmerica,treasureroftheAbilenePublicRelationsOrganizationandactiveintheTexasPublicRelationsAssociation.

Formoreinformation,seeHogan’sprofileonLinkedInathttp://www.linkedin.com/in/dahogan76orfollowhimonTwitter@dahogan.

ReachingShareholdersOnline:TrendsandBestPracticesinOnlineCommunicationandSocial

MediainCorporateInvestorRelations

Arevolutionistakingplaceinhoworganizationscommunicatewiththeirtargetaudiences,bothinternalandexternal.ThetransitioninorganizationalcommunicationsthatbeganwiththeadventoftheWorldWideWebandthepopularityofbroadbandInternetservicetookagiantleapforwardearlierthisdecadewhenseveralnewonlineservicesappearedforthefirsttime,includingMyspace(2003),Facebook(2004),YouTube(2005)andTwitter(2006).Collectively,theseandsimilarnewservicescametobeknownas“socialmedia.”CommunicationsconsultantMerrieSpaethhasdescribedtheimpactofsocialmediaasbeingevenmoresignificantthantheadventofearliernewcommunicationstoolssuchasradioandtelevision(Spaeth,2009).

Thispaperfocusesonhowonlinecommunicationtools,andespeciallysocialmedia,arechangingthecommunicationpracticesofcorporateinvestorrelationsdepartmentsatpubliccompaniesofallsizes.Italsoexaminesthequestionofwhycorporateinvestorrelationsdepartmentshavebeenslowertoadoptsocialmediacommunicationstoolsthantheircounterpartsinothercorporatecommunicationsspecialtiesandinmarketing.

WhilenumerousacademicstudiesexistontheroleofcorporateWebsites,theissueofhowsocialmediaisimpactinginvestorrelationspracticeshasnotbeenexploredin‐depthinacademicresearch.Thisismostlikelyduetothenewnessofthisphenomenonandtherelativelyfewexamplesofearlyadaptorsavailableforstudyuntilrecentlyamongpubliccompanies.Appropriately,manyofthemostvaluablesourcesforinformationforthisstudycamefromsocialmediaitself,especiallyfrombloggerswhowriteinthisspaceandfromTwittermessages(includingvaluablelinkstoonlineresources).SocialmediasharingtoolsincludingDeliciousandSlidesharealsoplayedavaluableroleinassemblingthisresearch.

TheRoleofCommunicationsinInvestorRelations

TheNationalInvestorRelationsInstitute,thelargestprofessionalorganizationintheworldforinvestorrelationsofficers,definesinvestorrelationsas“astrategicmanagementresponsibilitythatintegratesfinance,communication,marketingandsecuritieslawcompliancetoenablethemosteffectivetwo‐waycommunicationbetweenacompany,thefinancialcommunity,andotherconstituencies,whichultimatelycontributestoacompany'ssecuritiesachievingfairvaluation”(NIRI2003).Itisimportanttonotetheemphasison“communications”and“marketing”inthisdefinition.Investorrelationsofficersareinherentlyandinextricablycommunicators,nomatterwhattheirpreviousacademicorcareerbackgroundsmayhavebeen.NearlyafourthofallNIRImembersengagedincorporateinvestorrelationsworkcamefromcareerbackgroundsincorporatecommunicationsorpublicrelations,secondonlyto“corporatefinance”asacareerbackground(NIRI,2008).

TheRoleofCommunicationsinInvestorRelations(continued)

Ofspecialinteresttothisstudy,theNIRIdefinitiondescribestheroleofinvestorrelationsas“toenablethemosteffectivetwo‐waycommunicationbetweenacompany,thefinancialcommunity,andotherconstituencies.”Onlinecommunication,andinparticularsocialmedia,isideallysuitedtohelpinginvestorrelationsofficersfulfillthismission.Socialmediaexcelsinofferingtwo‐waycommunicationchannelsandprovidesinvestorrelationsofficerswithapromisingnewplatformforfulldisclosure,transparencyanddialogue.

Basedonthisdefinition,onemightexpectinvestorrelationsdepartmentstohaveenthusiasticallyandwhole‐heartedlyembracedsocialmediatoolstohelpthembetterachievetheirobjectives,butsuchhasnotbeenthecase.

InvestorRelations:LettingOthersTaketheLead

Theevidenceisclearthatinvestorrelationsisslowinjoiningthesocialmediaparty.ArecentstudyoftheFortune100companiesintheUnitedStatesconductedbyMcKennaPartnersfoundthat“veryfewcompaniesaredelvingintosocialmediaforIR”(McKenna2009).Aninformalsurveyof270investorrelationsofficersandchieffinancialofficers,conductedearlierthismonthbyBulldogReporter’sIRAlert,foundthatonly12.5percentofrespondentsusesocialmediatodisseminatefinancialinformationtoshareholdersandthefinancialmarkets.Largecompanies,definedinthestudyasthosewith$500millionormoreofannualsales,faredevenworse.Onlythreepercentoflargecompaniesusesocialmediaaspartoftheirinvestorrelationscommunications(BulldogReporter,2009).

