NEWS today from the Australasian Investor Relations Association (AIRA) that only 7% of retail investors say they monitor social media for investing purposes has been wrongly interpreted as a rejection of social media as an information source.
The fact is, these results need to be put into context. Retail investors in Australia are highly unlikely to be influenced by company IR information provided via social media for the simple reason that most companies in Australia and New Zealand are not using social media for IR purposes.
In our recent story on Australasian online IR practices, we could point to only a handful of Australasian companies that have begun using social media as part of their IR communications — and one of them is dually listed in the UK.
So it makes complete sense that retail, or institutional investors for that matter, would report very low levels of social media influence on their investing decisions (11% said it influenced their decisions).
Furthermore, one cannot look at the figures for how many retail investors think social media will become more important in the future — only 8% said they think so — because they don’t have any experience with companies using social media, so they cannot begin to fathom the benefits.
In countries were companies are in fact incorporating social media in to their corporate reporting practices, we are seeing huge retail investor interest. Just look at the strong activity generated by HP’s latest quarterly results.
Survey based on older demographic — 63% over age 62
We also need to be mindful of who the survey covered and take into account that it is heavily skewed to an older demographic. According to AIRA, 63% of respondents were over 62 years of age, and 32% were aged between 44-62 years of age.
In other words, 95% are over age 44, which means the survey is missing a key younger demographic that has grown up with the web and is much more likely to use social media sites. This group represents the future investor class in Australia. Companies there will need to reach out to this group if they hope to maintain Australia’s standing as a country with one of the highest levels of direct stock ownership in the world.
Despite surveying an older audience, the AIRA survey still finds that 41% of respondents said electronic communication with issuers had become more important over the past 12 months, while 14% said it had become
”much more important.”
Social media key for international visibility
It would be dangerous for Australian companies to interpret the AIRA results as retail investors “shunning” social media. Overlooking social media is to overlook the biggest opportunity in the history of the web for Australian companies, many of which are traded as ADRs in the US, to improve their visibility internationally.
Fortunately, it seems that Australian IROs already understand this. As we reported recently, 59% of AIRA members said in a recent survey that they expect social media’s influence to increase.
None expected social media’s influence to decrease.