Investor Relations and Social Media

Reaching Shareholders Online: Trends and Best  Practices in Online Communication and Social  Media in Corporate Investor Relations   Presented by David A. Hogan, APR  Instructor, Abilene Christian University  The 2009 Annual Conference of the International  Association of Online Communicators, Washington, D.C.,  October 1‐2, 2009  

About the Presenter  Dave Hogan, APR, is experienced in corporate communications  and investor relations.  He has served as an investor relations  officer for three U.S. public companies.  Hogan currently splits  his time between teaching public relations in the Department  of Journalism and Mass Communication at Abilene Christian  University in Texas and working as director of investor relations  and corporate communications for First Financial Bankshares,  Inc. (Nasdaq: FFIN).  Active in the National Investor Relations  Institute for more than a decade, Hogan is a member of the  Dallas/Fort Worth NIRI chapter and is a co‐founder and former  officer of the Greater Charlotte (N.C.) NIRI chapter.  He is an  accredited (APR) member of the Public Relations Society of  America, treasurer of the Abilene Public Relations Organization  and active in the Texas Public Relations Association.    For more information, see Hogan’s profile on LinkedIn at   http://www.linkedin.com/in/dahogan76 or follow him on  Twitter @dahogan.  

Reaching Shareholders Online: Trends and Best  Practices in Online Communication and Social  Media in Corporate Investor Relations   A revolution is taking place in how organizations communicate  with their target audiences, both internal and external.    The  transition in organizational communications that began with  the advent of the World Wide Web and the popularity of  broadband Internet service took a giant leap forward earlier  this decade when several new online services appeared for the  first time, including Myspace (2003), Facebook (2004),  YouTube (2005) and Twitter (2006).   Collectively, these and  similar new services came to be known as “social media.”   Communications consultant Merrie Spaeth has described the  impact of social media as being even more significant than the  advent of earlier new communications tools such as radio and  television (Spaeth, 2009).   

This paper focuses on how online communication tools, and especially social  media, are changing the communication practices of corporate investor  relations departments at public companies of all sizes.  It also examines the  question of why corporate investor relations departments have been slower  to adopt social media communications tools than their counterparts in other  corporate communications specialties and in marketing.  While numerous academic studies exist on the role of corporate Web sites,  the issue of how social media is impacting investor relations practices has  not been explored in‐depth in academic research.   This is most likely due to  the newness of this phenomenon and the relatively few examples of early  adaptors available for study until recently among public companies.    Appropriately, many of the most valuable sources for information for this  study came from social media itself, especially from bloggers who write in  this space and from Twitter messages (including valuable links to online  resources).   Social media sharing tools including Delicious and Slideshare  also played a valuable role in assembling this research.   

The Role of Communications in Investor Relations  The National Investor Relations Institute, the   largest professional organization in the world   for investor relations officers, defines investor   relations as “a strategic management responsibility that integrates  finance, communication, marketing and securities law compliance to  enable the most effective two‐way communication between a  company, the financial community, and other constituencies, which  ultimately contributes to a company's securities achieving fair  valuation” (NIRI 2003).   It is important to note the emphasis on  “communications” and “marketing” in this definition.  Investor  relations officers are inherently and inextricably communicators, no  matter what their previous academic or career backgrounds may have  been.   Nearly a fourth of all NIRI members engaged in corporate  investor relations work came from career backgrounds in corporate  communications or public relations, second only to “corporate  finance” as a career background (NIRI, 2008). 

The Role of Communications in Investor Relations  (continued)   Of special interest to this study, the NIRI definition describes the role  of investor relations as “to enable the most effective two‐way  communication between a company, the financial community, and  other constituencies.”  Online communication, and in particular social  media, is ideally suited to helping investor relations officers fulfill this  mission.  Social media excels in offering two‐way communication  channels and provides investor relations officers with a promising  new platform for full disclosure, transparency and dialogue.     Based on this definition, one might expect investor relations  departments to have enthusiastically and whole‐heartedly embraced  social media tools to help them better achieve their objectives, but  such has not been the case. 

Investor Relations: Letting Others Take the Lead  The evidence is clear that investor relations is slow in joining the  social media party.  A recent study of the Fortune 100 companies in  the United States conducted by McKenna Partners found that “very  few companies are delving into social media for IR” (McKenna 2009).    An informal survey of 270 investor relations officers and chief  financial officers, conducted earlier this month by Bulldog Reporter’s  IR Alert, found that only 12.5 percent of respondents use social media  to disseminate financial information to shareholders and the financial  markets.  Large companies, defined in the study as those with $500  million or more of annual sales, fared even worse.  Only three percent  of large companies use social media as part of their investor relations  communications (Bulldog Reporter, 2009). 

