The times, they ARE NOT a changin’ … at least not in IRMarch 17, 2014
This post was written by Joe Hassett, Senior Vice President
Those old Bob Dylan Lyrics, herein modified, got me to thinking about social media and the state of investor relations.
Facebook. Twitter. WhatsApp. LinkedIn. These companies, as well as their digital and social brethren, are driving the face of the investment community, garnering a lion’s share of the financial and general media’s interest, and offering fodder for the all too ubiquitous talking heads.
But, despite all the attention and interest the social stalwarts have attracted from broad audiences, it seems one audience has yet to embrace the apparent onset of a social generation: company communicators of financial information, aka IROs.
Consider some of these recent statistics:
- 72% of IR professionals do not use social media for IR …
- … but, 49% of those who do not use it plan to reassess social in the next 12 months
- … more than half (52%) of buyside professionals use social media for investment research
- 43% say that will increase, following the SEC’s April 2013 social media report
There seem to be two general objections to the more widespread use of social media. First, the fear that social media will increase the chance that a communicator may trip over the new rules and regulations which govern communications with the financial community. This argument effectively yields the field to the legal department, which many an IRO have long considered anathema. Second, the feeling that social channels really don’t speak to a company’s financial audience.
On the first issue, our experience strongly suggests that — properly structured and managed — a social media communications program poses no more threats to an inadvertent or illegal communication than any other communication. For those of us that have been in the profession long enough, contrast a blog post that has been scoured over by your legal department with the conversations that are a regular part of an NDR. It is hard to imagine that an extensively vetted blog post poses more of a Regulation FD risk than the conversation your average CEO and CFO may be having when they are squired away in a midtown Manhattan high rise with a bunch of hedge fund managers that use the second hand on their watch to measure “long term.”
On the second issue, we would go back to that Bob Dylan lyric, the times, THEY ARE a changin’. A recent Pew Research Center study noted that 90% of the younger generation (ages 18-29) consider themselves very facile with social media, and consistently view social media as a primary source of information. And, where is there more of an influx and prevalence of “youthfulness” than in the newly minted MBAs that are controlling the trillions of investable assets on Wall Street? Maybe not today, and maybe not tomorrow, but in short order, this younger generation will far outnumber the existing generation. They have little time and show no interest in getting their information from traditional wire service press releases. Furthermore, with the democratization of information created by the Internet, they will use social media and digital tools to know more about your business than their predecessors, causing further pressure on financial communicators to communicate in real time.
Consider this an opportunity. Consider this an invitation. Consider this a mandate. But, please do consider it, because the times, THEY ARE a changin’ …