InvestorRelations:LettingOthersTaketheLead(continued)

Anacademicstudyearlierthisyearconfirmedthatotherinstitutionsareoutpacingcorporationsinadoptingsocialmedia.Nonprofit(charitable)organizationsandacademicinstitutionshavebothembracedblogsandothersocialmediatoolsatahigherratethanhavecorporations.Morethanhalf(57percent)ofalllargecharitiesuseblogs,comparedwith41percentforcollegesanduniversitiesandonly16percentforFortune500corporations(BarnesandMattson,2009).Further,only28percentofthecorporateblogslinkedtoTwitteraccounts,21percentlinkedtocorporatevideosandonly10percentlinkedtopodcasts(BarnesandMattson,2009).


Thisreluctanceonthepartofinvestorrelationsdepartmentstopursuesocialmediaisallthemoresurprisinggiventhattheprimarytargetaudiencesforinvestorrelations‐‐institutionalinvestorsandanalysts‐‐areusingsocialmediatoolsforbothbusinessandpersonalreasons.Intuitively,institutionalinvestorsandanalystswouldseemtobeideallysuitedforsocialmedia.Theyarehighlyeducated,affluentandverymobile.BlackberryoriPhoneuseisalmostuniversalamongthiscrowd.Studiesconfirmtheinterestofprofessionalinvestorsinsocialmedia.TheBrunswickGroup,forexample,surveyed455analystsandinstitutionalinvestorsinJuly2009andlearnedthatnearlyhalf(42percent)readblogsandthatacomparablepercentageoftherespondentssaidtheyhavefolloweduponcorporateinformationfoundonablog.Twentypercentoftherespondentssaidinformationonabloghadcontributedtoaninvestmentdecisionorrecommendation.Mostrespondents(58percent)believesocialmediawillbecomeincreasinglyimportantinhelpingthemmakeinvestmentdecisions(Joyce,2009).


ProfessionalinvestorsalreadyareregularusersofcorporateWebsites.TheSECacknowledgedthisfactinits2008updateandevensaidthat“inverylimitedcircumstances”acompany’sWebsitecouldserveas“astandalonemethodofprovidinginformationtoinvestors…“(SEC,2008).AstudybytheRivelResearchGroupfoundthat75percentofinstitutionalinvestorslookforinformationoncorporateWebsites“weeklyifnotdaily”(Rivel,2007).DarrellHeaps,president,CEOandfounderofToronto‐basedQ4WebSystems,madethecaseinarecentblogpostthatcompaniesneedtorecognizethatthequalityoftheirinvestorrelationsWebsitesandsocialmediamayimpactreputationandstockvaluation.

"SomethinkthatWebsitesareonlyforretailinvestors,andifyou’relargelyheldbyinstitutionsthentheWebsitedoesn’tmatter,”Heapssaid.“Intoday’smarket,thissimplyisn’tthecase.YourWebsiteandhowyouusethesocialWebhaveadirectimpactonyourcompany’sreputationandinmanycasesthevalueofyourstock"(Heaps,2009).


Evidenceisgrowingthatinstitutionalinvestorsandanalysts,alreadyaccustomedtosearchingcorporateWebsitesforinformation,arenowturningtosocialmedia.Ahostofnewonlineandsocialmediaservicesareprovingappealingtotheseinvestors.TheyincludeSeekingAlpha,whichaggregatesarticlesfromfinancialblogsandnewslettersandclaimsfourmillionuniqueuserspermonth;StockTwits,whichallowsinvestorstosearchTwittermessagesusingstocktickersymbols;andWikinvest,acontributor‐driveninvestmentresearchsite.

NotYetConvinced

Whilethemomentumisgrowingforgreateradoptionofsocialmediaininvestorrelations,noteveryoneintheprofessionisconvincedofitsvalue.BethKurth,presidentofKurth&Companyandaformerinvestorrelationsandpublicrelationsdirectorforapubliccompany,recentlysaidinanonlinearticlethatTwitterdoesnothaveaplaceininvestorrelations.ShecriticizedTwitteras“timeconsuming”andadistributionchannelthatfailsto“meetthedemandsoffulldisclosure.”

