Blogs: a neglected channel

The best IR programs have always taken the discussion with investors beyond mere required disclosure, adding color and context to the numbers – and blogging is arguably the ideal online channel for that purpose.   

But blogs have failed to find a place in most IROs’ toolkits to the extent that the 140-character tweet has, according to Toronto-based IR consultant Q4 Web Systems, which has surveyed social media use by IROs since 2009.

‘Blogs may represent too much of a sustained effort or be viewed as high-risk in terms of disclosure,’ observes Sheryl Joyce, director of marketing and communications at Q4.

Of those companies that do blog, technology firms are the most active, followed by those in the services industry, she reports. Small-cap companies are the most prolific IR-specific bloggers, followed by large-cap and then mid-cap companies.

One company that’s keen to promote IR blogging is Dell, which has been a pioneer in exploring social media for its IR program. The tech firm’s IR blog site, DellShares, is a content-rich, investor-centric platform for news, interviews, links and updates that aims to keep the company top of mind with tech investors. DellShares is one of many Dell blog sites, each targeted at specific audiences.

David Mehok, the Dell IR team member responsible for DellShares, reports that in a 2010 survey of the blog’s audience, Dell found that both the buy side and sell side prefer ‘timely, relatively short blogs’ that are ‘easy to digest’ and that add incremental information and insight beyond the company press releases.

Investors also want to see and hear management outside of scripted calls, which Dell provides through numerous video blog (vlog) interviews posted on its site.

‘We are definitely not standing still,’ Mehok says. ‘We’re always looking for ways to improve and further our reach.’ The company recently added an IR website link to its ticker page on Yahoo! Finance.

‘The bottom line is that people will be talking about your company in social media whether you want them to or not,’ Mehok adds. ‘IROs should take a proactive approach – they need to be a part of, and help form, the conversation.’

On the network

Writing on your own blog is only one option, however:  companies can also post on blogging networks to get their message out there. For example, Seeking Alpha, the financial blogging site, has attracted articles from companies like Walmart and Netflix.

Ezra Marbach, who launched the China Stock Blog (now part of the Seeking Alpha network) in 2004, argues that social media channels can be invaluable, particularly for small-cap companies trying to stand out from the clutter of online financial information.

He points out, however, that there is a scarcity of investor-oriented platforms that are easy to integrate into an IR website, with the possible exceptions of Seeking Alpha and StockTwits, the ticker-specific Twitter stream. That gap is the main reason most IROs have not fully embraced blogging, he says.

Marbach still sees great promise for small-cap companies that creatively use multiple blog sites. He encourages IROs not just to take their stories to sites such as Seeking Alpha but also to actively seek out financial bloggers who might write about their firm, the same way they’d seek out new sell-side coverage.

Words of warning

Attorney Tom McCoy, a partner at O’Melveny & Myers and former general counsel at Advanced Micro Devices, approaches the question of investor-focused blogs with all the caution and skepticism you’d expect from a former general counsel and litigation attorney.

McCoy is not enamored of IR-specific blogs and is even more skeptical of CEO blogs. There ‘has to be a compelling purpose’ beyond ego gratification to justify the CEO or CFO blogging in his or her own name, he argues, warning that general counsel and boards of directors will ask ‘plenty of hard questions’.

McCoy advises any CEO who blogs to focus his or her communication ‘on what is really important to the business’, which he regards as employees, customers and business partners.

Sell-side and buy-side analysts are more interested in what a company says to those audiences and are smart enough to find the relevant information they need outside of a corporate blog specifically crafted for them, he says.

Marty Dunn, also an O’Melveny partner and a former SEC deputy director, adds that the risks inherent in CEO blogging need to be weighed against the perceived advantages.

While acknowledging that a CEO blog can help humanize a company’s senior leadership, Dunn warns that informal and unscripted communication can veer close to the line on selective disclosure and will be scrutinized by the plaintiff’s bar and the SEC if things go wrong.

Both McCoy and Dunn advise that executive blogs in particular should be treated like any IR-generated communication, adhering to a rigorous process of drafting and legal review.

Despite reservations, however, McCoy acknowledges that companies need to be in the flow. ‘We’re past the day when an organization can scratch its head and puzzle over social media,’ he concludes.