EVEN though their companies might be using social media for marketing or public relations, more than 90% of 200 investor relations websites reviewed by IR Web Report in the past month failed to direct investors to these channels.
And even when IR websites do include links to company accounts on social media sites like Twitter and Facebook, some IR departments told us that they do not consider these channels to be part of their communications with investors.
One such company is Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), whose IR website includes links to its social media accounts at the bottom of its IR homepage. However, the company told us in an email that it does not regard these accounts as channels for IR communications.
The findings are drawn from the benchmarking indices we use for our online IR audits. They cover 200 large- and mid-cap companies included in Standard & Poor’s indices and which trade on North America markets.
These indices are designed to give an objective snapshot of prevailing online IR communications practices among a representative sample of mainstream public companies.
Among the large-cap companies in the survey, our results show that only 8% currently provide links on their IR websites to company social media accounts. The same percentage of mid-cap companies do so.
IR pages no-go zones for social media
The results are a sobering reality check for IR consultants and vendors that are aggressively marketing social media services to investor relations departments. They also raise intriguing questions about why IR departments are so reluctant to use social media when there is growing evidence that they can deliver tangible benefits.
The most curious cases are where companies are aggressively promoting their social media accounts on all pages of their corporate websites – except the IR pages. This creates the impression that the IR departments want nothing do with social media.
Stanley Black & Decker (NYSE: SWK) is one company where social media appears to be a no-go area for IR communications. The footer of almost every page of the company’s corporate website sports prominent links to the company’s Facebook and Twitter accounts, including its homepage, news, company history, products and services, careers and contacts pages.
However, none of the pages on the company’s IR website include the same links to Twitter and Facebook. The company’s IR department did not respond when I asked them to explain why this is the case.
Heavy equipment maker Caterpillar Inc. (NYSE:CAT) is another example. At the foot of every page on the company’s website, you will find links to its accounts on Facebook, Twitter and YouTube. However, these links are not provided on the pages in the site’s IR section.
Despite urging, IR depts. show little interest in broader communications
Investor relations departments’ aversion to social media is curious given that the US Securities and Exchange Commission has tried to encourage companies to adopt new web technologies in their communications with investors. In 2008, the commission provided guidance on the topic and in 2007 it altered its proxy rules to encourage companies to participate in shareholder forums.
Meanwhile, the National Investor Relations Institute and its chapters also have been actively promoting social media through conferences, seminars, magazine articles and webinars. Yet the message appears to be falling on deaf ears.
Other issues, such as poor retail voting rates at annual meetings, the scrapping of the broker vote for uncontested director elections, and the recent adoption of proxy access rules have also failed to inspire IR departments to reach out to their shareholders via social media.
The survey did find some companies that are using social media as part of their IR communications channels. And we have previously written about companies such as HP, Cisco and eBay that have integrated social media into their financial reporting, but the initiative is mostly coming from PR and social media teams and not IR.
My take on the findings is that they show how most IR departments today are increasingly focused on catering to a small group of bulge-bracket financial analysts and portfolio managers and have little inclination to use the web to communicate with a mass audience.
As shareholders gain more power to influence the shape of corporate boards and the managers they appoint, this might well become a problem for CEOs and directors.
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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