“Twitterdoesn’treallymattertoIROsbecauseit’ssocialmedia,”Kurthsaid.“Andbydefinition,socialmediaisnotbusinessmedia.Rather,itisamediathatisdesignedtobeusedbyfriends,pals,buddiesandsocialacquaintances…itisnotamethodtodisclosematerialinformationinafullandpublicmanner”(Kurth,2009).

NotYetConvinced(continued)

JohnPalizza,apopularinvestorrelationsblogger,alsoquestionedthevalueofsocialmediainarecentblogpost.

“IconfessthatTwitterandFacebookhavemestymied,”Palizzasaid.“Ijustdon’tgetit.TwitterbecauseI’mincapableofsayinganythingin140charactersorlessandFacebookbecausewhywouldyouwanttoputallthatinformationoutthereinthepublicdomain?”(Palizza,2009).

BothKurthandPalizzareceivedabarrageofcommentsfollowingtheirarticles,indicatingtheintensityofinterestonbothsidesofthistopicamonginvestorrelationspractitioners.

LegalandRegulatoryConcerns

Whilesomeinvestorrelationsofficerssaytheyareholdingoffonimplementingsocialmediaprogramsbecausetheysimplydonotyetseethevalueofsocialmedia,theprimaryreasoncitedforinvestorrelations’slowadoptionofsocialmediaisconcernaboutlegalandregulatoryissues.InvestorrelationsofficersintheUnitedStatesworkinamazeofregulations,primarilyfromtheU.S.SecuritiesandExchangeCommissionbutalsofromstateregulatorsandthestockexchanges–includingtheNewYorkStockExchangeandNasdaq.Theseregulationsaredesignedtoprotectshareholdersandtocreateamorelevelplayingfieldintermsofdisclosureofinformationbetweenprofessionalandretailshareholders.Amistake,suchasdisclosingnon‐public,materialinformationinamannernotdeemedappropriatebytheSEC,canexplodeintoamajorpublicrelationsscandalforacompanyandleadtoshareholderlawsuits,finesandevencriminalcharges.

LegalandRegulatoryConcerns(continued)

“IRistrappedinaboxofregulationsandlegalliability,”Palizzasaidinablogpost.“Movingoutsidetheboxrequiresmoretime,effortandpoliticalcapitalthanit’sworth”(Palizza,2008).Bynature,blogsaresupposedtobe“quick,spontaneousandresonatewiththevoiceofthewriter,“Palizzasaid,allofwhichisdifficulttodoinatraditionalinvestorrelationsenvironmentthatemphasizesextensiveinternalreviewandtightcontrolovereverydocumentthatisreleased.BrianSolis,principalofFutureWorks,apublicrelationsandnewmediaagencyandanadvocateforusingsocialmediaininvestorrelations,alsopointedouttheinherentpitfalls.“Onewrong,irresponsibleorcasualpost,comment,tweet(or)statusupdatecanproduceadominoeffectofconsequencesthathaveyettoestablishprecedence,”Soliswroteinarecentblogpost.“Whileatweet,forexample,mayseemharmless,theactivityandresponsesparkedbyanupdatecouldresultinrepercussionsthattriggerSECandshareholderretaliation”(Solis,2009).


TheSEChasbothencouragedpubliccompaniesintheiruseofsocialmediaandcontinuedtoissuewarningsaboutthepossiblerisks.InAugust2008,theSECissuedanupdatetitled“CommissionGuidanceontheUseofCompanyWebsites.”Thereportpraisedtheroleofonlinecommunicationsin“modernizingthedisclosuresystem”and“promotingtransparency,liquidityandefficiencyinourtradingmarkets.”ItpraisedtheInternetforallowingcompaniestomakeinformationavailabletoinvestors“quicklyandinacost‐effectivemanner”(SEC,2008).TheSECreportpointedoutthatthecommissionwasanearlypromoterofdisseminatingcorporateandfinancialresultselectronicallywhenitimplementeditsElectronicDataGathering,AnalysisandRetrieval(“EDGAR”)system,firstintroducedintheearly1980s.Today,allpubliccompaniesintheU.S.mustfiletheirproxystatement,10‐K,10‐Q,8‐KandotherSECformselectronicallyonEDGARwheretheyareavailableforpublicviewing(SEC,2008).

