Investor Relations and Social Media: Five Key Takeaways

 

Cross posted on Social@Ogilvy’s blog.

As part of Social Media Week in NY, I attended a panel with six different investor relations communicators who were leading the adoption of social media within their IR groups.

With 63% of institutional investors reporting social media to be an input that will have increasing importance in investment decisions, it has quickly become a channel that the IR industry can no longer ignore, despite compliance concerns present in any Reg FD communication.

Surprisingly, the discussion around compliance was limited – the group has taken steps to mitigate risks while focusing on innovation in this space. We have started to see this from our clients more frequently now – where previously, regulated communication groups have been unable to overcome the compliance concern, they are now focusing on the opportunity that innovation in social media can provide.

Some other points that the panel agreed on during the conversation were:

1)    Context is key for investors to find signal in social media

In order for investors to find value in IR comms through social media, they need a way to cut through the noise of consumers talking about the same brand. StockTwits’ development of the “$” in tweets has helped bubble stock and earnings information to the top of the pile and IR communicators are actively using this in their information releases.

This is one of the great differentiators of Twitter as a platform compared to Facebook. Whether a poster uses a hashtag or a dollar sign, it enables you to push your message into any niche group that you want to be in. It also creates an efficient way for searchers to find this specific content through the competing noise.

2)    Curation of content is an art, not a science

Howard Lindzon of StockTwits says that his company focuses on four components to ensure effective curation of stock-focused content not only for the internal StockTwits community, but also for the top-tier media partners using this consumer generated content: Community self-policing through user flagging of off-topic content, an internal StockTwits moderation team, automatic keyword filters, and technology to pull in the right content from the right contributors from the outset.

While today’s technology is powerful and automatic filters efficient, we’ve found that nothing beats having a human looking through content. StockTwits’ use of community alerting as well as a moderation team is a model we roll out for our clients in many projects as well – often in conjunction with automatic filtering. This lets us be as efficient as possible without missing out on the value that experience around a topic can provide in curation.

3)    Retail investors can be as well informed as their institutional counterparts

Friederike Edelmann, Director of Investor Relations at SAP (an Ogilvy client), spoke about how social media has helped her company maintain its commitment to treat all investors in the same way. When SAP releases a news bulletin, the IR department starts with a typical PR Newswire release, but follows immediately with a tweet through its corporate Twitter handle.

68% of surveyed companies do the same thing as SAP, which makes sense since this platform helps companies not only reach the retail investor, but also financial writers. In fact, according to the Financial Media Conference, 60% of financial bloggers use Twitter as their primary news source.

4)    Social media still presents IR communicators with challenges

At the end of the day however, the panelists weren’t willing to say that social media didn’t present risks for IR communicators. Paul Dickard from AECOM said his biggest concern was the lack of control of his message and where the message could appear. Of course, Dickard was quick to acknowledge this risk exists through almost every other communication platform.

Gene Marbach from Makovsky and Co. also reported the need for clearer guidelines from the SEC. This makes sense – uncertainty around SEC and FINRA (for broker/dealers) regulations continue to cause pause for our clients – it’s only by walking them through a process to select the right social media compliance platform, establishing risk response guidelines, as well as moderation and escalation protocols do they feel ready to move into this space.

5)    Investor Relations must become more socialized with the rest of the enterprise

John Bell, Global Managing Director of Social@Ogilvy, said in his keynote address that enterprises are quickly becoming socialized in every department. Our IR panelists agreed with this statement and were firm in their stance that their industry can’t lag behind the rest of the organization, in spite of the risks that are inherent in this niche space. Their organizations are quickly moving forward from pilot programs into operationalizing social media as part of their everyday communications tactics – and it’s showing value for them almost immediately.

As we celebrate the launch of Social@Ogilvy, Ogilvy’s new global social media practice, it’s exciting to feature the an industry that is mitigating its risk in order to reach its stakeholders in a meaningful way – through social media.

Financial Services Firms Cannot Participate in Social Media

It’s a fact.

Despite how effective social media has been at creating  awareness, growing preference, and ultimately driving conversion, Financial Services firms have mostly stayed out of social media:

• Only 48% of asset management firms engage in social media today (source: Kasina)
• 66% of firms have no current or planned budget to engage in social media (source: Kasina)
• Fewer than 7% of financial advisers are blogging (source: American Century Investments)

So this is a strategic decision, right? This industry isn’t exactly the most forthcoming with new thoughts and ideas, so we would expect stats like these, right?

Let me show you some more numbers:

• According to Spectrem and Investment News, more than one-third (36%) of investors say they are interested in receiving information from their advisers or corresponding through social media. When looking at investors under 35, this number rises to 53%.
• 77% of investors who read blogs are more likely to consult them for information on new financial products and services
• 69% of LinkedIn users reported likely to consult their networks on this platform for investment advice

So, let me restate the irrefutable fact again: Financial services firms cannot participate in social media. Right? Well, no. While this has been a mostly untapped communication channel for these firms to date, it’s more important than ever for this industry to jump into social media. Here’s why:

• 31% of affluent investors (using social media) “rely less” on information from investment firm representatives
• 19% of them are less reliant on advice from their financial adviser
• (source: Cogent Research)

As people are connecting with each other at deeper levels through social media, they’re reverting back to the oldest form of marketing: word of mouth/third party recommendations. Friends and family or even strangers that have  experience are seen to have the same authority as more traditional financial experts — even in this complicated arena.

Financial firms have to take swift action to connect with their audiences in these new channels — both individual investors as well as analysts and IR practitioners. Of course, I’m not promoting the idea that an asset management firm should line up a campaign with a flash mob, but there are definitely ways for these companies to start to draw insights and have direct engagement in this space.

Social media continues to grow rapidly, but is still at a basic level in the financial industry. Trust me though, social media is an imparative for these firms now and will continue to be. Here’s the proof:

• 84% of asset management firms believe social media is here to stay and will have a lasting impact on the industry (source: Kasina)

What do you think? Can this highly-regulated and risk-adverse industry successfully participate in social media?