Sure, social media are huge: Twitter, Facebook, Digg, YouTube, and so on. And yes, IROs have embraced technology in every aspect of their job: live-streaming stock quotes, real-time access to transcripts, different tools to engage and track investors and real-time media feeds. You name it, we want it – anything that gives us an edge on information flow.
When we are communicating with investors though, we rarely put things in email. We don’t blog, and heaven forbid we should tweet. Why? There are a few factors. First, we are bred to ensure there is no selective disclosure. How does one differentiate between something that is simply interesting to investors and something that is considered material enough to be put in a news release? We always err on the side of caution and put it in a news release, an accepted vehicle for disclosure. Second, our target audience – institutional investors – are not ‘programmed’ to view company blogs, YouTube and Twitter to track companies. They already have enough to deal with. Third, it is an issue of resources: anything to be disseminated has to be vetted by legal.
This is very time-consuming, and it doesn’t exactly make for what should be an informal, free-flowing environment. In the time it takes to draft a blog, get it vetted, make changes and post it, an IRO could have made 10 phone calls to large shareholders or potential shareholders. And finally, coming back to investors, if you ask investors how they would best like to consume information from companies they track, social media don’t even hit the top five.
As we move into the future, things are going to get tougher for IROs dealing with these informal dissemination tools. The regulatory environment becomes more restrictive as time goes on, not less; technology continues to evolve in ways we never imagined and regulators are not able to keep pace. In the US, news releases and webcasts are considered the only accepted avenues for the disclosure of material information. And in Canada, for example, it is only news releases that are deemed acceptable. So IROs have this ongoing conundrum of how to embrace these new media without running afoul of regulators.
What IR can do is use other functions in its company for social media, because social media are unsurpassed in their ability to tell a story with a ‘human’ touch. Marketing, the office of the chief technology officer and other areas of a company can and have used social media to great effect.
Bo Gowan, the manager of social media for Ciena, is a social media expert and someone who does a terrific job using social media to advance understanding of that company and its brand in ‘Ciena Insights’. Gowan is incredibly effective because he takes formalized news release speak of corporate news and provides his perspective in plain language, picking out the salient points and adding cool pictures, video and other elements that help tell the story. He is, in effect, an in-house new media journalist.
Discussing the IR/social media conundrum, Gowan offers this perspective: ‘While disclosure rules limit the ability to communicate critical IR information through social media channels, the use of social media can provide many audiences – including investors – with a constant stream of updates on the broader activities of your company. This can help an IR organisation reduce background briefings and non-critical communications for the investment community, and focus on more strategic IR activities and interaction.’
I love reading blogs as much as the next person and I find the use of video, podcasts and a lot of other new media tools invaluable for communicating with investors. What you won’t find me doing any time soon is recommending to management that we engage a broader social media strategy for our investor audience. What you will find me doing, though, is pointing investors to the great blogs and posts that have been generated in areas other than the IR group!
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Janet Craig is an experienced investor relations officer, having spent the last 15 years working in publicly traded companies, including heading up investor relations at Nortel Networks and ATI Technologies.