Social Media in the World of Investor Relations

Social Media in the World of Investor RelationsDecember 2010Helmut Kazmaier | helmut.kazmaier@stimmt.chStimmt AG | Social Media in the World of Investor Relations 1

About Stimmt Stimmt is a consultancy, focusing on  human behavior  interactions between companies and customers  electronic user interfaces We are 12 people based in Zurich, operating for 12 years. Helmut Kazmaier Partner Electrical Engineer, with Stimmt for more than 5 yearsStimmt AG | Social Media in the World of Investor Relations 2

Before we start: some statistics on the topic 85% of financial service professionals under the age of 50 use social media (LederMark Communication, March 2010) 58% of institutional investors and sell side analysts in the USA and Europe think that social media will be relevant for their investment decisions in the future (Brunswick, September 2009) Time to find out, what social media is all aboutStimmt AG | Social Media in the World of Investor Relations 3

ContentsSocial media in a nutshellSocial media in the context of IR | ExamplesOpportunities, challenges and recommendationsDiscussionStimmt AG | Social Media in the World of Investor Relations 4

Social media: democratization of information and their distribution channels Traditional Media Social MediaActive Information provider Distribution channels: Conversation • PrintMonolog • TV Information • Radio provider • … • Blogs • Micro Blogs • Social networks • Content SharingPassive Consumers »Prosumers» Monolog turns into conversation. Everybody can provide and distribute information. Interaction of conversation partners becomes visible to global community. The passive consumer also becomes a producer or «prosumer». Stimmt AG | Social Media in the World of Investor Relations 5

Social media brings some major changes Low barrier: everybody with a computer and internet access can participate Low cost: distribution of information at marginal cost Global spread: Information can disseminate through global networks quickly Real time: information is available instantly Mobility: information can be provided and consumed independent of location Transparency: source information, its usage and conversations are visibleInformation monopoles are dissolved. Overall, social media foster democratizationof information and increase transparency in communication.Stimmt AG | Social Media in the World of Investor Relations 6

But what exactly are social media? For the sake of simplicity we focus on a few tools:  Blogs  MicroBlogs  Social Networks  Content Sharing  Content AggregationSource: http://social-media-prisma.ethrity.deStimmt AG | Social Media in the World of Investor Relations 7

In order to assess the opportunities of social media for IR, a quicklook at the purpose of IR is necessaryInvestor Relations (IR) is a strategic management responsibility thatintegrates finance, communication, marketing and securities law complianceto enable the most effective two-way communication betweena company, the financial community, and other constituencies,which ultimately contributes to a companys securities achieving fair valuation. Source: http://en.wikipedia.org/wiki/Investor_relations Fair valuation of securities Company Dialogue Financial Goal community Opportunity: Social MediaSocial media’s potential is in supporting the dialogue between a company and the financialcommunity. Also, social media can help providing relevant information efficiently andeffectively to a company’s stakeholders as we will see later on.Stimmt AG | Social Media in the World of Investor Relations 8

This presentation focuses on three different applications of socialmedia Additional distribution channel Embracing dialogue Join the conversationStimmt AG | Social Media in the World of Investor Relations 10

Increasing reach with social media tools:«fish where the fish are» Social media platform IR information on company web site Social media platform users Web site user Only web site users get information Users of social media tools., e.g. Twitter, can access informationThe same piece of information can be published easily on various social mediaplatforms, thus making it available more widely and directing users to thecompanies web site.Stimmt AG | Social Media in the World of Investor Relations 11

Making content available with social media tools is moreconvenient for members of the financial communityCompany A Content aggregation toolCompany BCompany C, no news User, e.g. analystInstead of having to check various sources, users can aggregate information in asingle tool. Information is pulled rather than pushed.Stimmt AG | Social Media in the World of Investor Relations 12

Example | Dell has created a whole blog dedicated to IRSource: http://en.community.dell.com/dell-blogs/dell-shares/b/dell-shares/default.aspxDell features its official content from its investor relations web site enriched withadditional context, commentaries and opinions.Stimmt AG | Social Media in the World of Investor Relations 13

