Burying the best material
Most IR websites continue to be held back by the legacy of a paper-based approach to disclosure and investor communications. Instead of creating information to take advantage of the electronic medium’s opportunities, most sites still function as little more than online filing cabinets for documents originally
designed for print.
The result is that useful information is buried in repurposed print documents three or four layers down from the IR homepage. And often they are available only in non-HTML formats or are formatted using unique user interfaces, both of which make it doubly difficult for investors to access and use them.
A better approach is to extract high-demand information from repurposed documents and place it on the IR homepage or one level below. For example, if investors find 10-year financial summaries extremely useful, why not make these accessible directly from the IR homepage, instead of near the back of
the annual report?
Identifying what information users want most means doing a simple user analysis. Think in terms of users’ motivation for visiting your site rather than superficial classifications such as different types of investors i.e. retail versus institutional.
Don’t waste money on tedious surveys or focus groups either. Use your own experience and logic and, if you must, take a quick look at your site’s traffic patterns. Then put the information users want in a place where they will find it easily.
To check if you’ve done the right thing, run some simple task-based tests with three or four people who are representative of your audience.
Finally, remember that there is no magic formula for the information architecture of an IR website. Each site should be as different as the companies that own them. And don’t copy what your competitors are doing. They’re probably not doing things right either, especially if they’re using an off-the-shelf site service (see mistake number 3).
Not enough context on the site
Retail investors are a significant force in today’s capital markets. This is both something no IRO can ignore and an incredible opportunity for companies to attract new shareholders at little or no incremental cost (you might even save money!).
But only if you understand that your new online audience is vastly different from the traditional one. Dealing with a retail-dominated online audience is nothing like talking to a professional one.
These two audiences have vastly different information needs. Besides their comfort with financial data, professionals will often (no, not always) have a fairly good grasp of your industry’s fundamentals and the merits of your business strategy.
Retail shareholders, especially online investors who lack access to quality professional advice, are handicapped on both counts. They need more basic information about what your company does and what makes it better than your competitors. No one expects you to explain the fundamentals of accounting, but the more context you provide about your industry and your business, the better.
Companies that provide a rich depth of industry and business background via their IR websites are still a rare breed. However, it’s no coincidence that those companies that do also tend to enjoy higher profiles within their industries, witness Shell’s award-winning website with its extensive background information on the global energy industry.
Following the crowd
One of the best things to happen to IR websites in recent years is arguably also one of the worst. I’m referring to aggregator services such as Thomson Financial, CCBN, Shareholder.com and Hemscott.
Clearly these suppliers provide a great service for overwhelmed IR departments. At relatively low cost, they will sell you a prepackaged IR website, complete with stock quote, First Call estimates, bulk e-mail management and a template for you to plug in your own content.
However, as hundreds of companies have rushed to sign up, the aggregators’ dramatic success has also proven to be their Achilles’ heel. The consequence of many companies using a similar out-of-the-box web package is that their sites begin to look the same. You can slap on your company logo and choose a different color scheme, but beneath the surface you still have a cookie-cutter website.
Furthermore, a prepackaged solution often isn’t a good one from either the company or the user’s perspective. The bread and butter of aggregator sites is short-term earnings related information such as analyst estimates.
This may be fine when momentum investing dominates, but when the focus turns to more long-term fundamental measures and non-financial value drivers, the aggregators are found wanting.
Usability is also not the aggregators’ forte. In some cases, such as webcasting services, their approach is rudimentary compared to higher-end service providers. Their approaches to email alerts and forms could also use improvement. 
That’s not to say you should make it a rule to steer clear of aggregator services completely. An emerging trend is for companies to cherry-pick the most useful services and then to build customized sites around them.
Vendors, too, are gearing up to provide clients with the ability to build highly customized sites using XML, a technology that calls up the data elements you want from the vendor’s server and then displays it on your site in almost any way you want.
This is a sensible approach since it allows you to stand out by implementing a custom-tailored information architecture with the aggregators’ standard fare at its core while also providing greater context about your company’s strategy and unique investment proposition.