Investor Relations: Letting Others Take the Lead  (continued)  An academic study earlier this year confirmed that other institutions are  outpacing corporations in adopting social media.  Nonprofit (charitable)  organizations and academic institutions have both embraced blogs and  other social media tools at a higher rate than have corporations.  More  than half (57 percent) of all large charities use blogs, compared with 41  percent for colleges and universities and only 16 percent for Fortune 500  corporations (Barnes and Mattson, 2009).    Further, only 28 percent of the  corporate blogs linked to Twitter accounts, 21 percent linked to corporate  videos and only 10 percent linked to podcasts (Barnes and Mattson, 2009).   

Investor Relations: Letting Others Take the Lead  (continued)  This reluctance on the part of investor relations departments to pursue social  media is all the more surprising given that the primary target audiences for  investor relations ‐‐ institutional investors and analysts ‐‐ are using social  media tools for both business and personal reasons.   Intuitively, institutional  investors and analysts would seem to be ideally suited for social media.  They  are highly educated, affluent and very mobile.  Blackberry or iPhone use is  almost universal among this crowd.   Studies confirm the interest of  professional investors in social media.  The Brunswick Group, for example,  surveyed 455 analysts and institutional investors in July 2009 and learned  that nearly half (42 percent) read blogs and that a comparable percentage of  the respondents said they have followed up on corporate information found  on a blog.  Twenty percent of the respondents said information on a blog had  contributed to an investment decision or recommendation.  Most  respondents (58 percent) believe social media will become increasingly  important in helping them make investment decisions (Joyce, 2009).   

Investor Relations: Letting Others Take the Lead  (continued)  Professional investors already are regular users of corporate Web sites.  The  SEC acknowledged this fact in its 2008 update and even said that “in very  limited circumstances” a company’s Web site could serve as “a standalone  method of providing information to investors … “ (SEC, 2008).  A study by the  Rivel Research Group found that 75 percent of institutional investors look for  information on corporate Web sites “weekly if not daily” (Rivel, 2007).     Darrell Heaps, president, CEO and founder of Toronto‐based Q4 Web  Systems, made the case in a recent blog post that companies need to  recognize that the quality of their investor relations Web sites and social  media may impact reputation and stock valuation.  "Some think that Web sites are only for retail investors, and if you’re largely  held by institutions then the Web site doesn’t matter,” Heaps said.  “In  today’s market, this simply isn’t the case. Your Web site and how you use the  social Web have a direct impact on your company’s reputation and in many  cases the value of your stock" (Heaps, 2009). 

Investor Relations: Letting Others Take the  Lead (continued)  Evidence is growing that institutional investors and  analysts, already accustomed to searching corporate  Web sites for information, are now turning to social  media.  A host of new online and social media  services are proving appealing to these investors.   They include Seeking Alpha, which aggregates  articles from financial blogs and newsletters and  claims four million unique users per month;  StockTwits, which allows investors to search Twitter  messages using stock ticker symbols; and Wikinvest,  a contributor‐driven investment research site.   

Not Yet Convinced  While the momentum is growing for greater adoption of social media in  investor relations, not everyone in the profession is convinced of its value.   Beth Kurth, president of Kurth & Company and a former investor relations  and public relations director for a public company, recently said in an online  article that Twitter does not have a place in investor relations.  She criticized  Twitter as “time consuming” and a distribution channel that fails to “meet  the demands of full disclosure.”    “Twitter doesn’t really matter to IROs because it’s social media,” Kurth said.   “And by definition, social media is not business media.  Rather, it is a media  that is designed to be used by friends, pals, buddies and social acquaintances  … it is not a method to disclose material information in a full and public  manner” (Kurth, 2009).   

Not Yet Convinced  (continued)  John Palizza, a popular investor relations blogger, also questioned the value  of social media in a recent blog post.  “I confess that Twitter and Facebook have me stymied,” Palizza said.  “I just  don’t get it.  Twitter because I’m incapable of saying anything in 140  characters or less and Facebook because why would you want to put all that  information out there in the public domain?” (Palizza, 2009).  Both Kurth and Palizza received a barrage of comments following their  articles, indicating the intensity of interest on both sides of this topic among  investor relations practitioners.   