Example | Sulzer using Twitter to propagate midyear results Source: http://twitter.com/#!/SulzerLtd Source: http://www.sulzer.com/desktopdefault.aspx/tabid-609/The message itself carries very limited information. It links to the IR section of theSulzer’s web site.Stimmt AG | Social Media in the World of Investor Relations 14

Example | Pfizer making presentations available onslideshare.netSource: http://www.slideshare.net/PfizerUsers can access presentations as well as subscribe to the Pfizer channel in order tobe informed automatically if any new content is available. The presentations canalso be embedded easily into other web sites fostering further distribution.Stimmt AG | Social Media in the World of Investor Relations 15

Example | GoogleIR shares video content on Youtube.com Source: http://www.slideshare.net/PfizerAs with the previous example the reach of the videos has been increaseddramatically. Users can subscribe to the GoogleIR channel in order to stay up todate as well as embed videos into their web sites.Stimmt AG | Social Media in the World of Investor Relations 16

A few words on risk | Reporting positive analyst opinions Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/Will the company as well report the negative messages?Stimmt AG | Social Media in the World of Investor Relations 17

A few words on risk | Reporting positive analyst opinions Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/Coming from an official company account this tweet might be risky.Stimmt AG | Social Media in the World of Investor Relations 18

A few words on risk | Giving exclusive information Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/This message was not published on the company’s web site. Why was it publishedon Twitter?Stimmt AG | Social Media in the World of Investor Relations 19

A few words on risk | A positive example Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/Strabag handles analyst recommendations properly. Also the negative ones arepublished on both Twitter and the company web site.Stimmt AG | Social Media in the World of Investor Relations 20

Using social media as an additional information distributionchannel seems to be the most prominent use case today Increasing reach by providing content at various social media platforms Potentially more focused distribution Foster distribution of content by making it easily sharable Link back from different platforms to own web site (good for Google ranking) Very cost efficient Necessary effort is quite reasonableMany companies start using social media as an additional information distributionchannel to increase their reach. It is the least complicated use case and is a goodstarting point to gain some experience in this realm.Stimmt AG | Social Media in the World of Investor Relations 21

Embrace the dialogue:From information distribution to two-way communication Access and discuss IR information Stakeholder inquiries Company Financial IR department Answer communityInformation is distributed to financial community. A feedback channel is openedallowing comments on and discussion of the information.Stimmt AG | Social Media in the World of Investor Relations 23

Example | TVI Pacific made Facebook the official corporatediscussion forumSource: http://www.facebook.com/tvipacificStakeholders can comment and ask questions. The company’s responses aretransparent to the whole audience. Thus not just the information itself but the wayTVI interacts with its stakeholders characterizes them.Stimmt AG | Social Media in the World of Investor Relations 24

Example | Shell uses Twitter to direct users to their events Source: http://Twitter.com/#!/shelldotcom/status/18530442711Shell uses the opportunity to direct people from Twitter to their events, invitingthem to interact with them.Stimmt AG | Social Media in the World of Investor Relations 25

Example | WEG S.A. uses Twitter to gather questions before aconference call Source: http://Twitter.com/#!/weg_irWEG S.A. uses Twitter as an additional channel for stakeholders to send inquestions to be answered later in the conference call.Stimmt AG | Social Media in the World of Investor Relations 26

Example | Google moderator allows the community to gatherand rate questions up-front Source: http://irwebreport.com/20090408/web-shareholder-meeting-questions/Next to Google other Companies like IBM, Barclays, Berkshire-Hathaway IBM orExxon Mobile have given their shareholders the possibility to pose questions for theannual meeting online and also rate them in advance.Stimmt AG | Social Media in the World of Investor Relations 27

Example | Virtual annual meetings are not new, but Intel is thefirst company to include online voting Source: http://irwebreport.com/20100331/virtual-annual-shareholder-meetings/Intel’s idea to have the annual meeting exclusively online was rejected vehementlyby its shareholders.Stimmt AG | Social Media in the World of Investor Relations 28

