Trends in Media and Technology – From NIRI 2009

9 June 2009

By Catherine Crofton

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Yesterday I attended a panel discussion that primarily focused on social media and the opportunity it provides to communicate with shareholders and potential investors. The panel included: Serena Ehrlich, Director of Social Media, Startup Army/BLAZE; Laura Graves, Senior IR Manager, Cisco Systems, Inc; Dick Johnson, President Johnson Strategic Communications Inc.& editor of  IR Cafe, and Robert Williams, Director Investor Relations, Dell Inc.

Robert said that Dell uses social media primarily to reach out connect with people who are interested in their company and want to access their information in different ways. He said that it was important to socialize SM internally with legal, finance and other executive positions, who may be concerned about risk, in order to help them understand the importance of being involved and the fact that you just can’t vet everything through the same DC&Ps. “The IRO is in a perfect position to handle social media because they understand the risks, they understand the story. And it’s not like they’re monitoring every phone call I make or every conversation I have with an analyst.”

One has to remember that when it comes to blogging there should be no material statements, no material events and no material omissions.

Laura admitted that at recently as a year ago she was saying, “Social media is not for me” but now she avidly uses it to reach both existing and new investor audiences. Laura said that it’s very important to get your internal people on side, which may be more difficult  with an older established company – you may have to do more work to bring them along but a few quick wins should help.

On this note Laura talked about the contract between Dominos pizza and the employee YouTube debacle, which was quickly addressed and quieted through social media and the Wendy’s ‘severed finger in the chili’ where the issue was addressed through more traditional channels and continued to haunt their brand for many months. (That story alone should be a wake-up call to most senior executives.)

Serena gave specific advice throughout the discussion. She said that it’s important to monitor what’s being said about your company online through sites like www.search.twitter.com , www.socialmention.com , or through RSS feeds. You can even index whether mentions are positive or negative. Serena also felt that issuers should have social media policies that include who represents the company on Twitter, Facebook and other SM. Serena also mentioned a number of other sites as information resources on social media and IR best practices including IR Café and Q4Blog.

Both Laura and Serena said that getting involved in SM doesn’t have to take up a lot of time for a busy IRO and instead, suggested finding someone with the company who is active in Twitter and excited to represent the company online.

Dick said that coordinating SM efforts between IR and PR was very important. He also said that investors are more likely to look for information on your corporate website than any other source and that it should be considered your primary source of information for investors. He offered a checklist as a handout, which he also provides on his site. He then said that a checklist is just the starting point, that a website should not be a filing cabinet and that issuers should look to provide more context for their investment proposition. (Q4 covered this topic previously in an IR website best practice presentation.)

Laura described a scenario which often happens and how social media provides a powerful tool to address misinformation. In the truncating of headlines by the media, often a message is dramatically altered which could significantly alter your stock. A company could issue a press release saying something like, “XYZ reports that sales are soft in Q1 but are expected to be strong in Q4”. The media shortens this headline to read, “XYZ reports that Sales are Soft”. A buzz begins and you can see your stock spiraling down – social media gives you a powerful voice to address these issues and correct the information. And if your company is actively involved in SM, people will know where to go to verify the misinformation.

She also suggested having a section on your site called “Hot Topics” where things like this can be flagged for investors to access further information.

Following this one of the delegates asked how she could keep up with addressing everything negative that was said about her company online. Serena responded by saying that this wasn’t necessary, and that sometimes these negative comments are coming from people who are not widely followed anyway. She suggested to measure how much traffic some of these negative bloggers get (before determining where it was necessary to respond) through sites like www.compete.com , www.quantcast.com , and www.alexa.com

Both Robert and Laura said that V-logs (video logs) were very good ways to address issues and to put investors in touch with more people inside the company. (In fact Dominos CEO addressed their issue through a video.) Robert said that they use V-logs to address 5-6 questions on the quarter and this has been a very effective strategy for them. 

How to get started – read Reg. FD with a ‘blog mindset’, and find a mentor. Put a calendar together to ensure regular blog posts. You’ll find that you won’t have to spend a lot of time thinking up things to blog about as issues will come up that provide blog topics.

There were a lot of good points made in the session, some of which I may not have captured in this post. I welcome comments from any of the participants or panel members to provide additional information.

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