Legal and Regulatory Concerns  While some investor relations officers say they are holding off on  implementing social media programs because they simply do not yet see the  value of social media, the primary reason cited for investor relations’ slow  adoption of social media is concern about legal and regulatory issues.   Investor relations officers in the United States work in a maze of regulations,  primarily from the U.S. Securities and Exchange Commission but also from  state regulators and the stock exchanges – including the New York Stock  Exchange and Nasdaq.  These regulations are designed to protect  shareholders and to create a more level playing field in terms of disclosure of  information between professional and retail shareholders.  A mistake, such  as disclosing non‐public, material information in a manner not deemed  appropriate by the SEC, can explode into a major public relations scandal for  a company and lead to shareholder lawsuits, fines and even criminal charges.   

Legal and Regulatory Concerns  (continued)  “IR is trapped in a box of regulations and legal liability,” Palizza said in a blog  post.  “Moving outside the box requires more time, effort and political  capital than it’s worth” (Palizza, 2008).   By nature, blogs are supposed to be  “quick, spontaneous and resonate with the voice of the writer, “ Palizza said,  all of which is difficult to do in a traditional investor relations environment  that emphasizes extensive internal review and tight control over every  document that is released.    Brian Solis, principal of FutureWorks, a public relations and new media  agency and an advocate for using social media in investor relations, also  pointed out the inherent pitfalls.  “One wrong, irresponsible or casual post, comment, tweet (or) status update  can produce a domino effect of consequences that have yet to establish  precedence,” Solis wrote in a recent blog post.  “While a tweet, for example,  may seem harmless, the activity and response sparked by an update could  result in repercussions that trigger SEC and shareholder retaliation” (Solis,  2009).   

Legal and Regulatory Concerns  (continued)   The SEC has both encouraged public companies in their use of social media  and continued to issue warnings about the possible risks.  In August 2008,  the SEC issued an update titled “Commission Guidance on the Use of  Company Web sites.”  The report praised the role of online communications  in “modernizing the disclosure system” and “promoting transparency,  liquidity and efficiency in our trading markets.”  It praised the Internet for  allowing companies to make information available to investors “quickly and  in a cost‐effective manner” (SEC, 2008).    The SEC report pointed out that the commission was an early promoter of  disseminating corporate and financial results electronically when it  implemented its Electronic Data Gathering, Analysis and Retrieval (“EDGAR”)  system, first introduced in the early 1980s.   Today, all public companies in  the U.S. must file their proxy statement, 10‐K, 10‐Q, 8‐K and other SEC forms  electronically on EDGAR where they are available for public viewing (SEC,  2008).     

Legal and Regulatory Concerns  (continued)  At the same time, the 2008 SEC report continued to sound warnings that are  sufficient to chill the enthusiasm for social media in many corporate suites.   It cautioned that the antifraud provisions of federal securities laws apply to  blogs and to electronic shareholder forums in the same way they do to  traditional forms of corporate communication.    “While blogs or forums can be informal and conversational in nature,  statements made there by the company (or by a person acting on behalf of  the company) will not be treated differently from other company statements  when it comes to the antifraud provisions of the federal securities  laws” (SEC, 2008).  While the SEC may not have given the definitive green light to social media  that some investor relations officers and securities attorneys would have  preferred, others believe the SEC is showing tolerance, understanding that  corporations are in a time of transition, trying to figure out the best ways to  use the newer forms of online communication for the benefit of both  corporations and their shareholders.   

Legal and Regulatory Concerns  (continued)  “The SEC is not looking at social media as a new way to get companies,” said  Serena Ehrlich, a social programs officer with the StartUp Army, in a recent  webinar sponsored by Q4 Web Systems.  “They just want to make sure that  Reg. FD (the SEC’s Regulation Fair Disclosure) is being followed.”  Ehrlich is a  long‐time NIRI board member who is active on Twitter and other social  media platforms.  She noted that the SEC has not filed a single complaint  against any company stemming from its social media programs, despite a  wide range of experimentation that is going on among the first wave of  companies that are using social media for investor relations purposes  (Ehrlich, 2009).  There is broad consensus within the investor relations field that social media  is a supplement to existing disclosures and won’t replace news releases, SEC  filings or conference calls in the near future, if ever. 

Legal and Regulatory Concerns  (continued)  “You should do social media on top of what you are already doing, not as a  replacement,” said Carol Stubblefield, a securities and corporate law  specialist with the law firm of Baker and McKenzie, in a recent webinar  hosted by Business Wire.  “Social media is not yet widely enough  disseminated to be a primary or sole distribution” (Stubblefield, 2009).   Stubblefield also emphasized the importance of establishing social media  disclosure policies and informing employees about the company’s policy  toward their use of Twitter, blogs and other channels for discussing company  business.  