Join the conversation:From 1:n to n:n communication 1:n n:n … … … Information Users providerCommunication becomes more challenging, since it takes place in an intertwinednetwork of participants. The role of the information provider becomes less central.Control over information becomes increasingly difficult.Stimmt AG | Social Media in the World of Investor Relations 30

The new task is to position a company as a valuable,authentic and reliable partner in the global conversation Being a good, trusted citizen*  Be honest  Respect the community  Be helpful  Create added value  Show don’t tell *These are some of the general rules of social media. … …It is not just about messages but about behavior. The way a company interactswith the global community becomes increasingly important.Stimmt AG | Social Media in the World of Investor Relations 31

Example | Using Twitter to answer direct questionsSource: http://Twitter.com/#!/Microvision/status/18061379992140 characters on Twitter are not always enough to give sufficient information, butdirecting stakeholders to the right contact person is also helpful.Stimmt AG | Social Media in the World of Investor Relations 32

Example | Pointing to relevant 3rd party resources is awelcome serviceSource: http://Twitter.com/#!/Emulex/status/18618946907Not just sharing own content but pointing to relevant content by other sources isconsidered being helpful and creating added value. This service makes a company’sTwitter stream even more attractive.Stimmt AG | Social Media in the World of Investor Relations 33

Example | Clever tweet by SulzerSource: http://twitter.com/#!/SulzerLtdPraising Roche shows that Sulzer cares, is listening and willing to engage in theconversation. On a side note Sulzer places an important messages in a modest way.Relevant messages that don’t focus on the sender are appreciated by thecommunity and show a good understanding of the etiquette.Stimmt AG | Social Media in the World of Investor Relations 34

Example | Being prepared to have tough conversations Source: http://www.facebook.com/pages/Boycott-ExxonMobil/304328864370First thing is being aware of these activities. Not yet being a part of theconversation makes it more difficult to engage in the conversation and act as areliable, trusted partner.Stimmt AG | Social Media in the World of Investor Relations 35

Example | Special interest communities aggregate finance information and opinions from everybodySource: http://seekingalpha.com Source: http://stocktwits.com Being aware of these offerings and monitoring activity in relevant sectors can give additional insight about what the financial community is up to. Stimmt AG | Social Media in the World of Investor Relations 36

Opportunities | Social media can help you getting the message out Increased reach, address new target groups Word of mouth• Better understand your stakeholders• Get more direct feedback• Improve your offering together with stakeholders• Improve bonding with stakeholders and thus increase loyalty• Counter fragmented media consumption• Circumvent intermediaries and save time and cost• Easy control and monitoring of successThis list is not exhaustive but gives an impression of how a company can benefitfrom the use of social media. It is also a basis for further discussion.Stimmt AG | Social Media in the World of Investor Relations 38

Challenges| Social media is not just another communicationchannel New communication rules need to be learnt and followed Often unclear: Comply with securities law, e.g. endorsement issue Control over information – bad news also spread fast Well informed, challenging stakeholders expect adequate responses Engagement has to be serious Communication processes are much faster Fragmented target audience is difficult to reach all at once Unwanted messages can lead to loss of authenticity and trust Target audience might not yet fully trust social media channelsThis list is not exhaustive but gives an impression of the challenges a companyfaces when engaging with social media. It is also a basis for further discussion.Stimmt AG | Social Media in the World of Investor Relations 39

Recommendations | Social media should neither be ignored norrushed into Start listening  Get a feeling for different social media tools  See how the community uses them  See what they say about you Monitor  Systematically monitor relevant channels  Identify information hubs and opinion leaders  Start feeding your messages to these channels Engage  Share your content: news, press releases, videos, photos, etc.  Invite stakeholders to interact with you on social media platforms  Engage in the conversation with other participants  With long term focus: Actively shape your position and reputation by your messages and value adding interactionsAlthough first steps can be taken easily with little risk, serious engagement shouldfollow a long term strategy and clear goal set.Stimmt AG | Social Media in the World of Investor Relations 40

Effective social media engagement doesn‘t happenby chance.Stimmt.Stimmt AG | Social Media in the World of Investor Relations 42

