Social media early adopters embrace investor relations, study finds

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COMPANIES that are early adopters of social media for corporate communications are increasingly using channels like Twitter, Facebook and YouTube to deliver investor-related information, a new study has found.

Conducted by Q4 Web Systems, which provides software for managing corporate and investor relations websites, the study looks at the social media activities of 362 companies that are currently using Twitter.

It finds that among these early adopters, 65% now use Twitter for investor-related content. This is a big increase from the 35% that were doing so in the third quarter of 2009.

The expanded use suggests that companies which initially started using Twitter for other purposes have found a willing audience for IR-related information. It may also suggest a thawing of attitudes towards the use of social media for regulated information, although the report finds evidence that many companies are still coy about their social media use.

Twitter is top venue, Facebook second

While Twitter is by far the most popular venue for sharing investor-related information, the report says public companies are increasingly adopting other social networks for IR content.

Among the 77% of surveyed companies that have Facebook pages, the authors find that 37% are using Facebook for IR-related information. Meanwhile, 56% have an official YouTube account and 29% use it to provide investor-related information.

And the 10% of companies that are using SlideShare to post presentations and documents all use it for IR content, while 10% of the sample are using their corporate blogs to post information of interest to investors.

”Our findings suggest that the adoption of social media by public companies to augment their IR program is approaching a tipping point,” says the study. “All companies in this study are using social media to provide context about their company — not just press releases, but to announce strategic partnerships, mergers and acquisitions, events such as participation in banking or industry-related conferences and quarterly conference calls to name a few.”

Lack of acknowledgment on corporate websites

The report highlights a key issue with current corporate use of social media –- a lack of visibility for companies’ social media accounts on their websites.

While all of the surveyed companies have Twitter accounts, the authors found that almost 40% do not post a link to the channel on their websites. This likely understates the situation because the Q4 reviewers are flexible on what constitutes a link on the corporate website.

The authors say that in their discussions with companies “some prefer not to include Twitter on their website as they are still ‘testing’ the channel.” The report rightly recommends that companies acknowledge the existence of their Twitter accounts on their websites.

Without a link on the company website, it is difficult for users to verify the Twitter account as legitimate. And while companies may believe that not acknowledging their social media accounts on their websites shields them from liability, in reality they are still liable.

What role is IR playing?

The lack of formal recognition of social media at many companies may be because most IR departments aren’t actually representing their companies on the social web.

While some companies have created separate social media accounts for IR, much of the investor-related information is coming from corporate accounts, which are being led by PR and online communications teams.

This raises an interesting question about the future role of the IR profession in the mass communication of corporate financial information.

Will IR continue to own online financial communications or will it be ceded to other departments who are gaining valuable experience and know-how by being early adopters?

The 96-page report Public Companies’ Use of Social Media for Investor Relations includes many examples of company social media activities and lists of best practices.

Dominic Jones

Dominic (bio & disclosures) is IR Web Report‘s founder and an online investor relations consultant. He advises leading public companies and investor relations service providers worldwide on using the web for disclosure, engagement and profile building. You can contact him via the contacts page.