Social Media Pioneers             Despite the ambiguity of the legal and             regulatory issues, a small‐but‐growing             number of companies are venturing into the  water and learning to integrate social media tools successfully with  more traditional investor relations approaches.  Within this group,  Twitter has emerged as the early favorite among social media tools  for investor relations, thanks to its simplicity and the ability to link  Twitter messages back to news releases, conference call  announcements and other disclosure information on the company’s  Web site.   

Social Media Pioneers  (continued)  A recent study by Q4 Web Systems identified 80 public companies with  Twitter accounts.  More than half (55 percent) of these companies are using  Twitter for investor relations purposes.  According to the Q4 study, these  companies use Twitter as follows:  •  68 percent provided a link to their earnings release only.  •  7 percent provided a link to their conference call notice only.  •  11 percent provided a link to their earnings release and notice of their  conference call.  •  11 percent provided a link to their earnings release and quarterly  investor webcast only.  •  7 percent provided a link to their conference call notice, earnings release  and webcast (Q4 Web Systems, 2009).   

Social Media Pioneers  (continued)   A handful of public companies in North America go much further with their  use of Twitter for investor relations purposes.  They include U.S.‐based eBay  and Canada’s CGI Group.  Both companies send a series of “live” tweets  during their quarterly conference calls with investors, following release of  their earnings.  In effect, they have become internal reporters, “covering”  the conference calls and reporting the results to the world via Twitter, 140  characters at a time.  “It (Twitter) is a new way to reach more people and expand our audience,”  said Colin Brown, communications and investor relations specialist with CGI  Group (Brown, 2009).   

Social Media Pioneers  (continued)    Even though CGI is a Canadian company, it also trades on the New York  Stock Exchange, meaning it must comply with U.S. SEC regulations.  In an  interview for this research paper, Brown said the company is not worried  about its use of Twitter because it only tweets information that is already in  the public domain (Brown, 2009).  Brown said the company would never  send a news release first on Twitter before it has been distributed using  more conventional means.  Even the tweets during the conference calls,  which may appear spontaneous, are typed out ahead of time based on the  wording from the conference call script, so Brown knows he is only posting  words on Twitter that his company executives are saying on the conference  call.  

Social Media Pioneers: CGI Group on Twitter 

Social Media Pioneers  (continued)  At eBay, Richard Brewer‐Hay, senior manager of corporate communications,  does not work for the investor relations department but he regularly sends  investor‐focused content on Twitter and on the corporate blog, titled eBay  Ink.    Perhaps more than anyone else, Brewer‐Hay has successfully walked  the tightrope of complying with SEC and company regulations while still  maintaining a degree of irreverence, personality and independence as the  social media voice of eBay.    When he first came to eBay two years ago, Brewer‐Hay said he was  concerned about the reaction he might get from the investor relations and  legal departments.    “I was concerned I’d be shot down,” he said during a recent webinar.  To the  contrary, Brewer‐Hay said both departments have been cooperative.   Together, they have developed a set of rules to guide the company’s  unprecedented exposure on Twitter and the company’s blog.   

Social Media Pioneers  (continued)  Prior to covering an investor relations conference call or similar event on  Twitter, for example, Brewer‐Hay first sends a series of four disclaimer  tweets, which he worked out collaboratively with eBay’s legal and investor  relations teams.  The disclaimer tweets are as follows:  Tweet one: “Important information about the nature of this session.   Forward‐looking statements and non‐GAAP financial measures.  Click here.”  Tweet two: “This session will contain non‐GAAP financial measures.”  Tweet three: “The presentation of this financial information is not intended  to be considered in isolation or as a substitute for GAAP financial measures.”  Tweet four: “A reconciliation of these measures to the nearest comparable  GAAP measures can be found by clicking on the following link.” 

Social Media Pioneers  (continued)  Brewer‐Hay defends the use of Twitter   to cover eBay’s investor conference calls   and other presentations.  “It expands the audience and adds to the transparency,” said Brewer‐Hay in  a webinar.  “Not everyone on Twitter is going to listen to a conference  call” (Brewer‐Hay, 2009). 

Social Media Pioneers: eBay’s blog 

Social Media Pioneers  (continued)  eBay’s new corporate Web site, introduced in October 2009,  incorporates  the look of a blog and offers many social media features.   

Social Media Pioneers  (continued)  The variety of uses for Twitter seem almost endless.  A few public  companies, including Johnson & Johnson and EMC Corp., have used Twitter  to report about proceedings at their annual shareholders’ meetings, while  eBay has used Twitter to send reports about “analyst days,” which are  invitation‐only events hosted by companies, usually at their headquarters,  for securities analysts and institutional investors.     In all of these instances, the net effect of Twitter is to expand the reach of  traditional investor relations activities that would typically attract only a  relatively small audience, thereby enhancing corporate  transparency. 