AppendixBest Practice RecommendationsSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010Stimmt AG | Social Media in the World of Investor Relations 43

Best Practice RecommendationsSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010; q4websystems.com Only share material information that has already been disclosed through a Reg FD approved method. Social networks can be used to establish your company as thought leaders in your industry; share industry-related information as well as any other supplemental information to help provide more background and context about the company’s business and market opportunity, e.g. videos that showcase corporate assets. If people ask questions that are not IR-related; use this as a customer service opportunity and direct them to the appropriate channel. If you are using social channels for IR already, use them consistently e.g. if you share one press release or event – share them all, over every social network you use. If you choose to automatically update Twitter via a feed for press releases, include additional tweets about news, events, or excerpts from specific news items (people like to hear from humans more than feeds). If you have a Facebook account be sure to stay on top of any questions asked over this channel. if you have YouTube and/or SlideShare accounts, you should take the opportunity to post an additional presentation or video with a relevant member of the company talking about a recent event such as a quarterly call to provide more context to help in the understanding of what it means to the company. Invest time in your profile pages on each social network: include a detailed company profile and link to your corporate website. You may also want to provide the name of the person responsible for administering the account and their contact information – this helps people know that there is an actual person /“official” spokesperson behind the account. Listen and monitor the conversation to see what is being said about your company and where – not only on the channels you are using, but on other networks such as wikis and social forums such as StockTwits or Seeking Alpha. Display the link(s) to your social networks on your corporate website in the Newsroom, IR or Contact Us sections. It may also help to list the social channels your company is using on other material such as press releases or corporate presentations. If your company has more than one social network account (for example, some companies have more than one Twitter account), mention which one is the “official” corporate account and list the other ones in your profile section. If you have a social network account dedicated to IR – proactively reach out to shareholders and ask them to submit questions for upcoming quarterly calls or the annual meeting. This is a good way to find out if you are dealing with any current or potential shareholders.Stimmt AG | Social Media in the World of Investor Relations 44

Best Practices for TwitterSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Ensure the investor focused Twitter account is in sync with the corporate/investor website; content should be posted simultaneously to the website and Twitter. Include a detailed profile of your company and link to your corporate website as well as your background image with further information including the name of the person(s) tweeting on behalf of the company. If you have more than one Twitter account, clearly indicate what each account is used for – it is also helpful to indicate the person responsible for each one. Ensure that you use the channel consistently – if you tweet one press release tweet them all. Similarly, if you have posted specific IR-related material in the past i.e. notice of a conference call or an analyst day, ensure you do so each time. Also, it is always best practice to provide a link back to the associated material, especially if it is housed on your corporate or IR website. Having a separate Twitter account for IR is a good best practice as it helps followers keep track of all IR-related information by following one account. It also lets them know that they can ask IR-related questions on this specific account. And it helps your company monitor and stay on top of the questions they receive so they can use this information to update company material, messaging and FAQ’s. If you have a Twitter account dedicated to IR, be very clear that it is an ‘official’ IR account for the company. You should also let people know how they can submit questions; recommend providing the investor relations email address or another way they can get a hold of you or the main IR contact. If you live-tweet events, be sure to use specific #hashtags to help people who can’t take part in the live session and need to do a search later. We also recommend limiting the number of #hashtags in each tweet, as it can confuse the context of the message Further, if you live-tweet your earnings, try and be consistent from one quarter to the next e.g. #eBayQ210. Twitter is limited to 140 characters, but at the very least a shortened disclaimer should be provided which links back to the full disclaimer (which should be housed on your website).Stimmt AG | Social Media in the World of Investor Relations 45