LegalandRegulatoryConcerns(continued)Atthesametime,the2008SECreportcontinuedtosoundwarningsthataresufficienttochilltheenthusiasmforsocialmediainmanycorporatesuites.Itcautionedthattheantifraudprovisionsoffederalsecuritieslawsapplytoblogsandtoelectronicshareholderforumsinthesamewaytheydototraditionalformsofcorporatecommunication.“Whileblogsorforumscanbeinformalandconversationalinnature,statementsmadetherebythecompany(orbyapersonactingonbehalfofthecompany)willnotbetreateddifferentlyfromothercompanystatementswhenitcomestotheantifraudprovisionsofthefederalsecuritieslaws”(SEC,2008).WhiletheSECmaynothavegiventhedefinitivegreenlighttosocialmediathatsomeinvestorrelationsofficersandsecuritiesattorneyswouldhavepreferred,othersbelievetheSECisshowingtolerance,understandingthatcorporationsareinatimeoftransition,tryingtofigureoutthebestwaystousethenewerformsofonlinecommunicationforthebenefitofbothcorporationsandtheirshareholders.


“TheSECisnotlookingatsocialmediaasanewwaytogetcompanies,”saidSerenaEhrlich,asocialprogramsofficerwiththeStartUpArmy,inarecentwebinarsponsoredbyQ4WebSystems.“TheyjustwanttomakesurethatReg.FD(theSEC’sRegulationFairDisclosure)isbeingfollowed.”Ehrlichisalong‐timeNIRIboardmemberwhoisactiveonTwitterandothersocialmediaplatforms.ShenotedthattheSEChasnotfiledasinglecomplaintagainstanycompanystemmingfromitssocialmediaprograms,despiteawiderangeofexperimentationthatisgoingonamongthefirstwaveofcompaniesthatareusingsocialmediaforinvestorrelationspurposes(Ehrlich,2009).

Thereisbroadconsensuswithintheinvestorrelationsfieldthatsocialmediaisasupplementtoexistingdisclosuresandwon’treplacenewsreleases,SECfilingsorconferencecallsinthenearfuture,ifever.


“Youshoulddosocialmediaontopofwhatyouarealreadydoing,notasareplacement,”saidCarolStubblefield,asecuritiesandcorporatelawspecialistwiththelawfirmofBakerandMcKenzie,inarecentwebinarhostedbyBusinessWire.“Socialmediaisnotyetwidelyenoughdisseminatedtobeaprimaryorsoledistribution”(Stubblefield,2009).

Stubblefieldalsoemphasizedtheimportanceofestablishingsocialmediadisclosurepoliciesandinformingemployeesaboutthecompany’spolicytowardtheiruseofTwitter,blogsandotherchannelsfordiscussingcompanybusiness.

SocialMediaPioneers

Despitetheambiguityofthelegaland regulatoryissues,asmall‐but‐growing numberofcompaniesareventuringintothewaterandlearningtointegratesocialmediatoolssuccessfullywithmoretraditionalinvestorrelationsapproaches.Withinthisgroup,Twitterhasemergedastheearlyfavoriteamongsocialmediatoolsforinvestorrelations,thankstoitssimplicityandtheabilitytolinkTwittermessagesbacktonewsreleases,conferencecallannouncementsandotherdisclosureinformationonthecompany’sWebsite.

SocialMediaPioneers(continued)

ArecentstudybyQ4WebSystemsidentified80publiccompanieswithTwitteraccounts.Morethanhalf(55percent)ofthesecompaniesareusingTwitterforinvestorrelationspurposes.AccordingtotheQ4study,thesecompaniesuseTwitterasfollows:•  68percentprovidedalinktotheirearningsreleaseonly.•  7percentprovidedalinktotheirconferencecallnoticeonly.•  11percentprovidedalinktotheirearningsreleaseandnoticeoftheir

conferencecall.•  11percentprovidedalinktotheirearningsreleaseandquarterly

investorwebcastonly.•  7percentprovidedalinktotheirconferencecallnotice,earningsrelease

andwebcast(Q4WebSystems,2009).

SocialMediaPioneers(continued)AhandfulofpubliccompaniesinNorthAmericagomuchfurtherwiththeiruseofTwitterforinvestorrelationspurposes.TheyincludeU.S.‐basedeBayandCanada’sCGIGroup.Bothcompaniessendaseriesof“live”tweetsduringtheirquarterlyconferencecallswithinvestors,followingreleaseoftheirearnings.Ineffect,theyhavebecomeinternalreporters,“covering”theconferencecallsandreportingtheresultstotheworldviaTwitter,140charactersatatime.

“It(Twitter)isanewwaytoreachmorepeopleandexpandouraudience,”saidColinBrown,communicationsandinvestorrelationsspecialistwithCGIGroup(Brown,2009).