Social Media Pioneers  (continued)  Dell’s IR Blog  One of the most‐watched social media developments in investor relations  has been the Dell Shares blog, launched in November 2007 by computer  maker Dell, Inc., and believed to be the first corporate blog dedicated to  investor relations.  Nearly two years later, Dell Shares still stands virtually  alone.  While several companies place investor relations information on  more general‐purpose corporate blogs, no one else has moved as boldly as  Dell to create a blog focused exclusively on the company’s investor relations  disclosures.      “Our job is to communicate information so investors can make informed  decisions,” said Robert Williams, director of investor relations at Dell, in an  interview for this paper.  “Anyway you can find to get information out ‘one  to many’ more efficiently is a good thing” (Williams, 2009). 

Social Media Pioneers  (continued)  Williams described blogs as a “very efficient” channel for communicating  with investors.  Contrary to the concerns some express about blogs, he said  Dell has found that their blog actually saves staff time by reducing the  amount of time spent on the phone explaining financial results and other  corporate developments.   “When we saw how effective our colleagues (at Dell) were in  communicating with our customers and other constituents, we felt it was a  natural extension (to use a blog to communicate with investors),” Williams  said.  “It’s a great way to democratize information” (Williams, 2009). 

Social Media Pioneers: Blogs and Video  (continued)  One of Dell’s more innovative uses of its Dell Shares blog is to post video  interviews (“Vlogs”) with key company executives.   Each quarter, Dell  records a video conversation with its chief financial officer to announce and  explain recently disclosed earnings results.  Other recent videos on Dell  Shares include interviews with the Dell executives in charge of sustainability  and small‐business ventures.  Far beyond merely posting news releases, Dell  uses its blog to provide context that helps investors and other stakeholders  better understand the company, its strategic direction and its financial  performance.   

Social Media Pioneers: Dell’s IR vlogs (videos) on Dell Shares 

Social Media Pioneers  (continued)  Contrary to critics who say analysts and institutional investors do not want  or use social media tools as part of their work, Williams said Dell’s  experience is that institutional investors are the primary audience for Dell  Shares (Williams, 2009).   Williams said he’s “surprised” that more large‐capitalization companies have  not followed Dell’s lead and established investor relations blogs.  In a recent  interview, Williams cited three possible reasons:   • The small size of most investor relations departments.  Unlike Dell, which  has seven members on its investor relations team, the average company has  only one or two employees dedicated to investor relations.   •  A lack of understanding about blogs.  Williams said many corporate  executives worry that blogs will be difficult to manage and that they won’t  be able to answer users’ questions.  • The fear of disclosure mistakes and shareholder lawsuits (Williams, 2009). 

Social Media Pioneers  (continued)  Williams conceded it would be difficult for a small (one or two person)  investor relations department to manage a blog along with all the other  expected tasks, but for larger companies, he listed in a recent webinar  (Williams, 2009) five things to consider before starting an investor relations  blog:  • The blog should not be used as a substitute for news releases, SEC filings  and the traditional means for communicating material information.  • It must be credible by communicating factual and accurate information and  avoid expressing opinions on investor issues.  • It should be strictly for investor communications and should not be used  for marketing the company’s products and services.  • An IR blog can be an effective tool to counter misperceptions about the  company without responding to specific market rumors.  • It’s important to view the blog not only as a means for distributing  information, but as a way of listening to what your investors are saying (Dell,  2009). 

Social Media Integration  Pioneering public companies with social media are finding they can  leverage their time and investment by coordinating their efforts using  multiple social media tools together.   Dell and eBay, for instance, both  use Twitter to announce new postings on their blogs.  Dell posts its  Vlogs, created initially for the Dell Shares blog, on YouTube.   This can  significantly expand the audience and drive more traffic back to the  companies’ Web sites and blogs.   

Dell’s use of Twitter for Investor Relations  (continued)   Pioneering public companies with social media are  finding they can leverage their time and investment  by coordinating their efforts using multiple social  media tools together.   Dell and eBay, for instance,  both use Twitter to announce new postings on their  blogs.  Dell posts its Vlogs, created initially for the  Dell Shares blog, on YouTube.   This can significantly  expand the audience and drive more traffic back to  the companies’ Web sites and blogs.   

Social Media Integration: Cisco Systems  Another innovative leader in using social media for investor relations  purposes is Cisco Systems Inc.  Like Dell, Cisco produces video interviews  each quarter featuring corporate executives talking about the recently  announced earnings results.  Also like Dell, Cisco posts its investor  relations Vlogs on YouTube to expand its audience and tweets on Twitter  when new videos are available.  Unlike Dell, however, the investor  relations department does not manage Cisco’s corporate blog, titled The  Platform, and the content comes from a variety of corporate sources,  not just investor relations (Cisco, 2009).   