I predict that following the crowd will become less common in the next two to three years and will gradually move down the list of common mistakes.
For now, though, it’s so pervasive that it belongs solidly at Number Three.
Overuse and misuse of PDFs
This is a topic I dealt with at length on this site. Suffice it to say that IR websites make far too much use of PDFs and often don’t properly prepare their documents for the format.
As a rough guide, PDFs should only be used in addition to an HTML file, and only to provide the user with a way to get a PostScript quality printout of a document.
You should never provide them as a way to view a document online.
Unusable audio and video archives
For most investors, real-time streaming media is one of the best things to happen to investor relations. Combined with Reg. FD, it gives them access to valuable information at the same time as it is being delivered to a formerly privileged audience of professionals.
But once the real-time event is over, streaming media’s value plunges precipitously. It moves from information of opportunistic value to information whose chief value is reference and discovery. Investors wanting to verify a statement made during a conference call, or someone researching your company for possible investment, have different needs than those listening in real time.
Archive users want to get at information quickly. And this is where streaming audio and video come up short. No one wants to spend 45 minutes listening to, or skipping back and forth through an archived conference call for the sake of verifying a few choice words. They also shouldn’t have to manually transcribe the words while the audio is playing.
This is where written transcripts of audio and video files are invaluable. For guidelines on how to present them, see the AOL TimeWarner and The First American Corporation sites.
With today’s voice recognition software, it’s quick to generate a rough transcript of audio and video files and then clean them up. As well, most executive presentations are scripted, so it shouldn’t be difficult to provide a copy online, likeIBM does.
While I believe a written transcript should accompany every audio or video archive, there is still value in the original audio or video files themselves, but only if they are broken up into useful segments.
Scrolling text and distracting animation
Reading online is difficult enough, but scrolling text is next to impossible to read. Your best bet is to avoid it.
Scrolling text is commonly applied on IR websites to news headlines and stock quotes. Neither of these uses for scrolling text adds value to a site and may actually reduce its effectiveness.
Especially poor is when multiple news headlines are set to scroll vertically in a tiny window that allows you to view only one headline at a time. If you miss a headline, you may be forced to wait 15 seconds or longer before you see it again. See this page for an example of distracting andvertically scrolling text.
Of course, animation can be used to good effect on an IR website, especially where it is used to convey information about a complex process or a timeline of events. However, it has to be used sparingly and with great caution.
Gratuitous animation, like spinning logos, flickering flashbulbs, dancing backgrounds and cursor chasing text or graphics should be taboo on any IR site.
Especially avoid animation on frame-based navigation bars. These stay within view no matter where you are in a document and can be extremely distracting.
Flash for the sake of it
While not all use of Flash, the ubiquitous animation program from Macromedia, is bad – most of it is.
Sites built entirely in Flash suffer from a host of usability problems. This over-the-top site, for example, is prone to making me positively dizzy every time I have to visit it.
Even limited Flash use can hurt a site’s effectiveness. Take a look at this page from Colgate Palmolive (includes unprompted audio). Flash does nothing but slow it down and irritate people. The same goes for this IR site which is full of Flash splash pages, although in this case they play only once rather than repeatedly.
One common use of Flash that won’t be missed if you avoid it, is for introduction or splash pages. You’ll often see these on the gateway page into a site or on the “cover” of an online annual report. Usually, you’re given the option to “SKIP INTRO”, which is invariably what most users will do. So why bother with them in the first place?
Because of its high installed base and seamless integration with the browser, Flash movies can be useful for online presentations, brief overviews of companies’ business propositions, and product explanations.
The best of these include a voice-over along with an animated presentation. View this sample from Avaya‘s IR Website, for an example that includes a synchronized voice-over. See this example of Flash used to provide a company overview, although the elevator muzak is bit hard to bear.
There’s a fine line between effective and ineffective Flash animation. Be sure to test the movie on a representative sample of your audience first, and make satisfactory test results a condition of any contract with your Flash developers.
Test how much information users are able to recall at the end of the presentation. At minimum, they should recall the key messages that you’ve defined for the presentation. This will quickly tell you if the animation is more flash than substance.
