I recently shared a summary of ‘Best Practices for Reporting to the Board’ from a survey that Ipreo conducted with their IR clients to gather feedback on the type of information they provide to their Board of Directors.
The findings reveal new ideas and have created a great foundation for an IRO who wants some insight into what information other companies are including in their Board Reporting. At the time, I did realize that social media was not included in the list of topics. But I just assumed that the companies surveyed didn’t use social for IR.
Recently Gene Marbach, CommPro Editor at Large sent me a key finding of the ‘2013 BDO Board Survey,’ conducted by the Corporate Governance Practice of BDO USA and asked my opinion. It states:
Close to two-thirds (64%) of corporate directors are aware of the new SEC rule that allows companies to disclose material information through postings on social media, but none indicate that their companies have utilized this new channel to do so, and only 11% anticipate utilizing social media for material disclosures in the future.
The findings prompted me to write this post. As we do know that social media is being used by public companies. So it seems that more education is needed on this front.
What follows are some ideas that I compiled way back in 2009 (inspired by the article “Problem Solved: How Do You Convince the Boss That it’s Time to Go Social?” by Claire Coyne of MarketingProfs (which are based on ideas from David B. Thomas, Social Media Managers, SAS). The ideas were used to form a list of tips to help IROs make the business case to inform the c-suite of how companies are using social media for IR. As many IROs report to their board, these tips can also be used to help educate them on social media. As a lot of changed in online communications, I also updated the language to reflect what is happening in the IR market today.
TIP #1 – SHOW & TELL
Over the last few years, we have witnessed a number of changes in the way public companies communicate with their various stakeholders – customers, employees, communities, analysts and investors. Social media has become one of the key methods for companies to engage in discussion and share information with their audiences.
I am a hands-on person and typically like to be walked through something to gain a better understanding. So tip #1 entails putting together a demo (and to quote David) that ‘is a focused, practical introduction on how you use social media.’ Or how it is being used by others.
You can get their attention early by using some of the data from the findings from our ongoing research on how public companies are using social media for IR. There are also other ways to show the Board that conversations are taking place about your company over a broad spectrum of social networks such as doing a general search of your company’s stock symbol on search.twitter.com.
Social networks for investors and traders like StockTwits are also being used by public companies to help increase awareness and broaden access to their company information. So getting familiar with this platform (if you aren’t) will help them further understand how the world of investor communications is changing.
TIP #2 – WALK THE WALK
Now that you have their attention, you can begin doing an overview of specific social networks. For example (depending on how big your company is), other departments such as PR or Marketing may already be using a blog or Twitter for their own purposes. This is a good way to leverage its’ use for IR – by showing how it is being used internally already and how you can begin incorporating IR into the mix as well.
There are many reasons cited by some IROs for not using social media such as the lack of guidance from the SEC regarding the role of social media in disclosure. Even in spite of the SEC’s April 2013 decision to ‘grant credibility to postings on sites such as Facebook and Twitter.’ Another concern is the lack of time to take on yet another task (especially from smaller companies which may only have one or two people in the IR department). IROs still believe that institutional investors don’t use social media (which has been widely refuted). Lastly, I would also venture to say there could even be a general fear of new concepts and using new technology.
But taking it slowly and seeing how others are using it is a way to ease it into your existing communications strategy. So in addition to touting the internal uses as outlined previously, you should definitely be armed with how your peers are using social networks for IR.
In addition to our research on the use of social media for IR, there are additional studies such as The Fortune 500 and Blogging: Slow and steady and farther along than expected that will help to make them aware of the increased adoption of social networks by corporations.
TIP #3 – MAKE IT REAL
You can then get down to specifics and ‘show them the blogs you follow and what useful business information you glean from them. Show them how you use your RSS reader to cut through the noise and present what you most need in an easily digestible way,’ Dave says.
You may even feel compelled to bring up the research you brought with you. In particular you can choose some of the case studies from our research that portray how companies are using a plethora of social media to augment their communications to share investor-related information. I would specifically point out that a good best practice is to link to previously disclosed headlines and other content posted on their corporate or IR websites – which is beneficial as it drives traffic back thereby increasing the number of visitors and broadens your following.
Further to this, you can show them how you use tools like TweetDeck to mine valuable and timely information. A lot of useful links, market information, and competitive intelligence that’s targeted to your business reside on Twitter, so it is essential to bring this to their attention.
TIP #4 – REMIND THEM OF WHAT THEY’RE MISSING
Finally, if they’re still doubting the value of social networks, ‘show them how many people are sharing information on specific channels such as LinkedIn and Facebook that directly relates to your company,’ Dave advises.
We have shown that Facebook is being used by public companies and blogged about LinkedIn’s increasing importance as a channel to be used by IROs. So again, arm yourself with some real-life examples, which will help provide them with concrete evidence. I’d like to add Twitter to this list, as we found it is the most common social channel that companies use to share investor-related information.
Thomas concludes by saying that ‘Every day, your customers and potential customers are posting information about their wants and needs, their plans and concerns, and what’s keeping them up at night,’ which is ‘the kind of information you used to pay to get from market researchers and focus groups, and now it’s freely and publicly offered, if you just take the time to look for it.’
This can be expanded to all key stakeholders including shareholders, analysts and institutional investors as there is increasing evidence that shows they are using social networks to gain and share information about your company.
Since we began our research in 2009, the most common reasons given for not using social media (for IR) are disclosure concerns, institutional investors are not using the channels, and a lack of time. Bearing this in mind, if you take the time to sit down and show the board how it can be used and give concrete examples of how your peers are using it for IR, you may just find out that they really didn’t realize the benefits of integrating it as part of company’s broader communications strategy.
Related posts:
Social Media: Parsing the Hypos Webinar Wrap-up – Part 2
NIRI 2013 – Social Media Workshop Follow up: Q&A – part 1
Role of Social Media in Performance Reporting
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