Facebook, LinkedIn, Flickr and YouTube  Initially, far more companies are using Twitter for investor relations  purposes than are using other popular social media sites such as Facebook,  LinkedIn and YouTube.   Facebook’s blog‐like qualities and social networking  power make it a popular choice for many companies, but so far most of  these companies’ Facebook pages appear to be managed by corporate  communications, public relations or marketing departments, not by investor  relations.  However, that is not to say Facebook and YouTube, especially, do  not have their roles to play in disseminating corporate investor relations  news.   Cisco’s Facebook page, for example, carries much of the same  content as its corporate blog, including the quarterly earnings videos and  other investor relations announcements.  Many companies include links  from their corporate Web sites or blogs to accompanying information on  Twitter, Facebook, LinkedIn, Flickr and YouTube.  The major loser in this race  appears to be MySpace, one of the largest U.S.‐based social networking  sites.  During this research, no public companies were identified that use  MySpace for investor relations purposes.   

IR Uses for Document‐Sharing Sites  Popular sites such as Twitter and Facebook  may steal most of the limelight in the  discussion about corporate uses of social  media, but another category of tools is proving  to be of significant value.  These are  document‐sharing, or “content” sites that  allow investor relations officers to expand the  distribution and improve the display of existing  types of corporate documents, such as news  releases, PowerPoint presentations and SEC  filings.   

IR Uses for Document‐Sharing Sites: Slideshare  One of the more popular document‐sharing sites is Slideshare, which  allows companies (and individuals) to post PowerPoint presentations,  PDFs and other document formats on a public site where they can be  viewed.  Slideshare is growing rapidly, with 17 million monthly visitors  and 50 million monthly page views. Heaps, of Q4 Web Systems,  described Slideshare in a recent webinar as “the YouTube of  presentations” (Heaps, 2009).  His company has been one of the first to  incorporate Slideshare into corporate investor relations Web sites,  including Barrick Gold Corp.  

IR Uses for Document‐Sharing Sites: Slideshare  Heaps’ analogy to YouTube is on the mark.  Like YouTube, what makes  Slideshare powerful is that information can be easily shared.  To use  YouTube terminology, Slideshare makes it possible for a company’s  PowerPoint presentation to “go viral” and be spread from investor to  investor, either via e‐mail, embedding on a blog or Web site, or through  a host of other sharing tools.   While it is not likely that any company’s  next quarterly earnings presentation is going to get millions of hits like  some of the more popular videos on YouTube, Heaps said it is possible  for a company to double its normal presentation viewership using  Slideshare.   

IR Uses for Document‐Sharing Sites: DocStoc  Docstoc is similar to Slideshare, although its emphasis is not on PowerPoint  presentations.  Companies are using Docstoc to place a variety of content  online, including news releases, which can then be shared by readers or  embedded on their Web sites and blogs.     

IR and Social Media: Looking Ahead  Social media has the power to help investor relations officers fulfill one of the key  objectives of their trade, “to enable the most effective two‐way communication  between a company, the financial community and other constituencies” (NIRI,  2009).   Social media can provide an added dimension and depth to the  conversation, as perhaps seen best with eBay and Dell, while allowing investor  relations officers the opportunity to both talk and listen to their shareholders,  analysts and other constituents.  Aside from the potential need for additional  staffing in smaller investor relations departments, the cost of using most social  media tools is nominal.    The voices speaking in favor of using social media as part of the investor relations  communications mix are growing.  “The benefits of communicating to investors with corporate social media and  interactive data are highly attractive,” said Steve Carr, managing director, Dresner  Corporate Services, in a recent article.  “Corporate social media and interactive data  (are) definitely on the way, and to some extent (are) already here.  The time to  prepare is now” (Carr, 2009). 

IR and Social Media: Looking Ahead  Jeff Morgan, president and CEO of NIRI,   recently urged all investor relations to get   familiar with social media skills, whether   they currently plan to use them in their   work or not.  “We need to understand these communications vehicles,” Morgan said.   “It’s incumbent for any IR person to try blogging, Twitter and using social  mediums to bring the discussion back to the company.  Become an expert in  it” (Morgan, 2009).  

