1 Stimmt AG | Social Media in the World of Investor Relations
December 2010
Helmut Kazmaier | [email protected]
Social Media in the World of Investor Relations
2 Stimmt AG | Social Media in the World of Investor Relations
About Stimmt
Helmut Kazmaier Partner Electrical Engineer, with Stimmt for more than 5 years
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.
3 Stimmt AG | Social Media in the World of Investor Relations
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 about
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Social media in a nutshell
Social media in the context of IR | Examples
Opportunities, challenges and recommendations
Discussion
Contents
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Conversation
Social media: democratization of information and their distribution channels
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».
Information provider
Distribution channels:
• Print • TV • Radio • …
Active
Passive
Traditional Media Social Media
Information provider
• Blogs • Micro Blogs • Social networks • Content Sharing
Monolog
»Prosumers» Consumers
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Social media brings some major changes
Information monopoles are dissolved. Overall, social media foster democratization of information and increase transparency in communication.
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 visible
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But what exactly are social media?
Source: http://social-media-prisma.ethrity.de
For the sake of simplicity we focus on a few tools:
Blogs
MicroBlogs
Social Networks
Content Sharing
Content Aggregation
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In order to assess the opportunities of social media for IR, a quick look at the purpose of IR is necessary
Investor Relations (IR) is 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.
Financial community
Goal Company
Fair valuation of securities
Source: http://en.wikipedia.org/wiki/Investor_relations
Dialogue
Social media’s potential is in supporting the dialogue between a company and the financial community. Also, social media can help providing relevant information efficiently and effectively to a company’s stakeholders as we will see later on.
Opportunity: Social Media
9 Stimmt AG | Social Media in the World of Investor Relations
Social media in a nutshell
Social media in the context of IR | Examples
Opportunities, challenges and recommendations
Discussion
Contents
10 Stimmt AG | Social Media in the World of Investor Relations
This presentation focuses on three different applications of social media
Additional distribution channel
Embracing dialogue
Join the conversation
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Increasing reach with social media tools: «fish where the fish are»
The same piece of information can be published easily on various social media platforms, thus making it available more widely and directing users to the companies web site.
IR information on company web site
Web site user
Only web site users get information
Social media platform
Users of social media tools., e.g. Twitter, can access information
Social media platform users
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Making content available with social media tools is more convenient for members of the financial community
Instead of having to check various sources, users can aggregate information in a single tool. Information is pulled rather than pushed.
Content aggregation tool
Company A
Company B
Company C, no news
User, e.g. analyst
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Example | Dell has created a whole blog dedicated to IR
Dell features its official content from its investor relations web site enriched with additional context, commentaries and opinions.
Source: http://en.community.dell.com/dell-blogs/dell-shares/b/dell-shares/default.aspx
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Example | Sulzer using Twitter to propagate midyear results
The message itself carries very limited information. It links to the IR section of the Sulzer’s web site.
Source: http://twitter.com/#!/SulzerLtd
Source: http://www.sulzer.com/desktopdefault.aspx/tabid-609/
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Example | Pfizer making presentations available on slideshare.net
Users can access presentations as well as subscribe to the Pfizer channel in order to be informed automatically if any new content is available. The presentations can also be embedded easily into other web sites fostering further distribution.
Source: http://www.slideshare.net/Pfizer
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Example | GoogleIR shares video content on Youtube.com
As with the previous example the reach of the videos has been increased dramatically. Users can subscribe to the GoogleIR channel in order to stay up to date as well as embed videos into their web sites.
Source: http://www.slideshare.net/Pfizer
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A few words on risk | Reporting positive analyst opinions
Will the company as well report the negative messages?
Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/
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A few words on risk | Reporting positive analyst opinions
Coming from an official company account this tweet might be risky.
Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/
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A few words on risk | Giving exclusive information
This message was not published on the company’s web site. Why was it published on Twitter?
Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/
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A few words on risk | A positive example
Strabag handles analyst recommendations properly. Also the negative ones are published on both Twitter and the company web site.
Source: http://irwebreport.com/20100420/investor-relations-social-media-compliance-risks/
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Using social media as an additional information distribution channel seems to be the most prominent use case today
Many companies start using social media as an additional information distribution channel to increase their reach. It is the least complicated use case and is a good starting point to gain some experience in this realm.
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 reasonable
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This presentation focuses on three different applications of social media
Additional distribution channel
Embracing dialogue
Join the conversation
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Embrace the dialogue: From information distribution to two-way communication
Information is distributed to financial community. A feedback channel is opened allowing comments on and discussion of the information.