Slow download speeds
Most Internet connections in North America are still based on the 56K dial-up technology. In fact, a recent research report by Cahners In-Stat Group found that most US households will still be using dial-up access in the year 2005.
Elsewhere, the standards can be even slower. Large multinationals with global investor bases also contend with data bottlenecks in trans-ocean cables.
Usability experts agree that an effective web page is one that downloads in less than three seconds. The outside limit is 10 seconds. That means you have to make some tough decisions if your site is to meet the requirements of people using dial-up access (i.e. most of your users).
Watch out for items made available as downloads in non-standard formats, including PowerPoint, Word, PDF and Flash. Wherever possible, these documents should be converted to HTML.
Excel may be an exception since it has a high installed base with an IR website audience and provides value beyond what HTML can offer. This will change, however, when the new XBRL standard becomes the norm.
Jargon, legalese and marketese
Using plain language can dramatically enhance the usability of an IR website for both retail and professional investors.
Companies in highly technical fields need to pay particular attention to avoiding jargon. A glossary is a good idea if you’re in an obscure sector, but it shouldn’t be used as an excuse for lazy writing.
Many sites, particularly those in Canada and Europe, are dense with legal jargon, probably because regulators there have yet to follow the US Securities and Exchange Commission’s plain language rule. Before publishing anything on the web, have a skilled plain-language web editor review it.
Marketese refers to hype-filled purple prose that might be okay in the static medium of paper, but which can be off-putting to online users. Research by author and usability consultant Jakob Nielsen shows that users prefer fact to fluff. Marketese also undermines your credibility, which leads us to mistake Number 10.
Credibility gaps and gaffes
I put this at Number 10, not because it’s the least important mistake, but because it’s impossible for me to provide an exhaustive list of the things that can undermine your company’s credibility online.
Perhaps the most important rule to remember is that it’s much harder to hide things online than it is in the physical world. Investors are able to compare your company’s disclosure materials and practices to those of your competitors with just a few clicks of a mouse. They can search your site and even seek out key words on individual pages.
Here are some key things that can undermine your credibility:
Missing information:
More often than not, what you don’t disclose online hurts you more than that which you do. It’s important to review the content of your site against your peers at least annually to ensure that you’re offering the same or more information. Common mistakes companies make include:
- failing to provide proxy statements online; omitting the question and answer period from conference call and investor presentation archives;
- ignoring or glossing over corporate governance issues; not publishing voting results from annual meetings; and,
- offering only a catch-all email address for the IR department (it makes you appear aloof).
Happy copy:
When things aren’t going well, it’s okay to explain why and point out what steps the company is taking to address them. The very worst thing you can do is clam up and pretend that everything is going swell when everyone knows it’s not. Avoiding difficult issues is a surefire way to stoke the flames of the online message boards. Being frank and upfront helps to diffuse wanton disaffection and gives you a greater ability to influence the public debate. In fact, you should probably communicate more when times are tough than when they’re going well.
Being thin-skinned:
Don’t react directly to baseless criticisms of your company by analysts, short-sellers, anonymous posters on message boards or anyone else. If you have to, issue a clarification by news release but don’t give credence to the original barb by referencing it, even as “unfounded statements.” Remember, most people don’t believe anything they read on message boards. If something strikes you as being blatantly misleading and possibly illegal, notify the regulators. Trying to shutdown an irritating poster through a court challenge will make you appear heavy-handed and defensive, and earn you more than enough bad press on online news sites like Wired, Salon and CNET.
So what do these 10 mistakes say about the state of IR websites in 2001? That there’s still a long way to go before IR Websites come into their own.
It took a few decades for print annual reports to attain a semblance of usefulness to a wider audience. As with everything, change came via the courage of a few pioneers and their willingness to push the envelope.
Judging by the increasing number of public companies that are using the Internet as their primary communications medium with investors, it likely won’t take that long for the same thing to happen to IR websites.
Dominic Jones (bio) created IR Web Report in 2001. He is a consultant to leading public companies and investor relations service providers worldwide. You can contact him via the contacts page.
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