IR and Social Media: Looking Ahead  Heaps, through his work at Q4 Web Systems,   his company blog and frequent speaking events   at NIRI meetings, has emerged as a champion for   using social media for investor relations.    “Disseminating information through traditional channels and making  financial statements available in one format are no longer enough,” Heaps  said in a recent blog post.  “The world is adopting social media in record  numbers … Adding social channels to distribute information … will increase  your audience reach, empower people to engage with your company and  give them a better understanding of your investment proposition.” (Heaps,  2009).   

IR and Social Media: Looking Ahead  If many of the arguments now being used by critics against social media  sound familiar, then that is because they are some of the same arguments  used in the 1990s when corporate Web sites first began to be used for  investor relations purposes.   At that time, some critics said investors and  analysts were not interested in accessing corporate information online.  We  now know that is not the case.   Others raised concerns about the impact of  adding the responsibility for investor relations Web sites onto the workloads  of limited staffs.  Still others preferred to maintain the status quo and did  not fully appreciate the potential for investor relations Web sites as a  communications tool.    Today, just a decade later, it is hard to imagine how  any corporate investor relations department functioned without a robust  Web site. 

IR and Social Media: Looking Ahead  (continued)  Social media is here to stay.  It marks a revolutionary change in how  organizations, both private and public, communicate internally and  externally.  No company today can totally ignore social media.  At the very  least, it is necessary for all companies to monitor comments about them  and their industry online, including in social media.   Only by doing so can  they be aware of misinformation or rumors that may be spreading online  and that could impact their stock performance.   

IR and Social Media: Looking Ahead  (continued)  A growing number of investor relations officers already understand the  potential of social media, and it may be only a matter of time before social  media tools become as mainstream as Web sites and conference calls in  modern corporate investor relations work.    The SEC could encourage this development by providing more definitive  instructions to guide companies as they chart their way through these new  waters.   Those instructions would help eliminate the most worrisome  objection to the use of social media at this time, the fear of regulatory and  legal risk.   Hopefully the SEC will partner with NIRI, the stock exchanges and  other interested parties to develop practical guidelines for the use of social  media in corporate investor relations practice.  # # # # # 

References  •  Barnes, N.G., & Mattson, E. (2009, April 22). Nonprofit organizations lead the  way in social media adoption according to Society for New Communications  Research Chair Dr. Nora Ganim Barnes and Eric Mattson of Financial Insite,  Society for New Communications Research.  Retrieved from  http://sncr.org/2009/06/28/nonprofit‐organizations‐lead‐the‐way‐in‐social‐ media‐adoption‐according‐to‐society‐for‐new‐communications‐research‐chair‐ dr‐nora‐ganim‐barnes‐and‐eric‐mattson‐of‐financial‐insite/  •  Brewer‐Hay, R. (2009, September 17).  Monitoring social media for investor  relations, webinar sponsored by Q4 Web Systems.  Retrieved from  http://www.q4blog.com/2009/09/18/webinar‐replay‐–‐monitoring‐social‐media‐ for‐investor‐relations/  •  Brown, C. (2009, August 20).  Telephone interview.    •  Bulldog Reporter’s IR Alert (2009, September 17).  Survey reveals investor  relations professionals slowly embrace social media, especially smaller  companies – and which IR blogs they read.  Retrieved from  http://www.iralert.com/ME2/Sites/dirmod.asp? sid=9545E49F1F9042C48E6DBCF5610426C5&nm=IR+Technology +Update&type=Publishing&mod=Publications%3A% 3AArticle&mid=8F3A7027421841978F18BE895F87F791&SiteID=9545E49F1F904 2C48E6DBCF5610426C5&tier=4&id=C81A7BA8FEB749EBA5BB3700C6010620 

References  •  eBay.com (2009, March 6).  New social media guidelines for reporting company  information.  Retrieved from  http://ebayinkblog.com/2009/03/06/new‐social‐media‐guidelines‐for‐reporting‐ company‐information/  •  Ehrlich, S. (2009, September 17).  Monitoring social media for investor relations,  webinar sponsored by Q4 Web Systems.  Retrieved from  http://www.q4blog.com/2009/09/18/webinar‐replay‐–‐monitoring‐social‐media‐ for‐investor‐relations/  •  Heaps, D. (2009, July 1).  Q4 Web Systems introduces social media and XBRL to  investor relations Web sites.  Bulldog Reporter’s IR Alert.   Retrieved from  http://www.iralert.com/ME2/Sites/dirmod.asp? sid=9545E49F1F9042C48E6DBCF5610426C5&nm=IR+Technology +Update&type=Publishing&mod=Publications%3A% 3AArticle&mid=8F3A7027421841978F18BE895F87F791&SiteID=9545E49F1F904 2C48E6DBCF5610426C5&tier=4&id=904DFFF8A09F46529EFA4732D1FE0C32  •  Joyce, S. (2009, September 23).  Institutional investors and analysts increasingly  using blogs and social networks for research.  Message posted to the Q4 Blog,  http://www.q4blog.com/2009/09/23/institutional‐investors‐and‐analysts‐ increasingly‐using‐blogs‐and‐social‐networks‐for‐research/ 

