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Discussion: How to push social media for IR forward?

By Guest Contributor on December 22, 2010

Patrick Kiss, Head of Investor & Public Relations at Deutsche EuroShop AG, submits for discussion:

Patrick Kiss

Patrick Kiss

Social media usage for investor relations is still in its early stages and I don’t want to seem a skeptic – far from it – but I’m honestly a little disappointed in how things are progressing.

Even though social media has been a hot topic of discussion in the IR community since at least 2009, it’s my view that not much progress has been made. Yes, the big IR associations have done seminars with early adopters, but often these have been consumed with endless discussions about the needed capacities and benefits of social media.

Yes, it’s now accepted wisdom that companies should at least monitor what is being said about them in social media. It’s also accepted that investors will and should inform themselves via a broad mix of channels, including social media. And blogs, Twitter, Facebook, YouTube, SlideShare and others are widely accepted platforms for information exchange and dialogue.

But there is something missing.

While an increasing number of companies are establishing social media programs for IR purposes, the target groups are very rarely actively participating on them, because they mainly follow passively. That’s especially true, in my experience, if the companies are not global consumer brand names but rather operate in specialist industries.

There are exceptions like TVI Pacific, which runs an active discussion forum on Facebook, and there is some interaction between companies and investors on specialized services like Seeking Alpha and StockTwits, but the activity is largely concentrated in North America.

In fact, I now worry that for some companies and their IROs the topic of social media for investor relations will have an “empty disco” effect.  The channels for engagement are available, investors and analysts are informed about them, but they’ll look at the deserted dance floor and not want to be the first ones in if no one else is participating.

Meanwhile, companies that have already set up a social media presence will increasingly question if it still makes sense to be there. Perhaps they should just step back and watch, too.

To move social media for investor relations forward we must start to push engagement or active participation rather than merely monitoring or broadcasting information. Of course, engagement will bring a new dimension to social media. It will be more difficult, with new discussions, ideas, arguments, views and questions. This might cause some companies to step back to simply monitoring the conversation, which would be the wrong decision in my view. Every use of social media for investor relations should have a sustainable approach.

The bottom line, from my perspective, is that for progress to be achieved in investor relations in social media, monitoring is not enough. Engagement is necessary — and all members of the financial community should take part.

This is a very subjective impression, I have to admit, and I don’t have any statistics, but maybe we can share different views in a discussion.


Guest Contributor

IR Web Report occasionally accepts guest posts and discussion topics from corporate investor relations professionals and experts in specific areas. If you would like to contribute a post or discussion topic, feel free to contact us.

Posted in , | Tagged , , , , , , | 12 Responses

  • http://irwebreport.com Dominic Jones

    Patrick,

    You raise an important issue that is relevant to many corporate social media programs that have an investor relations component.

    If I’m being brutally honest, most IR social media activities are largely pointless. At most, they have the effect of increasingly companies’ visibility modestly. But as more companies join in, the visibility benefits the early adopters achieved due to the novelty of their mere presence begins to wear off. I pointed this out recently in 10 IR Twitter accounts revisited: honeymoon is over, where I noted that audience response had weakened in Q3 versus Q4. Tweeting links to news releases, or even live tweeting earnings calls, just isn’t as novel as it use to be.

    But I think Annica Strahner, in her recent post on Twitter use by Nordic companies, touched on another issue when she said “the vast majority of company tweets are of a poor quality.” This to me is the big issue. A lot of what is being shared via social media channels is irrelevant to investors. It’s not meaningful and doesn’t add value to existing channels that investors are already using. Tweeting a link to a news release after the news release has already been received by investors isn’t helpful. It’s additional noise that they don’t need. That’s not to say you should stop tweeting links to news, we just need to recognize that it’s not a high value activity.

    To increase audience participation, we have to improve the relevance and quality of what is communicated via social media. There are many ways to do that, but they all require a strong commitment from IR professionals and their executives. If companies and their executives make that commitment, the target audiences will respond.