EventhoughCGIisaCanadiancompany,italsotradesontheNewYorkStockExchange,meaningitmustcomplywithU.S.SECregulations.Inaninterviewforthisresearchpaper,BrownsaidthecompanyisnotworriedaboutitsuseofTwitterbecauseitonlytweetsinformationthatisalreadyinthepublicdomain(Brown,2009).BrownsaidthecompanywouldneversendanewsreleasefirstonTwitterbeforeithasbeendistributedusingmoreconventionalmeans.Eventhetweetsduringtheconferencecalls,whichmayappearspontaneous,aretypedoutaheadoftimebasedonthewordingfromtheconferencecallscript,soBrownknowsheisonlypostingwordsonTwitterthathiscompanyexecutivesaresayingontheconferencecall.

SocialMediaPioneers:CGIGrouponTwitter


AteBay,RichardBrewer‐Hay,seniormanagerofcorporatecommunications,doesnotworkfortheinvestorrelationsdepartmentbutheregularlysendsinvestor‐focusedcontentonTwitterandonthecorporateblog,titledeBayInk.Perhapsmorethananyoneelse,Brewer‐HayhassuccessfullywalkedthetightropeofcomplyingwithSECandcompanyregulationswhilestillmaintainingadegreeofirreverence,personalityandindependenceasthesocialmediavoiceofeBay.WhenhefirstcametoeBaytwoyearsago,Brewer‐Haysaidhewasconcernedaboutthereactionhemightgetfromtheinvestorrelationsandlegaldepartments.“IwasconcernedI’dbeshotdown,”hesaidduringarecentwebinar.Tothecontrary,Brewer‐Haysaidbothdepartmentshavebeencooperative.Together,theyhavedevelopedasetofrulestoguidethecompany’sunprecedentedexposureonTwitterandthecompany’sblog.


PriortocoveringaninvestorrelationsconferencecallorsimilareventonTwitter,forexample,Brewer‐Hayfirstsendsaseriesoffourdisclaimertweets,whichheworkedoutcollaborativelywitheBay’slegalandinvestorrelationsteams.Thedisclaimertweetsareasfollows:

Tweetone:“Importantinformationaboutthenatureofthissession.Forward‐lookingstatementsandnon‐GAAPfinancialmeasures.Clickhere.”

Tweettwo:“Thissessionwillcontainnon‐GAAPfinancialmeasures.”

Tweetthree:“ThepresentationofthisfinancialinformationisnotintendedtobeconsideredinisolationorasasubstituteforGAAPfinancialmeasures.”

Tweetfour:“AreconciliationofthesemeasurestothenearestcomparableGAAPmeasurescanbefoundbyclickingonthefollowinglink.”


Brewer‐HaydefendstheuseofTwittertocovereBay’sinvestorconferencecallsandotherpresentations.

“Itexpandstheaudienceandaddstothetransparency,”saidBrewer‐Hayinawebinar.“NoteveryoneonTwitterisgoingtolistentoaconferencecall”(Brewer‐Hay,2009).

SocialMediaPioneers:eBay’sblog


eBay’snewcorporateWebsite,introducedinOctober2009,incorporatesthelookofablogandoffersmanysocialmediafeatures.


ThevarietyofusesforTwitterseemalmostendless.Afewpubliccompanies,includingJohnson&JohnsonandEMCCorp.,haveusedTwittertoreportaboutproceedingsattheirannualshareholders’meetings,whileeBayhasusedTwittertosendreportsabout“analystdays,”whichareinvitation‐onlyeventshostedbycompanies,usuallyattheirheadquarters,forsecuritiesanalystsandinstitutionalinvestors.

Inalloftheseinstances,theneteffectofTwitteristoexpandthereachoftraditionalinvestorrelationsactivitiesthatwouldtypicallyattractonlyarelativelysmallaudience,therebyenhancingcorporatetransparency.


Dell’sIRBlog

Oneofthemost‐watchedsocialmediadevelopmentsininvestorrelationshasbeentheDellSharesblog,launchedinNovember2007bycomputermakerDell,Inc.,andbelievedtobethefirstcorporateblogdedicatedtoinvestorrelations.Nearlytwoyearslater,DellSharesstillstandsvirtuallyalone.Whileseveralcompaniesplaceinvestorrelationsinformationonmoregeneral‐purposecorporateblogs,nooneelsehasmovedasboldlyasDelltocreateablogfocusedexclusivelyonthecompany’sinvestorrelationsdisclosures.

“Ourjobistocommunicateinformationsoinvestorscanmakeinformeddecisions,”saidRobertWilliams,directorofinvestorrelationsatDell,inaninterviewforthispaper.“Anywayyoucanfindtogetinformationout‘onetomany’moreefficientlyisagoodthing”(Williams,2009).


Williamsdescribedblogsasa“veryefficient”channelforcommunicating

withinvestors.Contrarytotheconcernssomeexpressaboutblogs,hesaidDellhasfoundthattheirblogactuallysavesstafftimebyreducingthe

amountoftimespentonthephoneexplainingfinancialresultsandother

corporatedevelopments.

