Article 2:
A Compelling Case for Social Media Usage for Investor Relations
By Trevor Heisler, The Equicom Group Inc.
Today's investors want to be more informed than ever when making their buy, sell and hold decisions. Not surprisingly, more and more professional and retail investors are turning to the web for their information, which, thanks to the continued evolution of the internet, is more readily available than ever before. In fact, with the advent of social media in the past few years, the internet has expanded beyond simply being a resource where investors can find information to one where they can create and share content as well as interact with others online, and in a way far more effective than traditional websites and email.
In addition to seeking equity analyst recommendations online, investors are doing their own research, reviewing public issuers' corporate websites, financial media and finance websites such as TMXmoney.com. They are also using social media tools to listen to what other investors (as well as customers, suppliers and other business partners) are saying about an issuer.
Many public companies, however, have yet to embrace using social media for investor relations. Why? Well, the more common reasons appear to be fear and disbelief. Some are fearful that messaging would get out of control, others cite regulatory concerns, and many others do not see the relevancy of social media for investor relations, dispelling social media as either a fad or something that is predominantly used by teenagers and university students.
C-level executives need to realize that the discussion about their company is likely happening online with or without them. At the very least, by using social media public companies are more likely to discover how investors and other business stakeholders truly perceive them. A public issuer's best chance to have some degree of control over the messaging, and the perception of their company, is to join the discussion.
With all of the benefits and promises of social media, we also need to recognize the potential consequences, specifically with regards to regulatory issues. However, social media is no different than a corporate website and all other electronic disclosure media, in that they should all be considered an extension of a company's normal disclosure practices and therefore subject to the same policies and regulations.
Communicating with social media is not a substitute for regular continuous disclosure through an approved newswire, but rather an adjunct to proper disclosure practices. In this regard, social media can be effective at providing valuable supplementary information to all investors, and to a potentially much broader audience, on a regular and timely basis, keeping them well informed and helping them make quality investment decisions.
As far as the relevancy of social media goes, social media is not just being used by the younger demographics, but substantially across most age groups (a recent study by Forrester Research found that 80% of adults of all ages now use social media and the fastest growing demographic in social networking is adults 35 and older.
Still not convinced that the audience for your investor relations messaging is increasingly using social media? On professional networking site, LinkedIn, the ranks of more than 47 million members (most of which are university educated) include investment advisors, traders and equity analysts, as well as executives from all Fortune 500 companies. Furthermore, a recent survey of U.S.-based investors and analysts by the Brunswick Group revealed that: social media prompted 47% of respondents to research an investment further; 20% of respondents indicated that social media use led to an investment decision; and, 63% of respondents expect social media to play an increasingly important role in investment decisions in the future.
Finally, while many public companies have not yet embraced the idea of incorporating social media into their investor relations programs, the move has begun and is expected to continue, and there may well be inherent advantages for early adopters - in addition to being able to help set the bar with respect to best practices, the audience is massive, growing and still largely untapped by public companies. However, a well thought out strategy is important as it is in all of a public company's investor communications channels and the overall objectives remain the same: clearly communicating your investment proposition and how you intend to maximize shareholder value. That being said, with approximately 60% of chief financial officers and investor relations officers currently using social media for personal use and networking, and 12.5% already using it to communicate with investors (according to a recent survey by Bulldog Reporter's IR Alert), it is never too early to begin getting your feet wet with social media.
If planned and implemented correctly, social media communications as part of your overall investor relations program can be an effective and inexpensive way for attracting new audiences to your investment story. Social media tools offer public companies the opportunity to build deeper relationships with investors and other investment community stakeholders by facilitating interaction and feedback.
If you are interested in learning more about social media and how it can be integrated into your organizations' investor relations program, please contact Cameron Davies at the Equicom Group at (416) 815-0700 extension 260, or by email at cdavies@equicomgroup.com.
* Google Finance/Yahoo Finance/MarketWatch/LinkedIn are property of their respective owners.