    We saw that just this week when Netflix CEO Reed Hastings wrote a blog post on Seeking Alpha in response to an earlier one by Whitney Tilson, who has a large short position in Netflix. That post generated a lot of interest, with more than 200 comments both positive and negative. Of course, part of that is because of the uniqueness of a CEO responding to a short in a blog post. But it was also due to the quality and relevance of the information Hastings provided.

    Finally, I believe strongly that a lot depends on an IR professional’s attitude towards investors. Do they see themselves as working for the company’s investors? Do they really want to help people make informed decisions? I see that attitude in you, Patrick, and I see it in Rhonda Bennetto at TVI. It takes a high level of commitment to constantly monitor, engage and share information with investors though multiple web channels, in addition to the usual channels.

    Unfortunately, that service mentality is too rare, not just among IR professionals, but among executives as well. If an IRO doesn’t have support from executives to pursue open engagement with all investors, the IRO has little incentive to do it, even if they want to and know it will bring benefits to the company.

    Just my thoughts. I’d like to know what others think.     

  • http://www.nexxar.com Thomas Rosenmayr

    Patrick,

    I agree with you that most Social Media dialogues in IR that I follow have been very passive. For me it even seems that IR service suppliers tend to dominate the overall discussion on IR on Twitter. (check who is active on #irchat)

    So what’s the problem? Do IRO’s not want to get their hands dirty?
    I guess its a mix of regulatory fears, work overload and a simple profile problem: maybe Investor Relations is less about Social Relation and more about figures?

    Wishing you a Merry Christmas from Vienna!
    Thomas

  • http://twitter.com/ThomasRos Thomas Rosenmayr

    Patrick,

    I agree with you that most Social Media dialogues in IR that I follow have been very passive. For me it even seems that IR service suppliers tend to dominate the overall discussion on IR on Twitter. (check who is active on #irchat)

    So what’s the problem? Do IRO’s not want to get their hands dirty?
    I guess its a mix of regulatory fears, work overload and a simple profile problem: maybe Investor Relations is less about Social Relation and more about figures?

    Just another thought, interested to hear others!

    Wishing you a Merry Christmas from Vienna,
    Thomas

    • http://irwebreport.com Dominic Jones

      We also need to accept that most people read but don’t necessarily participate. That’s how it is and always will be. Even in the Netflix Seeking Alpha post, I’m guessing tens of thousands of people read it, but probably less than 150 commented.

      IR consultants and service providers have a strong incentive to participate for promotional reasons. I can’t speak for corporate IROs, but my sense is they participate to learn and share.

  • http://twitter.com/pkiss Patrick Kiss

    Thomas,

    Your points are part of the problem, but I meant more the situation, that IROs/companies have set up social media channels for investor relations, but there’s merely interaction, it’s more one-way communication. The target groups are too passive.

  • http://irwebreport.com Dominic Jones

    We also need to accept that most people read but don’t necessarily participate. That’s how it is and always will be. Even in the Netflix Seeking Alpha post, I’m guessing tens of thousands of people read it, but probably less than 150 commented. IR consultants and service providers have a strong incentive to participate for promotional reasons. I can’t speak for corporate IROs, but my sense is they participate to learn and share.

  • http://twitter.com/darrellheaps Darrell Heaps

    Great post and discussion topic.

    From my perspective and the research that we continue to do I have to say that the number of companies using social media continues to increase. As well, the scale of what companies are doing also continues to increase. So the question of “how to push social media for IR forward” is interesting to me because from what I can see it’s moving ahead quite steadily.

    Having said that, it certainly is not a straight line and we are all learning as we go. In terms of engagement and trying to get investors to engage I don’t agree that this is where we should be trying to “push” the market. The reality is, that the only thing we can do is use the web to provide valuable information to investors. What investors do with that information and whether or not they engage with companies is out of our control.