“Whenwesawhoweffectiveourcolleagues(atDell)werein

communicatingwithourcustomersandotherconstituents,wefeltitwasanaturalextension(touseablogtocommunicatewithinvestors),”Williams

said.“It’sagreatwaytodemocratizeinformation”(Williams,2009).

SocialMediaPioneers:BlogsandVideo(continued)

OneofDell’smoreinnovativeusesofitsDellSharesblogistopostvideo

interviews(“Vlogs”)withkeycompanyexecutives.Eachquarter,Dell

recordsavideoconversationwithitschieffinancialofficertoannounceand

explainrecentlydisclosedearningsresults.OtherrecentvideosonDell

SharesincludeinterviewswiththeDellexecutivesinchargeofsustainabilityandsmall‐businessventures.Farbeyondmerelypostingnewsreleases,Dell

usesitsblogtoprovidecontextthathelpsinvestorsandotherstakeholders

betterunderstandthecompany,itsstrategicdirectionanditsfinancial

performance.

SocialMediaPioneers:Dell’sIRvlogs(videos)onDellShares


Contrarytocriticswhosayanalystsandinstitutionalinvestorsdonotwantorusesocialmediatoolsaspartoftheirwork,WilliamssaidDell’sexperienceisthatinstitutionalinvestorsaretheprimaryaudienceforDellShares(Williams,2009).

Williamssaidhe’s“surprised”thatmorelarge‐capitalizationcompanieshavenotfollowedDell’sleadandestablishedinvestorrelationsblogs.Inarecentinterview,Williamscitedthreepossiblereasons:

• Thesmallsizeofmostinvestorrelationsdepartments.UnlikeDell,whichhassevenmembersonitsinvestorrelationsteam,theaveragecompanyhasonlyoneortwoemployeesdedicatedtoinvestorrelations.• Alackofunderstandingaboutblogs.Williamssaidmanycorporateexecutivesworrythatblogswillbedifficulttomanageandthattheywon’tbeabletoanswerusers’questions.• Thefearofdisclosuremistakesandshareholderlawsuits(Williams,2009).


Williamsconcededitwouldbedifficultforasmall(oneortwoperson)investorrelationsdepartmenttomanageablogalongwithalltheotherexpectedtasks,butforlargercompanies,helistedinarecentwebinar(Williams,2009)fivethingstoconsiderbeforestartinganinvestorrelationsblog:• Theblogshouldnotbeusedasasubstitutefornewsreleases,SECfilingsandthetraditionalmeansforcommunicatingmaterialinformation.• Itmustbecrediblebycommunicatingfactualandaccurateinformationandavoidexpressingopinionsoninvestorissues.• Itshouldbestrictlyforinvestorcommunicationsandshouldnotbeusedformarketingthecompany’sproductsandservices.• AnIRblogcanbeaneffectivetooltocountermisperceptionsaboutthecompanywithoutrespondingtospecificmarketrumors.• It’simportanttoviewtheblognotonlyasameansfordistributinginformation,butasawayoflisteningtowhatyourinvestorsaresaying(Dell,2009).

SocialMediaIntegration

Pioneeringpubliccompanieswithsocialmediaarefindingtheycan

leveragetheirtimeandinvestmentbycoordinatingtheireffortsusing

multiplesocialmediatoolstogether.DellandeBay,forinstance,both

useTwittertoannouncenewpostingsontheirblogs.DellpostsitsVlogs,createdinitiallyfortheDellSharesblog,onYouTube.Thiscan

significantlyexpandtheaudienceanddrivemoretrafficbacktothe

companies’Websitesandblogs.

Dell’suseofTwitterforInvestorRelations

(continued)

Pioneeringpubliccompanieswithsocialmediaarefindingtheycanleveragetheirtimeandinvestmentbycoordinatingtheireffortsusingmultiplesocialmediatoolstogether.DellandeBay,forinstance,bothuseTwittertoannouncenewpostingsontheirblogs.DellpostsitsVlogs,createdinitiallyfortheDellSharesblog,onYouTube.Thiscansignificantlyexpandtheaudienceanddrivemoretrafficbacktothecompanies’Websitesandblogs.

SocialMediaIntegration:CiscoSystems

AnotherinnovativeleaderinusingsocialmediaforinvestorrelationspurposesisCiscoSystemsInc.LikeDell,Ciscoproducesvideointerviewseachquarterfeaturingcorporateexecutivestalkingabouttherecentlyannouncedearningsresults.AlsolikeDell,CiscopostsitsinvestorrelationsVlogsonYouTubetoexpanditsaudienceandtweetsonTwitterwhennewvideosareavailable.UnlikeDell,however,theinvestorrelationsdepartmentdoesnotmanageCisco’scorporateblog,titledThePlatform,andthecontentcomesfromavarietyofcorporatesources,notjustinvestorrelations(Cisco,2009).

