Updated: January 29, 2006
EMAIL newsletters have long been one of the most favored — and effective — tools of online marketers. Everyone from Amazon.com to the esteemed Wharton School of business uses them.
And now some investor relations departments are catching on to the opportunities which email newsletters can provide. Newsletters, as opposed to email alerts, are chiefly aimed at long-term shareowners who don’t monitor the company week by week or even month by month.
Instead of inundating them with dozens of disparate email alerts about upcoming events, news releases, filings and changes to the IR site, newsletters organize key information about the company and deliver it in a cohesive, meaningful and digestible format.
The best of them go beyond the standard fare of earnings and other material releases to provide an interesting array of non-financial contextual information on industry dynamics and key internal value drivers, such as innovation, customer relationships and human resources.
A reward for loyal shareholders
Current email alert utilities work best for traders, analysts and other investment professionals and active individual investors. For buy-and-hold shareholders, email newsletters offer a better way to stay informed about important developments at a company.
An IR newsletter that is properly done can help shareholders feel more like the owners of the business that they are. They can learn more about the culture of the business, the people, the products, social responsibility activities, and they can develop a keener sense for senior management’s priorities, abilities and character.
Newsletters can be used to inform shareholders about the company’s results and activities and raise awareness of shareholder services programs like dividend reinvestment and share purchase plans, electronic delivery, online voting, odd-lot programs and online shareholder account features.
A tool to market your company
An email newsletter’s value extends beyond communicating with the converted. You can use them proactively to attract a following from investors and analysts who either do not cover or hold your company’s stock.
However, to do this, the newsletter has to offer something original and of wider interest to its industry, including analysts and investors who may cover or own competitors’ stock.
Features on industry trends, highlights from proprietary research and surveys and new product showcases, can all be useful to someone who has an interest in your company’s industry or in a direct competitor.
You can also promote your company’s investment attributes and build credibility in your newsletter by highlighting operational and financial achievements as well as third-party recognition such as awards and rankings.
The same content can also serve to reinforce the company’s attractiveness to existing shareowners.
What makes email newsletters compelling?
At the start of this article we said that email newsletters have proven to be one of the most effective tools for online marketers. Their effectiveness has declined since the early days when response rates of 70% where widely reported.
However, problems with spam and new email filtering technologies have introduced obstacles to the effective delivery of email newsletters. Nonetheless, open rates and click-thrus from email newsletters continue to be attractive given the low publishing costs per user.
Open and click-thru rates for email newsletters also depend on the format and content of the newsletter and on how the notifying email is written and configures. An open rate of 60% and click thru of 25% are considered excellent.
There are five main reasons email newsletters and email itself make for such compelling tools in the practice of investor relations:
1. Email is intrusive
Opt-in email gives you one of the few invitations to intrude on your online audience without alienating them. The email recipient’s role is passive, receptive and intimate.
Email is much more personal than surfing the web. Your message shares space in the inbox along with private business and personal correspondence, things people care about.
Of course, this applies only if they’ve invited contact from you. Unsolicited email from an unfamiliar source almost always is treated with suspicion. However, if your message is appropriately targeted, properly formatted and the content truly worthwhile, you stand a good chance of winning over the recipient.
2. You can can control the message
Most Internet use involves the user actively seeking out information on their own terms. Their interest is limited to information that they perceive as important. You have no foolproof way to make them pay attention to something you deem important.
With email, however, the situation is different. You control your message and what information is provided. HTML email newsletters are especially effective because they can typically be viewed in the recipients’ email program without them needing to download a separate file.
3. They are cheap
Compared to traditional mailings, email broadcasts are cheap. There’s no money wasted on postage for unopened mail, no cost for paper and printing and no need to spend hours updating the database for changes of address.
Complete set up and annual maintenance of a customized email list program should cost no more than $3,000. If you out-source to a service provider, you’ll likely pay an annual fee in the range of $1,200 or less per year. Pricing depends on the sophistication of the list management and tracking features you require as well as the size of your list.
Depending on how adventurous you want to get, you may incur additional costs for a design firm to format your newsletter in HTML. This can be limited to a one-time cost by asking for a template that you can use over again.
You might consider hiring a specialist web editor to review your newsletter and format it for online reading. However, neither a design firm or a web writer can ensure success. The key success factor is the value of your content, not what it looks like.
4. You can communicate more regularly.
Ongoing contact with your email list eventually leads to a relationship of some kind developing between the company and the recipients. In a very real sense, all members of the list are part of a virtual community with shared interests. How much value you extract from this relationship, however, will largely depend on the nature and quality of the information you provide.
To make the most of the relationship with your email audience, your newsletter has to provide value beyond what recipients can get by simply visiting your site or signing up for email alerts.