References  •  Kurth, B. (2009, September 23).  Don’t believe the hype: Twitter doesn’t matter  to IROs, Bulldog Reporter’s IR Alert.  Retrieved from  http://www.iralert.com/ME2/Sites/dirmod.asp? sid=C72F51EDD8C248ABBD0B2AD3521017C5&nm=Full +Disclosure&type=Publishing&mod=Publications%3A% 3AArticle&mid=8F3A7027421841978F18BE895F87F791&SiteID=9545E49F1F904 2C48E6DBCF5610426C5&tier=4&id=A39E6F40BAB740E49DFEA7CB05A18631  •  McKenna, Francine (2009, August 21).  Investor relations and Web 2.0. Re: The  Auditors.  Retrieved from  http://retheauditors.com/2009/08/21/investor‐relations‐web‐20‐2/  •  Morgan, J. (2009, July 8).  Obama’s regulatory tsunami, possible Reg FD  crackdown, social media shifts: NIRI’s Morgan blows the whistle on pending  threats to IROs  ‐‐ and offers timely coping tips, Bulldog Reporter’s IR Alert.   Retrieved from  http://www.iralert.com/ME2/Sites/dirmod.asp? sid=9545E49F1F9042C48E6DBCF5610426C5&nm=Thought +Leader&type=Publishing&mod=Publications%3A% 3AArticle&mid=8F3A7027421841978F18BE895F87F791&SiteID=9545E49F1F904 2C48E6DBCF5610426C5&tier=4&id=B9BCFD112D9449038E0280F9540CBB37  •  National Investor Relations Institute (2003, March).  Definition of investor  relations.  Retrieved from http://www.niri.org/FunctionalMenu/About.aspx  

References  •  National Investor Relations Institute (2008, April 7).  NIRI releases summary  results of inaugural NIRI – Korn/Ferry International IRO compensation study.   Retrieved from  http://www.niri.org/Main‐Menu‐Category/resource/publications/Executive‐ Alert/2008‐Executive‐Alerts/2008‐Comp‐Study.aspx  •  Older, Stephen E. (2009, September 16).  Corporate disclosure: The Twitter  effect.  Law.com Legal Technology.  Retrieved from  http://www.law.com/jsp/legaltechnology/PubArticleFriendlyLT.jsp? id=1202433819094  •  Palizza, J. (2009, September 1).  Investor relations and social media.  Messag  posted to the Investor Relations Musings blog.  Retrieved from  http://investorrelationsmusings.blogspot.com/2009/09/investor‐relations‐and‐ social‐media.html  •  Palizza, J. (2008, June 16).  Blogging and investor relations.  Message posted to  the Investor Relations Musings blog.  Retrieved from  http://investorrelationsmusings.blogspot.com/2008/06/blogging‐and‐investor‐ relations.html  •  Q4 Web Systems (2009, August 26).  Public companies and their use of Twitter for  investor relations: An analysis of corporate reporting using social media.”   Retrieved from http://www.q4blog.com/about/research‐reports/ 

References  •  Solis, Brian (2009, July 9).  Social media and the SEC: Where do you stand in the  investor broadcasting vs. investor relations debate? Bulldog Reporter’s IR Alert.   Retrieved from  http://www.iralert.com/ME2/Sites/dirmod.asp? sid=C72F51EDD8C248ABBD0B2AD3521017C5&nm=Full +Disclosure&type=Publishing&mod=Publications%3A% 3AArticle&mid=8F3A7027421841978F18BE895F87F791&SiteID=9545E49F1F904 2C48E6DBCF5610426C5&tier=4&id=70B80636A5964A88AB1C152FA1BA744B  •  Stubblefield, C. (2009, July 30).  Press releases, public companies and social  media: What to do?”  Webinar sponsored by Business Wire.    •  U.S. Securities and Exchange Commission (2008).  Commission guidance on the  use of company Web sites (SEC Release Nos. 34‐58288, IC‐28351; File No.  S7‐23‐08).   Washington, D.C.  •  Williams, R. (2009, September 1).  Telephone interview.    •  Williams, R. (2009, August 14).  Keep your friends close & your enemies closer: A  lesson on social media.  Webinar.   

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Investor Relations and Social Media

by Dave Hogan

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