Facebook,LinkedIn,FlickrandYouTube

Initially,farmorecompaniesareusingTwitterforinvestorrelationspurposesthanareusingotherpopularsocialmediasitessuchasFacebook,LinkedInandYouTube.Facebook’sblog‐likequalitiesandsocialnetworkingpowermakeitapopularchoiceformanycompanies,butsofarmostofthesecompanies’Facebookpagesappeartobemanagedbycorporatecommunications,publicrelationsormarketingdepartments,notbyinvestorrelations.However,thatisnottosayFacebookandYouTube,especially,donothavetheirrolestoplayindisseminatingcorporateinvestorrelationsnews.Cisco’sFacebookpage,forexample,carriesmuchofthesamecontentasitscorporateblog,includingthequarterlyearningsvideosandotherinvestorrelationsannouncements.ManycompaniesincludelinksfromtheircorporateWebsitesorblogstoaccompanyinginformationonTwitter,Facebook,LinkedIn,FlickrandYouTube.ThemajorloserinthisraceappearstobeMySpace,oneofthelargestU.S.‐basedsocialnetworkingsites.Duringthisresearch,nopubliccompanieswereidentifiedthatuseMySpaceforinvestorrelationspurposes.

IRUsesforDocument‐SharingSites

PopularsitessuchasTwitterandFacebookmaystealmostofthelimelightinthediscussionaboutcorporateusesofsocialmedia,butanothercategoryoftoolsisprovingtobeofsignificantvalue.Thesearedocument‐sharing,or“content”sitesthatallowinvestorrelationsofficerstoexpandthedistributionandimprovethedisplayofexistingtypesofcorporatedocuments,suchasnewsreleases,PowerPointpresentationsandSECfilings.

IRUsesforDocument‐SharingSites:Slideshare

Oneofthemorepopulardocument‐sharingsitesisSlideshare,whichallowscompanies(andindividuals)topostPowerPointpresentations,PDFsandotherdocumentformatsonapublicsitewheretheycanbeviewed.Slideshareisgrowingrapidly,with17millionmonthlyvisitorsand50millionmonthlypageviews.Heaps,ofQ4WebSystems,describedSlideshareinarecentwebinaras“theYouTubeofpresentations”(Heaps,2009).HiscompanyhasbeenoneofthefirsttoincorporateSlideshareintocorporateinvestorrelationsWebsites,includingBarrickGoldCorp.

IRUsesforDocument‐SharingSites:Slideshare

Heaps’analogytoYouTubeisonthemark.LikeYouTube,whatmakesSlidesharepowerfulisthatinformationcanbeeasilyshared.TouseYouTubeterminology,Slidesharemakesitpossibleforacompany’sPowerPointpresentationto“goviral”andbespreadfrominvestortoinvestor,eitherviae‐mail,embeddingonablogorWebsite,orthroughahostofothersharingtools.Whileitisnotlikelythatanycompany’snextquarterlyearningspresentationisgoingtogetmillionsofhitslikesomeofthemorepopularvideosonYouTube,HeapssaiditispossibleforacompanytodoubleitsnormalpresentationviewershipusingSlideshare.

IRUsesforDocument‐SharingSites:DocStoc

DocstocissimilartoSlideshare,althoughitsemphasisisnotonPowerPointpresentations.CompaniesareusingDocstoctoplaceavarietyofcontentonline,includingnewsreleases,whichcanthenbesharedbyreadersorembeddedontheirWebsitesandblogs.

IRandSocialMedia:LookingAheadSocialmediahasthepowertohelpinvestorrelationsofficersfulfilloneofthekeyobjectivesoftheirtrade,“toenablethemosteffectivetwo‐waycommunicationbetweenacompany,thefinancialcommunityandotherconstituencies”(NIRI,2009).Socialmediacanprovideanaddeddimensionanddepthtotheconversation,asperhapsseenbestwitheBayandDell,whileallowinginvestorrelationsofficerstheopportunitytobothtalkandlistentotheirshareholders,analystsandotherconstituents.Asidefromthepotentialneedforadditionalstaffinginsmallerinvestorrelationsdepartments,thecostofusingmostsocialmediatoolsisnominal.

Thevoicesspeakinginfavorofusingsocialmediaaspartoftheinvestorrelationscommunicationsmixaregrowing.

