IT HAS become a tradition of sorts that quarterly earnings season kicks off when aluminum giant Alcoa Inc. (NYSE:AA) reports its results. That’s still the case but it now comes with a twist that shows just how entrenched social media has become in the US corporate reporting scene.
On Monday when the company announced its results, much of the activity and evident investor interest took place outside of the company’s usual channels, on its social media and document sharing accounts. While this might once have seemed remarkable, it’s now fast becoming standard practice for scores of companies – and many more will likely join the parade in the coming weeks.
In fact, company disclosure channels that once seemed innovative – such as investor relations websites, webcasting and PR wire services – are struggling to stay relevant as investors grow accustomed to receiving information from companies in real-time on their favorite social networks in formats that are easier to access and use. These changes are irreversible and were very much in evidence as Alcoa posted its numbers this week.
Social media offers better user experience than IR websites
Facebook now features prominently in Alcoa’s corporate reporting. The company’s page on the giant social network was transformed on the day of its results into a frequently updated feed of new information that its almost 14,000 followers were able to comment on and share with their friends, things they cannot do on the company’s corporate website.
Alcoa also used the company’s Twitter account to provide links to the earnings release, earnings call webcast and the company’s investor presentation, which was posted on the SlideShare presentation sharing service. The company also highlighted key facts and quotes from its release for its 2,600 Twitter followers.
Of course, Alcoa is still using its “traditional” IR channels – website, PR wire and webcast — as the backbone of its quarterly reporting. However, the usability of Alcoa’s IR website, which is about par for most IR websites today, pales in comparison with the social channels.
Accessing the Thomson Reuters-hosted earnings call, for instance, requires users to acknowledge a long disclaimer and then work their way through 4 separate screens – including a registration form — before they can access the audio.
As you can see in the screenshot below, one user on Alcoa’s Facebook page clearly had difficulty using the webcast. Before Facebook and Twitter, investors didn’t have an easy way to complain so companies were clueless about how poor their websites were. Now they get the feedback in real time and in public.
I also noticed that the full-text earnings release that Alcoa distributed via Business Wire seemed to get almost no attention whereas a version of the same release posted in the News section of Alcoa’s website was shared more often than any other version on the web.
For instance, the version on Yahoo! Finance, by far the world’s most popular finance website, was not shared by anyone while the version on the company’s website was “liked” on Facebook 15 times and shared on Twitter 11 times.
This suggests that Alcoa may be wasting its time and money distributing full-text earnings releases via Business Wire when people appear to be accessing the company’s releases mostly from its own website. Alcoa probably could save a bit of money and boost traffic to its website by shifting to an advisory earnings release.
Investor information consumption changing
The point is that the audiences for investor relations information are changing how and where they access and use company financial disclosures. They are moving away from the old PR wire channels and engaging with companies directly on their websites, and through social media when companies make themselves available in those channels.
A large and growing number of companies have recognized this. While they may have initially started using social media for marketing or PR purposes, they’ve quickly realized that investors also are using social media and want to receive information where it’s now most convenient for them.
In fact, hundreds of companies will use social media this quarterly reporting season. Most will use Twitter, but growing numbers will also use Facebook, YouTube, SlideShare and StockTwits. And more companies are coming on board every week, which in turn is driving more investors to use these channels.
The tipping point
I can’t say this loud enough: SOCIAL MEDIA IS NOW MAINSTREAM, and companies that haven’t yet started using social media in their IR programs are in danger of finding themselves talking to increasingly smaller audiences.
We have reached the tipping point for social media in investor relations. If you’re not using social media in your IR program yet, you need to make it a priority and start right away.
That might sound alarmist, but then you probably don’t study this stuff for a living. You’re not seeing what is happening on a daily basis the way I am.
Here’s a taste of what I’ve seen just in the 24 hours that preceded this post. It’s just one day and it’s not even most of it. And there’ll be more next week, and the week after that.
Get on board or be left behind. It’s that simple.
As I said, that’s just some of what hit my screens in the 24 hours before I post this. Earnings season isn’t even a week old yet!
(Disclosure: I have in the past advised StockTwits on its IR services, but do not have a current consulting arrangement with the company.)