Reaching the North American Retail Investor. Investor Relations Role
Reaching theNorth AmericanRetail Investor: Investor Relations Role
Presenter• Eric Stevenson – PresidentEric brings over 40 years of financial corporatedevelopment and publishing experience to play in thisPresentation, sharing valuable tips and information and therole IR plays in reaching retail investors across Canada andthe United States.The information is focused on retail investor outreach onlyand covers both market and media IR practices.Institutional IR practices are not covered.
Agenda• The Facts About Retail Investors• Reaching Out to the Marketplace• Budgeting for Effective Retail Investor Outreach• The Storyline and Importance of Communications
The Facts About Retail Investors• Canada: – 16 million Canadians own stock. – Average Portfolio is $60,000 to $100,000. – Average 3 to 4 trades per quarter. – Invests long-term, 3 to 5 years. In the United States, retail investors are much more active, trade more frequently and are influenced by advertising. *$285 billion of TSX trading comes from the U.S. Source: TMX Equicom Group
The Facts About Retail Investors• United States: – 84 million Americans invest. – Of the approximately 106.5 million households in the U.S., 49.5%, or 52.7 million households, own equities. – These households are highly responsive to advertising and tend to follow a "buy-and-hold" strategy. – 15% of portfolios are invested in foreign stocks with Canada making up a large portion. Source: Mellon Bank, Accessing the Retail Investor
Reaching Out to the Marketplace• Building a retail investor outreach program requires a coordinated effort between the IR agency and its client.• Sound planning is crucial and should be designed around perceived milestones in a company’s development that are presented over time in a storyline fashion.• Companies compete for retail investor attention, so it’s vital to use a staged approach in developing an IR strategy.• IR strategies must also be designed to utilize a mix of resources in reaching retail investors that can be measured. Email, direct mail, magazine articles, news and press releases all play an integral role.
Budgeting• Annual IR budgets vary significantly, depending on the size of the company. *In 2010, annual IR budgets ranged from as little as $250,000 to $1.2 million, with a median budget of $500,000.• Budgeting for retail investor outreach strategies can stretch those numbers significantly, that’s why it’s important to have sound planning in place – though the resulting increase in market liquidity can more than offset those costs.• Companies must understand the role retail investor outreach campaigns play in order to justify the added cost. Source: Mellon Bank, Global Trends in IR, 2010
The Storyline and Importance ofCommunication• In building a retail investor outreach program, the goal is to communicate the storyline: Announcements Perception Trade Magazines Newsletters Financial Content Achievement
The Storyline• Storylines are the perceived goals and objectives. They’re presented through a series of press releases that collectively tell a story. – Each release contains a quote from an executive which is the anchor to storyline development, sort of like a piece to a puzzle. – The progress communicated in each release builds a perception of what’s to come, so when it arrives, those that have been following the story react.
Getting the Word Out• The IR strategy should build upon the storyline presented, using third-party content producers, trade magazine articles and newsletters to disseminate to an ever-broader base of retail investors. Selection, timing and budgets all play a role. – Content Producers; websites that write about the news a company releases. Consideration in the selection process should be the quality of their work and audience reach. (cost: 1k to 5k) – Trade Magazine Articles; two-page feature articles written by professional journalists. (cost: 7k to 15k) – Newsletters; subscriber base, frequency of delivery, quality of writing and niche served are key considerations. (cost: 5k to 35k)
The Storyline Budget• Many factors effect the budget process; - The goal of an outreach campaign.Budgeting for a retail investor outreach campaign requires consideration of theobjective and what it will take to reach that goal. Many factors influence that. - Trading volume.If a stock is thinly traded, or has lost significant value over time, ‘fighting back’ canbe a challenge. Budgets of those natures should be large enough to achieve results. - Value of perceived milestones.How retail investors perceive results will effect their reaction in the marketplace. If amilestone is significant, it may not require as much budget consideration, thoughwhat a company perceives as significant may not be to investors. This can beassessed in the early stages of the storyline’s promotion and adjusted accordingly.
Key Issues• The main source of investor information is now online. – Financial content producing sites. – Research. – Financial newsletters.• Choosing the right resources is critical. – Choose an IR agency that specializes in retail investor outreach services. – Involve IR in your planning process. Stocks do not ‘take care of themselves’. You cannot expect the investing public to discover you, you have to discover the public.
Electronic Tools• Website. Your website is your ‘storefront’ to the investing public. It must be informative, easy to navigate and provide not only information on your business, but the sector you’re in as well.• Social Sites. Twitter, Facebook and Blogs can all play a role in retail investor communications, though you must be cautious on what you write.• Video. Videos allow for investors to see management and it allows for broader distribution of your story. But they can also be used for slide presentations and charts.
Other Tools• Brochure. Promotional material can be mailed, handed out at shows and used continually. But they should be professionally designed.• S&P Stock Report. Standard & Poor’s provides a great stock report service independent of the company that is updated monthly. The Report is a great third-party resource investors trust for its accuracy. These can be accessed from your website or printed and used as handouts or mailers.• Fact Sheet. Factsheets are great for mailers or handouts at shows. They are artful in presenting a capsulated view of the facts; quarterly financial picture, growth and outline description of the business with contact information.
Additional Questions, Please Contact: Eric Stevenson President Price Target Media, Inc. email@example.com Ph: 775-434-4451
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.