The objective should be to educate shareholders and interpret events and news for them. A newsletter that simply regurgitates recent news releases with no heed to their relative importance provides no value and will quickly lose readership.
By improving investor understanding of your company’s industry and business, you will be contributing to a more accurate valuation, longer holding periods by shareholders, and an overall heightened industry profile.
5. Email is convenient
For the IR department, signing up new members, maintaining the list and sending out messages is a process that mostly looks after itself, a far cry from the days when taking care of a large mailing list required one person in part- or even full-time employment.
For the recipient, getting an email is much more efficient than having to regularly visit your site to stay informed about your company.
How companies are using email newsletters in IR
Investor relations email newsletters are still something of a rarity. Most that we see are PDF shareholder newsletters or magazines. Some are text only emails that provide links to a smorgasbord of information on the IR site as well as to other sections of the corporate site.
Others link users back to a special newsletter section on the IR site where subscribers can read full text articles. Still others provide the full text of articles in the email itself (avoid this format since it results in large emails that don’t facilitate scanning.)
Besides general investor relations newsletters, other sites have utilized email newsletters to keep shareholders informed of specific, major developments in the business, such as the construction of a new plant or progress of a merger transaction.
One example is the email service set up to deal specifically with the merger of BHP and Billiton to create the world’s second biggest resources company. Subscribers to the mailing list received regular email updates on the status of the merger, including notice of shareholder mailings, press coverage and special company-sponsored events like a live chat session with retail shareholders. Here is an example (opens in new window) of one email update they sent out.
Most of the general newsletters include articles about earnings announcements, presentations and news releases. A few include articles about industry developments, profiles of customers, reports from industry research firms and Q&As with senior management.
Below is a selection of email newsletters that we’ve collected. Where possible, we’ve added links to samples of the email newsletters as they were sent to subscribers or we provide links to the newsletter sections on the companies’ sites.
- Microsoft sends out a periodic email newsletter in HTML (new window). This is simple, to the point and clearly thought out. One criticism is that that is is not done more frequently. Given the vast amount of information that companies like Microsoft can produce, it should be quite simple to consolidate it into a meaningful monthly email newsletter.
- (No longer available) Kimberly-Clark has an excellent HTML newsletter that is produced quarterly. It is used mostly to highlight the company’s performance, strategy and review key news at the company. However, the company inexplicably does not enable shareholders and others to subscriber to receive the newsletter by email. In addition, the newsletter is obscure on the site.
- (No longer available) SCA, the big Swedish paper products firm whose site is reviewed on this site, has one of the best shareholder newsletters. Compiled on the company’s behalf by an outside agency, the newsletter includes company features, profiles and event news about competitors.
- Novo Nordisk, the Danish drug firm, has an excellent email newsletter, or investor magazine as the company says. Originally called Perspective, it was distributed three times per year in HTML (see a copy of one issue here). Later, the company changed the name to Share and offered the newsletter quarterly, but in PDF only. You will find examples in the company’s document library or you can download the Q1 2005 issue (PDF 240KB, 8 pages)
- EMC, the data storage giant whose IR website was recently voted the best in the US by analysts and retail investors, offers one of the best. Prepared weekly, EMC’s E-News provides a summary of the week’s news releases, links to third-party articles about the company, feature articles and in-depth coverage of the data storage industry. Here is a sample issue of the EMC E-News Weekly (new window).
- (No longer available) AMP, the Australian diversified insurer, has a special newsletter section on its IR website. The newsletter, formatted in PDF. It covers everything from financial results to community activities and interviews with key management leaders. One frustration with it is that only registered shareholders can subscribe to receive it by email. Others have to view it on the site.
- BAE Systems, the UK-based systems, defense and aerospace company, began providing monthly Investor Briefings in 2002 covering business updates, general news, contract awards, divestitures and international partnerships. Each brief is just that; articles are cleverly kept to a couple of paragraphs, although in some instances one wishes for a link to a more detailed article.
- AOL TimeWarner’s investor newsletter, FYI (new window), offers interviews with senior management and feature articles about different business segments. A recent article on the success of teen pop band Eden’s Crush sought to show the band’s success as “a symbol of how company-wide resources can be used to create unique business opportunities”.
- (No longer available) Delahaize Group, the Belgium-based international food retailer, provides its quarterly investor newsletter in PDF with the option to receive it by email.
- The Walt Disney Company provides a lengthy shareholder newsletter in PDF, but this is not available by email.
- Fosters Group in Australia publishes a PDF shareholder newsletter.
Setting up your own email newsletter
Given the opportunities to build profile, understanding and loyalty with investor audiences, email newsletters are a highly attractive proposition for investor relations departments. Furthermore, the low cost of setting them up makes newsletters affordable to companies of virtually any size.
