The Cross Border Group, publisher of IR Magazine for corporate investor relations professionals, has posted an article looking at the issues and challenges that social media brings for corporate investor relations.
“The risk posed by social media for your company … exists whether you participate or not,’ observed Darrell Heaps, CEO of Q4 Web Systems, an IR website and communications firm out of Toronto. ‘If you’ve ignored social media and said there are too many risks, we‘re not going to get involved, then you are putting your company at higher risk … than if you know how to use the tools. The market doesn’t care whether or not you’re there. They’re going to use the channels that are most readily available to them to put their message out.’
Heaps made those comments during a panel discussion yesterday in downtown Minneapolis on best practices for using social media to communicate material information, co-sponsored by the Dorsey & Whitney law firm and the Twin Cities NIRI chapter.
Facebook, Twitter, YouTube and blogs, collectively referred to as ‘social media’, have worked their way into the IR conversation. As evidence of how hot the topic is, NIRI chapters as well as consultants have sponsored several events on the topic around North America over the past six months.
Embrace the trend; plan your attack; update and integrate your policies across functions; implement consciously; train your employees; monitor what’s being said about your company; and manage the process. Those were the key takeaways in Minneapolis.
“Social media defines the online experience today,” Heaps said. Over the last couple of years, the line between social media and mainstream websites has blurred, he observed. “You go to your favorite newspaper site and you see comments, profiles, people interacting. The social concept has been applied to virtually every website.”
Citing a recent study by Brunswick Group, Heaps reported that 47 percent of buy-side and sell-side players surveyed in the US and Europe were prompted to research an issue and 20 percent made an investment decision or recommendation based on information from a blog. Nearly two-thirds of the US survey group expects blogs and social media to play an increasingly important role in investment decision-making in the future.
While social media raises new issues for publicly-traded corporations that must conduct their investor relations communications within the limits of a variety of laws and regulations, the challenges are not insurmountable – and the overall value of social media to enhance a company’s image and communications with customers, shareholders, clients, suppliers and other interested parties vastly outweighs the challenges.
Business Week looked at some of that in an article regarding Twitter that was published Thursday, saying, “Companies can work wonders before Twitter’s vast interactive audience of consumers, but it’s best to start slowly and build credibility.”
Says Business Week: “Business uses for Twitter are proving to be as diverse as those for the telephone or e-mail. They generally break into two categories: ways to follow customers and ways to increase efficiency.” Note that neither of those categories sounds much like a one-way marketing communications channel. In fact, says Business Week, “Companies who try to use the tool as yet another marketing arrow in their quiver—one that mostly carries targeted, one-way messages—usually fail.”
Twitter – and social media in general – is not a marketing channel, but a conversation conduit. Companies that use it that way will derive real value from doing so; companies that use it merely as a way to distribute the latest “company line” more than likely won’t.
Incidentally, the same is true for political candidates and campaigns.
