Advice on making the most of social media, in the first of a two-part guest post
In April 2013 the SEC made a bold, progressive step in condoning social media for Reg FD compliant disclosure. IR professionals must now figure out how ‒ or if ‒ to follow that lead.
While 70 percent of IROs report not using social media, we believe engagement will grow as precedent mutes legal concerns and the benefits become better understood.
In our view social media enables more frequent and granular investor dialogues, fostering greater understanding through additional data, anecdotes, perspective or review. It can also play a key role in crisis communications, provided the channel is established well in advance.
But the most compelling argument for IR social media is that it provides an easy, low-cost way to leverage your investment in existing IR assets, putting them before new investors, bloggers and media with similar interests. It’s no panacea but, over time, builds a growing base of awareness and interest that can favorably influence your stock price.
To be fair, the potential benefits of IR social media seem more compelling for smaller companies that struggle to develop investor interest against market currents that favor size and liquidity.
The myth of non-engagement
For now, social media’s importance to IR seems a near-sighted measurement of investors not engaged in the medium by similarly positioned IROs. Yet a brief visit to StockTwits, SeekingAlpha or Twitter confirms the existence of a sufficiently large and growing audience to warrant our attention.
Social media has also been validated by hedge funds that filter it to guide investment decisions, by Bloomberg’s integration of Twitter feeds into its financial information platform, and ‒ lest we forget ‒ by @Carl_C_Icahn, whose 59 posts to date have drawn enormous Wall Street attention and attracted 123,000 followers.
And guess what? Your company is likely the subject of an active social media dialogue that is shaping investor perceptions without you. Doesn’t it make sense to balance those communications with approved company messages?
What would a social media IR program look like?
Because social media is an adjunct to your existing IR communications, the same disclosure rules and regulations apply. Despite the SEC’s comments, we do not recommend using social media to initiate material disclosures and our comments reflect that posture.
We do, however, recommend following the SEC’s guidance to publicly state which social media channels you use for investor relations, thereby protecting your social media efforts.
A formal social media program and plan should be developed along with policies and designated persons for the review and posting of messages and responses. This policy should be reviewed by management and counsel and updated at least yearly for any changes in practice, participants or approved social media forums.
Leading IR social media forums include Twitter, SeekingAlpha, StockTwits, SlideShare, LinkedIn, Facebook, BoardVote and Stockr. To reflect the unique needs of investors, public companies should establish stand-alone IR social media accounts. The ‘IR’ suffix is frequently used and easily differentiates IR content from other social media communications.
We recommend using the same account name across all channels if possible. There is no cost to set up most accounts, though it does take some time to create a professional profile and presence. Protect account access by using strong passwords and two-step authentication. Once set up, the posting of approved messages takes just a few minutes and will become an automatic part of your communications work flow.
Click here to read part two of this post.
David Collins is founder and managing director at Catalyst Global, the New York-based IR firm.