“Thebenefitsofcommunicatingtoinvestorswithcorporatesocialmediaandinteractivedataarehighlyattractive,”saidSteveCarr,managingdirector,DresnerCorporateServices,inarecentarticle.“Corporatesocialmediaandinteractivedata(are)definitelyontheway,andtosomeextent(are)alreadyhere.Thetimetoprepareisnow”(Carr,2009).

IRandSocialMedia:LookingAhead

JeffMorgan,presidentandCEOofNIRI,recentlyurgedallinvestorrelationstogetfamiliarwithsocialmediaskills,whethertheycurrentlyplantousethemintheirworkornot.

“Weneedtounderstandthesecommunicationsvehicles,”Morgansaid.“It’sincumbentforanyIRpersontotryblogging,Twitterandusingsocialmediumstobringthediscussionbacktothecompany.Becomeanexpertinit”(Morgan,2009).


Heaps,throughhisworkatQ4WebSystems,hiscompanyblogandfrequentspeakingeventsatNIRImeetings,hasemergedasachampionforusingsocialmediaforinvestorrelations.

“Disseminatinginformationthroughtraditionalchannelsandmakingfinancialstatementsavailableinoneformatarenolongerenough,”Heapssaidinarecentblogpost.“Theworldisadoptingsocialmediainrecordnumbers…Addingsocialchannelstodistributeinformation…willincreaseyouraudiencereach,empowerpeopletoengagewithyourcompanyandgivethemabetterunderstandingofyourinvestmentproposition.”(Heaps,2009).


Ifmanyoftheargumentsnowbeingusedbycriticsagainstsocialmediasoundfamiliar,thenthatisbecausetheyaresomeofthesameargumentsusedinthe1990swhencorporateWebsitesfirstbegantobeusedforinvestorrelationspurposes.Atthattime,somecriticssaidinvestorsandanalystswerenotinterestedinaccessingcorporateinformationonline.Wenowknowthatisnotthecase.OthersraisedconcernsabouttheimpactofaddingtheresponsibilityforinvestorrelationsWebsitesontotheworkloadsoflimitedstaffs.StillotherspreferredtomaintainthestatusquoanddidnotfullyappreciatethepotentialforinvestorrelationsWebsitesasacommunicationstool.Today,justadecadelater,itishardtoimaginehowanycorporateinvestorrelationsdepartmentfunctionedwithoutarobustWebsite.

IRandSocialMedia:LookingAhead(continued)

Socialmediaisheretostay.Itmarksarevolutionarychangeinhoworganizations,bothprivateandpublic,communicateinternallyandexternally.Nocompanytodaycantotallyignoresocialmedia.Attheveryleast,itisnecessaryforallcompaniestomonitorcommentsaboutthemandtheirindustryonline,includinginsocialmedia.Onlybydoingsocantheybeawareofmisinformationorrumorsthatmaybespreadingonlineandthatcouldimpacttheirstockperformance.

IRandSocialMedia:LookingAhead(continued)

Agrowingnumberofinvestorrelationsofficersalreadyunderstandthepotentialofsocialmedia,anditmaybeonlyamatteroftimebeforesocialmediatoolsbecomeasmainstreamasWebsitesandconferencecallsinmoderncorporateinvestorrelationswork.

TheSECcouldencouragethisdevelopmentbyprovidingmoredefinitiveinstructionstoguidecompaniesastheycharttheirwaythroughthesenewwaters.Thoseinstructionswouldhelpeliminatethemostworrisomeobjectiontotheuseofsocialmediaatthistime,thefearofregulatoryandlegalrisk.HopefullytheSECwillpartnerwithNIRI,thestockexchangesandotherinterestedpartiestodeveloppracticalguidelinesfortheuseofsocialmediaincorporateinvestorrelationspractice.

#####

References

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•  Brewer‐Hay,R.(2009,September17).Monitoringsocialmediaforinvestorrelations,webinarsponsoredbyQ4WebSystems.Retrievedfromhttp://www.q4blog.com/2009/09/18/webinar‐replay‐–‐monitoring‐social‐media‐for‐investor‐relations/

•  Brown,C.(2009,August20).Telephoneinterview.•  BulldogReporter’sIRAlert(2009,September17).Surveyrevealsinvestor

relationsprofessionalsslowlyembracesocialmedia,especiallysmallercompanies–andwhichIRblogstheyread.Retrievedfromhttp://www.iralert.com/ME2/Sites/dirmod.asp?sid=9545E49F1F9042C48E6DBCF5610426C5&nm=IR+Technology+Update&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&SiteID=9545E49F1F9042C48E6DBCF5610426C5&tier=4&id=C81A7BA8FEB749EBA5BB3700C6010620

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