IR information
Financial community
Stakeholder inquiries
Access and discuss
Answer Company IR department
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Example | TVI Pacific made Facebook the official corporate discussion forum
Stakeholders can comment and ask questions. The company’s responses are transparent to the whole audience. Thus not just the information itself but the way TVI interacts with its stakeholders characterizes them.
Source: http://www.facebook.com/tvipacific
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Example | Shell uses Twitter to direct users to their events
Shell uses the opportunity to direct people from Twitter to their events, inviting them to interact with them.
Source: http://Twitter.com/#!/shelldotcom/status/18530442711
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Example | WEG S.A. uses Twitter to gather questions before a conference call
WEG S.A. uses Twitter as an additional channel for stakeholders to send in questions to be answered later in the conference call.
Source: http://Twitter.com/#!/weg_ir
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Example | Google moderator allows the community to gather and rate questions up-front
Next to Google other Companies like IBM, Barclays, Berkshire-Hathaway IBM or Exxon Mobile have given their shareholders the possibility to pose questions for the annual meeting online and also rate them in advance.
Source: http://irwebreport.com/20090408/web-shareholder-meeting-questions/
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Example | Virtual annual meetings are not new, but Intel is the first company to include online voting
Intel’s idea to have the annual meeting exclusively online was rejected vehemently by its shareholders.
Source: http://irwebreport.com/20100331/virtual-annual-shareholder-meetings/
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This presentation focuses on three different applications of social media
Additional distribution channel
Embracing dialogue
Join the conversation
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Join the conversation: From 1:n to n:n communication
Communication becomes more challenging, since it takes place in an intertwined network of participants. The role of the information provider becomes less central. Control over information becomes increasingly difficult.
Information provider
…
…
Users
…
1:n n:n
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The new task is to position a company as a valuable, authentic and reliable partner in the global conversation
It is not just about messages but about behavior. The way a company interacts with the global community becomes increasingly important.
…
…
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.
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Example | Using Twitter to answer direct questions
140 characters on Twitter are not always enough to give sufficient information, but directing stakeholders to the right contact person is also helpful.
Source: http://Twitter.com/#!/Microvision/status/18061379992
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Example | Pointing to relevant 3rd party resources is a welcome service
Not just sharing own content but pointing to relevant content by other sources is considered being helpful and creating added value. This service makes a company’s Twitter stream even more attractive.
Source: http://Twitter.com/#!/Emulex/status/18618946907
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Example | Clever tweet by Sulzer
Praising Roche shows that Sulzer cares, is listening and willing to engage in the conversation. 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 the community and show a good understanding of the etiquette.
Source: http://twitter.com/#!/SulzerLtd
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Example | Being prepared to have tough conversations
First thing is being aware of these activities. Not yet being a part of the conversation makes it more difficult to engage in the conversation and act as a reliable, trusted partner.
Source: http://www.facebook.com/pages/Boycott-ExxonMobil/304328864370
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Example | Special interest communities aggregate finance information and opinions from everybody
Being aware of these offerings and monitoring activity in relevant sectors can give additional insight about what the financial community is up to.
Source: http://seekingalpha.com
Source: http://stocktwits.com
37 Stimmt AG | Social Media in the World of Investor Relations
Social media in a nutshell
Social media in the context of IR | Examples
Opportunities, challenges and recommendations
Discussion
Contents
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Opportunities | Social media can help you getting the message out
This list is not exhaustive but gives an impression of how a company can benefit from the use of social media. It is also a basis for further discussion.
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 success
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Challenges| Social media is not just another communication channel
This list is not exhaustive but gives an impression of the challenges a company faces when engaging with social media. It is also a basis for further discussion.
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 channels
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Recommendations | Social media should neither be ignored nor rushed into
Although first steps can be taken easily with little risk, serious engagement should follow a long term strategy and clear goal set.
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 interactions
41 Stimmt AG | Social Media in the World of Investor Relations
Social media in a nutshell
Social media in the context of IR | Examples
Opportunities, challenges and recommendations
Discussion
Contents
42 Stimmt AG | Social Media in the World of Investor Relations
Effective social media engagement doesn‘t happen by chance. Stimmt.
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Best Practice Recommendations Source: Q4 Whitepaper – Public Company Use of Social Media For Investor Relations, 2010
Appendix
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Best Practice Recommendations Source: 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.
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Best Practices for Twitter Source: 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).
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Best Practices for Facebook Source: 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.
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Best Practices for IR blogs Source: 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.
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Best Practices for Youtube/Slideshare Source: 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.
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Best Practices for LinkedIn Source: 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.