Best Practices for FacebookSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Ensure the investor focused Facebook page is in sync with the corporate/investor website (or blog); content should be posted simultaneously to the website and Facebook. Provide a detailed company description as well as any other information your company would want current or potential shareholders to see. Include a link to your corporate/IR website and provide other relevant links i.e. an ‘information’ tab. Indicate this is the company’s official Facebook account, along with the contact name and their information so people know it’s a company-administered account. Use the channel to consistently provide information released over Reg FD channels and link them back, wherever possible to your corporate or IR website. Regularly monitor the channel to ensure that inquiries are being handled properly – particularly the discussion board. Spell out the ‘Terms of Use’ or ‘Discussions Policy’ – particularly for posted comments that are in poor taste, derogatory etc. and that the company has the right to remove such posts. We have seen one company demonstrate complete transparency by implementing a ‘removed posts board’ where offensive posts were removed and the reasons why were given. Provide your disclaimer (or a shortened version) linking back to the full disclaimer, which should be housed on your website. Use Facebook to post supplemental information about the company such as videos that showcase corporate assets or highlight community-related activities e.g. charitable events etc. If your company is getting a lot of IR-related or direct questions from shareholders, provide a synopsis of the information and inform people through other corporate social channels i.e. Twitter. Have a variety of tabs – that encompass various aspects of the business such as news, videos, careers/HR, employees etc. Providing a mosaic of information will help current and potential shareholders get the complete picture about the company.Stimmt AG | Social Media in the World of Investor Relations 46

Best Practices for IR blogsSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Provide insight into news, industry developments and the company – don’t just regurgitate information in press releases or other company materials. Use the blog to solicit questions from shareholders in advance of a company event such as a quarterly earnings call or annual meeting. Post videos, which will help provide additional commentary around company events such as a quarterly earnings call or annual meeting. Provide a “Discussions Policy” and the company’s disclaimer (or a link to where the disclaimer can be found on the company’s website.) Although not seen very often, posting the bio and avatar of the main contributor(s) to the blog can help companies give shareholders a more personal touch. It is also useful to provide contact information (even it is housed someplace else on the corporate or IR website) for the IR person/department.Stimmt AG | Social Media in the World of Investor Relations 47

Best Practices for Youtube/SlideshareSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com If your company is not currently using YouTube or SlideShare for IR (but are planning to do so in the future), go in and officially register your corporate account. While some third parties legitimately post real company information, having an ‘official’ account will help users find the ‘voice of authority’ on your company in these channels. If your company is using YouTube or SlideShare for IR, fill out your profile summary – this will also help people recognize the company’s official YouTube or SlideShare account. Even if you don’t use YouTube or SlideShare, you should actively monitor these sites – as you may discover a protest account. While we don’t advocate addressing every negative comment, knowing the account exists is important. Your social media policies should help you determine which negative comments need to be addressed and how best to do so. If you are using YouTube or SlideShare, be sure to repurpose the video e.g. embed it on your IR website and if you use other channels like Twitter, be sure to let your followers know you have posted a new video and provide a link. Similarly, if you have a Facebook account, we recommend having a separate ’YouTube/Video”’ or ‘SlideShare’ tab, which helps increase awareness of your company. Posting presentations on YouTube and SlideShare makes it easy for interested parties, such as the financial media, institutional and retail shareholders, to share company videos/presentations as the embed code is easily extracted and can be cut and pasted virtually anywhere. SlideShare now offers companies the option of customizing their account, which provides more control over the design of their channel. We have seen a few companies put links to the other social networks they are using on their SlideShare profile – this is a good practice, as it helps ensure that people know of other options where they can view company materials and engage with them.Stimmt AG | Social Media in the World of Investor Relations 48

Best Practices for LinkedInSource: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010, q4websystems.com Company profiles are automatically populated on LinkedIn - so you should regularly monitor your company’s information to ensure it is correct. A new feature was recently launched by LinkedIn which allows anyone to follow a company and receive updates to any company changes such as personnel which reinforces the point to monitor the site to ensure accuracy of the information. In spite of LinkedIn’s limited use for IR, if your company has a presence there, get familiar with the channel and the information posted on your company – as more investors begin using the channel, you may receive questions about something they saw on LinkedIn. LinkedIn is evolving quickly and with the high number of professionals using this channel, it is likely that company specific services will continue to emerge. Our recommendation is to keep a close eye on the evolution of LinkedIn as it will only grow in importance to investor relations.Stimmt AG | Social Media in the World of Investor Relations 49

Social Media in the World of Investor Relations

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