    In some cases investors are engaging, like in the case of TVI Pacific. But in many they are not, but I don’t think this means their social media efforts are failing. For instance:

    Dell has what is considered to be a very successful IR blog. Research with their investors show that ½ of them use the blog regularly and view it as a valuable source of information. However, none of these investors have ever left a comment on the blog. So does this mean the blog is not successful?

    The same feedback comes from BASF. There are no investor questions happening through their social channels, but yet the reach of these channels and their influence continue to increase. So again, are their efforts in social media failing because investors aren’t asking questions? I don’t think so.

    A final example is the Netflix blog post. Although there are 200+ comments on the blog post, how many of them are trying to engage with the CEO? As far as I can tell all of them are discussing his post among themselves. Even in a forum like SeekingAlpha, the community isn’t looking to engage directly with the CEO.

    Investors are not consumers and as such are using these channels in a different way. I think companies should focus on using these channels and tools to provide value to their stakeholders and analyze what content is being viewed, shared, etc as a metric for what is interesting. As social media becomes even more ingrained in communications, Investors of some companies may ask questions and want to engage. But many will still want to listen and talk among themselves, and I think that’s OK.

  • http://twitter.com/pkiss Patrick Kiss

    @Darrell

    I think if a blog has no comments there’s no difference to a standard website. Of course it’s read, but many experts ask for engagement, not only for broadcasting.

    In a few weeks we will set up an IR blog. We know about the mentioned examples like DELL und BASF. We don’t expect many comments, but we are prepared for dialogue. We see the blog as up-to-date addition to our FAQ section. It should help us to bundle the answers to maybe 20 phone calls in one blog post.

    So if you have a comprehensive website and ongoing topics in your blog, you will be able to concentrate on important tasks without repeating everything countless times.

    Happy holidays!

  • http://twitter.com/pkiss Patrick Kiss

    Harvard Business Review: The New Conversation – Taking Social Media from Talk to Action
    http://www.sas.com/events/pbls/2010/las-vegas/documents/TheNewConversation.pdf (PDF, 1.2 MB)

  • Pingback: Social media advice for IR in 2011: use your own website | IR Web Report

  • http://twitter.com/jimacrawford Jim Crawford

    To pick up the thread of engagement and the expectations of engagement. Social Media (SM) nurtures engagement behaviour and has the opportunity to facilitate dialogue.

    Mainstream ‘consumer’ SM is setting a level of expectation on how corporate entities ‘should’ be embracing emerging SM communication platforms – technology being defined as a strategic brand differenciator.

    Brand perception then drives corporate behaviour in adopting SM technologies.

    IROs, driven by a natural risk mentality, are going to be cautious in adopting SM comms techniques early-on, without seeing the evidence first. However, this could generate a self-made risk of having to play ‘catch-up’.

    Closer partnerships are expected with Corporate Comms teams, to ensure consistancy of both the strategic and tactical corporate messaging and the appropriate channels/platforms through which this is acheived – even if the most receptive investor touchpoint is a 140 character tweet.

    Dominic’s point of ‘we also need to accept that most people read but don’t necessarily participate’ is spot on. A blog post, corporate Facebook page or tweet could be read, but may not result in SM participation, but could still result in influencing corporate (and investment) perception.

  • http://irwebreport.com Dominic Jones

    “IROs, driven by a natural risk mentality, are going to be cautious in adopting SM comms techniques early-on, without seeing the evidence first. However, this could generate a self-made risk of having to play ‘catch-up’.”

    Could be worse than just having to play catch-up. At companies where there’s a large overlap between customers and shareholders, a disconnect between the customer experience and the shareholder experience could undermine the overall brand and management’s credibility.

    It’s odd that if I’m your customer, you’re accessible to me via social media. But if I’m your shareholder — one of the owners — I can’t even get you to reply to my emails. You send me off to some third-party call center where the people only want to know me by some “control number” I can’t remember.

    In such cases the risk-avoidance mentality is most definitely a liability, and a smokescreen for a lack of accountability.

    Much to chew on there, Jim. Thanks for the thoughtful comment.