Global blue chips don't like Facebook

(Article updated with new headline and extra text on 01/08/11)

The 750 mn active users of Facebook make it the most popular social media forum in the world – yet this widespread popularity in the personal sphere has so far failed to cross over into the IR community. A global study of corporate social media use, conducted by

Q4 Web Systems, finds that less than half of public companies (45 percent) use Facebook for IR, while more than two thirds (67 percent) use Twitter.    

The use of Facebook is even less common among FTSE 100 companies: fewer than one in three (29) of the UK’s largest public companies has a corporate presence on Facebook of any description, according to research into social media usage by Radley Yeldar. To determine why this is, IR magazine set out to investigate the Facebook presence of a panel of 15 companies with a significant global presence. The panel comprises the top five companies by market capitalization featured in the S&P 500, the S&P Europe 350 and the S&P Asia 50.

Of those 15 companies, eight either do not have an official Facebook account or do not provide a link to it on their corporate website: Apple, China Construction Bank, China Mobile, Exxon Mobil, HSBC, ICBC, Samsung Electronics and Taiwan Semiconductor Manufacturing Company. The remaining seven companies – BP, Chevron, GE, IBM, Nestlé, Novartis and Vodafone – have a Facebook page but don’t use it for IR purposes (except for a few financial results posted by BP).

Off the wall
All of these blue chip companies are headquartered in typically tech-smart locations in the US, Europe and Asia, and all shy away from using Facebook to communicate with investors. Why?

Some companies simply view Facebook as unnecessary for IR. ‘At Vodafone, the investor relations department does not use Facebook,’ confirms the UK telecoms company. ‘We already interact with our global investor base through a variety of electronic means including our website and via email.’

Swiss pharmaceuticals company Novartis takes a similar line. ‘We currently do not use social media channels such as Facebook to engage with the investor community, but we are using this channel to engage with the public at large,’ explains a company spokesperson.

Other reasons for snubbing Facebook are largely pragmatic. Nestlé, which won the award for best use of technology at the IR Magazine Europe Awards both this year and in 2010, and recently brought out an IR app for the iPad, finds no demand for it. ‘Facebook has not featured in comments from our shareholders as something they feel would enhance our investor communications,’ explains Roddy Child-Villiers, head of IR at Nestlé. ‘Equally, we know from our experience with our many branded Facebook pages that the management of an IR Facebook presence – to the level of professionalism and responsiveness we demand of our existing IR activities – would be extremely resource-heavy.’

Public face
Of the 15 companies, BP comes closest to dipping an IR toe in the water. It began using Facebook as a crisis management tool while it was under fire for last year’s massive oil spill in the Gulf of Mexico. Later, the UK oil company posted a range of content on its Facebook wall, with varied results.

‘We are now slowly moving into a wider arena that covers not just the recovery efforts in the Gulf but also other happenings in BP, including the quarterly results, sustainability report and more recently the energy review,’ explains Gerry Bye, IR manager at the oil company. ‘Some of these corporate publications/announcements have been well received and others have had a mixed reaction, mainly because the audience is not a purely investor audience.’

The problem does not seem to be with Facebook itself: almost half of the companies surveyed for this article have an official presence on the social networking site. Moreover, the percentage of Fortune Global 100 corporations on Facebook increased by 13 percent between 2009 and 2010, according to data released by the PR firm Burson-Marsteller.

As the remarks from Nestlé, Novartis and BP illustrate, the issue inside the companies seems to be the volume of investor demand: at present, it is seen as insufficient to justify the time and effort it takes to properly maintain a Facebook presence. After all, the general public uses Facebook, not investors. Essentially, it is a popularity contest that companies don’t want to lose by posting share prices and financial results - however much they may have improved on the last quarter.

Correct usage
There is also a question about the way companies currently use the site. Having a static corporate fan page forgoes the personality of the relationship that is the very foundation of Facebook. As a result, it is unlikely to encourage investors to sign up to the site.

‘Investor audiences are increasingly absorbing more corporate information through social media channels,’ says Richard Coope, head of digital at Radley Yeldar. ‘But the reaction of the companies – particularly the FTSE 100 companies – is to bury their heads in the sand and do nothing about it.’  

In order to get the most out of Facebook – arguably the most personal and intimate of all the social media platforms – individual IR professionals need to decide whether they are willing to extend their personal Facebook pages to investors and analysts, just like many Facebook users debate whether to accept friend requests from colleagues.

The intimacy of Facebook may be a barrier to greater take-up by investors and IROs, however. While the definition of a friend on Facebook is certainly looser than in everyday life, accepting a friend request from an analyst and investor still involves bringing work life into the private sphere in a way that the business networking site LinkedIn never will.

‘Of all the social media channels, Facebook’s focus is more personal than professional, like LinkedIn,’ says Coope. Setting tight privacy restrictions is an option, although that would undermine many of the benefits and attractions of the site.

Poking around
Two IROs who have blurred the public and private divide are Patrick Kiss and Nicolas Lissner, head of IR and IR manager, respectively, at the German real estate investment company, Deutsche EuroShop. Both members of the investor relations team decided to provide links to their Facebook pages on the company website because they were already connected to many business contacts via this and other social media platforms.

‘This is exactly what ‘relations’ are based on: personal opinions, the personality, daily issues, and so on,’ says Kiss. ‘We believe it helps to strengthen a relationship. If I see a comment from an analyst on Facebook who has written about moving cities, then when we meet or talk a few days later I can ask him or her if it went well.’

At last count, Kiss says 18 percent of his Facebook friends are investment professionals, though more of them are analysts than investors. The decision to go public with his Facebook page was not easy, but he reports that there has been no misuse so far.  

On the basis of current usage, all this may sound like a step too far for many companies, not to mention IROs. The Radley Yeldar research, for instance, finds that 16 of the 29 FTSE companies using Facebook provide content on a weekly basis and only 10 attempt to engage their audience and be responsive. Those companies that post regular content are mainly using the platform to push out press releases, according to Coope, who describes the approach as more of a monologue than a dialogue.

Joining the conversation
As for the companies that are not currently on Facebook at all, there is always the danger that other Facebook users could still be talking about them in their absence. Take Exxon Mobil, for example: it is not on Facebook but a search for it on the social networking site brings up numerous protest pages, with names such as ‘Boycott Exxon Mobil’.

Nonetheless, it would appear IR professionals are much more at home on Twitter and LinkedIn. Chevron is among those that prefer the micro-blogging service to Mark Zuckerberg’s creation. ‘At this time, we do not use Facebook for IR purposes,’ says Justin Higgs, media adviser at Chevron Corporation. ‘We do, however, tweet quarterly earnings results, interim updates and dividend announcements.’

The Radley Yeldar research finds that more than half (54 percent) of the FTSE 100 have corporate Twitter profiles while almost all (98 percent) have a LinkedIn page. As Coope sums it up: ‘Most companies are predominately using LinkedIn and Twitter. The story for Facebook is that it’s being neglected.’

This article appeared in the August print edition of IR magazine.