Stop Talking and Start Using Social Media in Your Investor Relations Program
By Abe Wischnia
President
Abe Wischnia & Associates
An earlier version of this article was published by the National Investor Relations Institute in March, 2010.
Using Social Media for investor relations is the topic of seminars, webinars, and meeting programs. But it seems to be mostly talk and little action. Not that long ago, social media and interactive web use seemed to be strange, unexplored territory that IROs considered with caution. But how long does it take to study or think about this? You need to understand social media and the best way to do that is to start using social media tools.
What if there were a cost-effective, straight-forward way to add elements of interactive social media to your IR program? What if you could do so at a pace that fits your comfort level, allowing you to test one before adding another? Well, it’s no longer a case of “what if.”
Consider the experience of one company (a client) that has successfully added elements of social media to the IR mix. They are an early-stage pharmaceutical company with several active third-party (independent) message boards (Yahoo, etc.) which frequently carry posts with erroneous information.
The company entered the social media arena with an interactive electronic shareholder forum, which was followed by a CEO’s blog, and subsequent use of Twitter as an IR tool. The company became an early adopter model of successful, careful application of social media to IR.
Creating a 24/7 Communications Platform
Watching the adoption of social media for other functions – marketing, corporate communication, customer relations -- I recommended that the company establish an interactive, 24/7 electronic shareholders eForum to do a better job of two-way communication with their shareholders. Among the objectives of this approach:
- Create a credible alternative to the third-party message boards to share news and correct misinformation.
- Use the web to engage shareholders in meaningful two-way discussion.
- Provide an additional avenue for shareholders to ask management questions and voice comments.
- Create a place where shareholders could discuss the company and its business in an environment of civil discourse.
- Maintain control of the eForum to avoid the bashing and manipulation that plague the third-party boards.
Management agreed with the objectives and the approach and the company’s Shareholder eForum went live in November 2008. They were one of the first publicly traded companies -- and still one of the few -- to establish a 24/7 eForum devoted to investor relations.
Sharing lessons
- Here are some things we learned in that first year of operating the Shareholder eForum:
- Maintaining control was easy due to the eForum being moderated, having a clear use agreement, and a requirement that prospective posters first prove that they are actually shareholders as part of their registration.
- There were very few “out of line” comments or questions submitted for posting on the site. The few such attempts were rejected by the eForum moderator citing the eForum rules and use agreement.
- The number of active posters on the eForum corresponded roughly to the number who post on the third-party message boards.
- The “Ask Management” section quickly became the second most read page of the company’s website after the CEO’s blog (see below).
- Managing the eForum took less than 30 minutes a day on average.
- Shareholder feedback was positive.
“Ask Management” – Important Feature
Note in the list above that management of the eForum took less than 30 minutes a day. Creation of the eForum generated significant time savings in managing the IR function. The reason is the “Ask Management” section. Most investor relations officers know how much time can be consumed by investor phone calls asking the same questions over and over. With the “Ask Management” function, questions are submitted online and answers are posted next to the questions for all to see. It doesn’t take that long to answer the questions since most of the questions and answers are already in the Q&A a good IRO constantly maintains anyway. Use of the “Ask Management” tool eliminated lots of calls, saving far more time than managing the eForum requires. As an added benefit, shareholders would frequently copy and paste the questions and answers from the eForum as their postings on those third-party boards.
The CEO’s Blog
The success of the eForum led to the addition of a CEO’s blog. Appearing about once monthly, the blog allowed the CEO to provide additional detail and color about the company’s business and announcements as issued in news releases. The blog also allowed him to address the shareholder concerns that show up in the comments and questions submitted to the eForum. In a blog, the CEO can communicate in a less formal, more personal and more conversational way than in a news release. The blog got more than 3,000 page views a month – quite a lot for a small company.
We put a link to the CEO Blog on the front page of the company website. Legal counsel was involved in reviewing blog drafts to the same degree as involvement in reviewing draft news releases.
As management’s comfort level increased, the next step was to use the blog along with the “Ask Management” feature to solicit shareholder questions in advance of the annual meeting.
The latest addition – Twitter
The positive experience with the eForum and the blog made management more comfortable with a suggestion to add Twitter to the IR mix. That started in November 2009. Tweets have been used as an additional alert after the company issues a news release, gives a presentation, posts new content on the website (including new blog entries) and as a reminder of upcoming events.
It’s important to note that the company is careful not to use Twitter, the blog or the eForum as the first disclosure of new material information.
Implications for You
A growing percentage of your investors are already using using social media in their daily lives. They’re coming to expect interactive communications from the companies they do business with and that expectation will increasingly apply to companies they invest in, or are thinking of investing in. This development will change the way effective IR is practiced. It means you will have to rethink the relations part of IR.
Whether you’re trying to sell a product or an investment thesis, it’s no longer good enough to just keep trying to push messages at your audience. Instead, you need to be exploring ways to actively engage your shareholders. Today, that means understanding and acting on their desire for two-way interaction.
An easy way to start is by creating a shareholder forum on your IR website. Another easy way to start is by creating an “Ask Management” question and answer section to that site. Those are easy first steps allowing you to test one before adding another.
At Abe Wischnia and Associates, we have direct experience in helping companies do this. Let us help you.