Despite this, you need to determine if you have sufficient resources to manage the process of publishing a regular newsletter. This means assessing your department’s ability to handle three things:
- Set up and manage an email list;
- Gather and generate content for your newsletter; and,
- Format your newsletter to be emailed to recipients.
Setting up an email list, or using an existing one, is simple and cheap. However, you should ideally choose one which allows you to control the formatting of messages in standard text and HTML, and which can deliver the most appropriate message format supported by users’ email clients/programs.
Formatting your email newsletter is easy, especially if you opt for a text-only approach. You can format your messages using any email client, such as Microsoft Outlook or Express.
Express, for example, will let you apply fairly complex HTML effects to your message, including hypertext links, color and various font attributes. Inserting images is a little more complex, but well within the average person’s ability to learn. More elaborately formatted newsletters will require more time and expertise, so you should consider out-sourcing these to a design firm.
Lest you want to make users mad, do not use PDF as the exclusive format for your newsletter or send PDFs as email attachments. You might consider providing a PDF in addition to the HTML version on your site.
Once formatted, you can cut and paste your message’s source code into your email list application and fire it off. However, you should only use complex HTML formatting with an email list that automatically delivers the format supported by the user’s email client. Most clients today support HTML formatting, but those that don’t will end up displaying a bunch of gobbledygook.
Gathering material for your newsletter
Many IR departments will view gathering and generating content as their biggest obstacle to starting an investor relations email newsletter. In a few situations this might well be the case, but don’t reject the concept out of hand because you may have more resources than you think.
Most organizations generate vast amounts of information that can be leveraged for your newsletter. By working more closely with other communicators within the company — public relations, corporate communications, marketing and sales — information prepared for employees, customers, the media or suppliers can be reworked and customized for your investor audience.
Corporate Intranets, employee magazines and sales newsletters are rich sources of information about a company, its products, its people and its culture. External sources like trade publications, business journals, mainstream media and news services can also provide you with excellent contextual material.
With many possible sources of content, your objective should be to establish a disciplined news gathering process for your newsletter. One useful approach is known as the three C’s. They stand for comb, call and collect.
This means scouring all existing sources of news and information about your company for items that you can reuse or adapt for your newsletter. Daily newspapers, trade magazines and websites, industry research reports, surveys, internal company newsletters, press releases, media backgrounders, sales brochures, all are potential sources that might provide information to help investors develop a broader appreciation for your company.
In the journalistic sense, call means contacting sources who might have something interesting to share. You can do the same within the corporate domain. Contact senior managers to discuss the possibility of doing a Q&A about their role and speak to other communicators and managers within the company about projects they are working on. An interesting media backgrounder being prepared for an upcoming product launch might make a useful feature for your newsletter (It probably won’t get much play with the media anyway!). A report being compiled on a company-wide innovation program might provide good source material for an interesting article or interview. Also call external industry suppliers and consultants to learn about any surveys or other research that they may be conducting.
This refers to material that inevitably lands on your desk, including earnings releases, investor presentations, speeches and news releases. This material will be the backbone of your newsletter, your fallback should combing and calling produce little that you can use. But even here a little creativity can go a long way. Often news releases include quotes from internal and external sources and experts. Most of the material from these interviews tends to be left out of the final release and could well be repurposed for your newsletter. If you use a PR firm, ask them to transcribe their interviews with these sources, or better still write a short article based on the interview. Since they’re talking to the people anyway, a little extra writing should not add much more to your bill.
Of course, the more resources you have at your disposal, the better your newsletter will likely be. If your department is constantly being stretched, consider publishing your newsletter on a quarterly schedule to follow your earnings releases. This will give you an opportunity to gauge investor reaction to the results and possibly prepare a Q&A with the CEO to clarify or expand upon any contentious issues or lingering questions.
The ideal frequency for an IR newsletter would seem to be about every two weeks to a month. At least one company sends out a weekly newsletter, but that’s more than most of us can handle. Anything less often than a quarterly schedule is of dubious value.
However, don’t sacrifice quality for frequency. It is better to provide high quality content each quarter than second-rate bumpf each month.
Consider reallocating your resources
Obviously, the more resources you can allocate to your newsletter, the better it will likely be. One idea is to reallocate resources away from less effective communications tools and dedicate them to your newsletter.
An obvious target is your annual report. A number of companies have already moved away from publishing expensive annual reports in favor of providing more information electronically. Cost savings will also be realized when electronic distribution of shareholder materials is adopted more widely.
The question for you is whether it still make sense in this age of instant communication to invest large sums once per year in a print or electronic document which is often outdated by the time it is published? Would your IR program not be better served using that money to provide more relevant information and more frequent contact throughout the year on your website and via a regular IR newsletter?
These are questions only you can answer, but the alternative is becoming increasingly compelling.