However, according to a survey by Corbin Perception for the National Investor Relations Institute (NIRI) conducted a month after the SEC issued the go-ahead, 72 percent of investor relations departments aren’t using social media for IR purposes; and less than half of those surveyed plan on doing so in the next 12 months.
While an overwhelming majority of survey respondents cited a “lack of interest by the investment community” as the reason for not using social media to dispense key information to shareholders, institutional investors themselves provided a much different answer.
Of 87 buy-side institutional investors surveyed, Corbin Perception reports that 52 percent said they use social media, be it Facebook, Twitter, blogging, or any other platform, as part of their research. A whopping 43 percent said they are likely to increase their social media use in the future.
Needless to say, the gap between the majority of IR departments and their shareholders should be Tweeting volumes, so to speak, but simply aren’t.
As IR Web writer Dominic Jones points out in his article, Survey finds social media gap between investors, companies, a closer look at the facts paints a more complex picture.
Some institutional investors use social media sources as part of their research processes not necessarily by choice, but because they’ve learned that by not doing so they may miss out on information vital to their due diligence.
Some company executives communicate to the public via social media, and investors say their due diligence process would be lax if they didn’t take into consideration what was being said on that channel, even though the survey showed that 92 percent of the investor respondents ranked information obtained from social media sites as either somewhat or not at all reliable.
It’s also worth noting that delving through layers of social media creates more footwork for institutional investors and analysts as they try to keep pace with the release of information. If they’re not on their toes or familiar with social media outlets, they risk missing news or being caught off-guard by new information.
A key clause of the SEC’s approval tackles this issue, requiring that a company must alert investors as to which social media will be used to disseminate information.
“Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news,” George Canellos, acting director of the SEC’s Division of Enforcement, said in an earlier SEC press release.
Regardless of whether public companies or the investment community are ready to incorporate social media into the business world, it has happened – and by not participating in the evolution, valuable time and opportunity are wasted.
So how exactly does integrating social media into investor relations work? And once it’s done, how can a company be sure it is reaching the investment community? And once that’s done, how can a company earn trust and prove that information is legitimate? The answer is creative integration paired with the very foundation of investor relations: communication.
There are a few ways to do this. The most desirable means would be to retain an experienced and innovative public relations or social media relations firm that can drive measurable results – this can be priceless. SocialMediaRelations.us, for instance, integrates investor relations with a host of social media strategies to create individualized campaigns that encourage dialogue between the company and shareholders. Its comprehensive line of services includes social media account set up, management, promotion, and much more.
To take a shot at it without professional assistance:
Familiarize company management with top social media networks such as Facebook, Twitter, and YouTube
Create a plan as to who will communicate via the social media account, what they will post, and how often
Establish a social media account and present direct links to these pages on the company Web site – the investment community is savvy at following leads
Go back to the basics – issue press releases and articles announcing your new social media account(s) and detail what you intend to do with them
Fill in the blanks – the more transparent, the better. Post photographs of management, company events, charts, financials, etc.
Stay consistent – frequently update the accounts to build trust with investors. Make sure the information released through social media matches the fact and back it up elsewhere, such as on the company Web site. Give investors a reason to come back time and time again.
By utilizing these basic methods, a company can create a cost-effective investor relations and advertising campaign. As trust grows between the company and the investment community, investors will become more familiar with how to incorporate social media into their due diligence process and feel more comfortable using information from those platforms.
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