Leveraging Technology: Online Communications & the Role of Social Media
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This presentation was given by Sheryl Joyce, Q4's Vice President Marketing & Communications at Deutsche Bank’s annual capital markets client training seminar in New York on August 1-2, 2011. In it, she shares insights about the online world and the role of IR websites and social media and investor relations. Specific examples are cited from a recent Q4 whitepaper that gathers real-world data from hundreds of companies on how they use social media for investor relations.
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Leveraging Technology: Online Communications & the Role of Social Media
- 1. ADR Issuer Client Training Event August 2, 2011 Levering Technology: Online Communications & Social Media Presented by: Sheryl Joyce Director, Marketing Communications Q4 Web Systems
- 4. Are Investors Using Social Media? 49% of institutional investors read financial blogs. 33% at least weekly* *Rivel Research – 257 Institutional Investors in the US 27% pro investors use YouTube. 9% at least weekly* 3 out of 5 financial bloggers use Twitter as a primary news source*** ***Financial Media Conference, NYC, Feb 2011 63% pro investors agree that social media will increase in importance over the next year** **Brunswick Group, Sept 2009
- 5. Financial Blogging is Mainstream SeekingAlpha to almost 5M investors a month. Increased from 3.2M in just 3 months (Jan 2011).
- 6. StockTwits Growing Rapidly StockTwits grown more than 100% since Nov 2010. Now more than 500,000 investors.
- 7. The New Information Food Chain IR ’s Role in Social Media is to feed the producers to ensure a healthy ecosystem Company
- 8. Social Media IR Website Corporate IR Website Social Networks Publish and monitor Social Media Publish and Integrate
- 11. Twitter Use by Sector Q4 Whitepaper Research 2011
- 12. Social Media Use by Region Q4 Whitepaper Research 2011
- 13. Industry-related News from Financial Blogs Q4 Whitepaper Research 2011 http://twitter.com/#!/AXI_IronOre/status/58189594910408704
- 14. Analyst Reports: The Good & The Bad Q4 Whitepaper Research 2011 http://twitter.com/#!/rdsa/status/54885200928309248
- 15. Analyst Reports: The Good & The Bad Q4 Whitepaper Research 2011 http://twitter.com/#!/rdsa/status/55338202017447937
- 16. Partnerships/Acquisitions Q4 Whitepaper Research 2011 http://twitter.com/#!/TXInstruments/status/55023095408361472
- 17. Partnerships/Acquisitions Q4 Whitepaper Research 2011
- 18. Partnerships/Acquisitions Q4 Whitepaper Research 2011 http://twitter.com/#!/TXInstruments/status/55260974634115072
- 19. Partnerships/Acquisitions Q4 Whitepaper Research 2011
- 20. Quarterly Reporting: Videos Q4 Whitepaper Research 2011
- 21. Quarterly Reporting: Live-Tweeting Q4 Whitepaper Research 2011 http://twitter.com/#!/Polycom/status/61172935020384256
- 22. Live-Tweeting Annual Meeting Q4 Whitepaper Research 2011 http://twitter.com/#!/JNJComm/status/63603179081834496
- 23. Live-Tweeting Annual Meeting Q4 Whitepaper Research 2011 http://twitter.com/#!/JNJComm/status/63702785983651840
- 24. StockTwits Q4 Whitepaper Research 2011
- 25. ENGAGEMENT
- 26. Engagement: @replies Q4 Whitepaper Research 2011 http://twitter.com/#!/symantec/status/68058256500727810
- 27. Engagement: Investors Q4 Whitepaper Research 2011 http://twitter.com/#!/NovaGold/status/65802175070220288
- 28. Engagement: Retweets Q4 Whitepaper Research 2011 http://twitter.com/#!/XeroxCorp/status/68351567291629568
- 32. Time Savings Before Social Media After Social Media TVI Pacific - Calls to Investor Relations / Week
- 34. Expanded Reach “ IROs spend a lot of their time talking about their company on the phone with securities analysts and portfolio managers. Establishing this one-to-many medium made it a much more efficient way for us to get that information out there to the investor and analyst community. It actually enhanced the conversations that we were having on a follow-up basis because we knew that we had established a base level of understanding about a particular topic.” Rob Williams, VP IR at Dell March 23, 2011
- 35. Discussion
- 36. More on Q4: www.q4websystems.com Thought leadership: www.q4blog.com Contact: Sheryl Joyce 1-877-426-7829 ext. 227 sherylj@q4websystems.com twitter.com/q4websystems
Editor's Notes
- I’m Sheryl Joyce, Director MarCom @ Q4 Q4 is a software company that provides best practice IR websites & social media solutions to hundreds of public companies across North America. Prior to joining the company I was an in-house IRO and IR consultant for 9 years. I’m responsible for the development and implementation of the company’s marketing strategy. A large part of which entails maintaining our presence on Twitter, LI and Facebook. I also blog regularly on q4blog.com on IR trends and research, develop and write our whitepapers on IR Website Best Practices and Social Media & IR. I’m here today to talk to you about the online world and the role of websites and social media in IR. I’m also going to share results from a whitepaper I wrote after 3-months of primary research to gather real-world data from hundreds of public companies on how they use social media for IR. We’ve conducted this study annually for the last 3 years. This time around our study sample increased from 362 to 629 so I decided to release the results in phases. We issued Twitter first as companies use it the most for IR. Our research was published in a Q4 whitepaper and has been widely quoted by the media and in academic papers. I’m going to mostly share examples of how companies are using Twitter, in particular. Although in a few instances, I’m going to provide a couple of other social media examples such as YouTube and Facebook to give you an idea of those as well.
- A lot has changed since I was in Investor Relations. For example, the IR website was predominantly used to house regulatory documents and in general remained a static entity that was only updated with news releases and corporate disclosure documents. Sadly, most companies still use their websites as ‘filing cabinets’ in spite of findings by Rivel research that found 75% of your investors visit your website weekly, if not daily.
- Over the past few years, online communications has been shifting toward an integrated approach that combines your IR website and social media. This quote from Rob Williams, Dell’s VP of IR, sums up the current online landscape quite nicely. Read quote. Dell has been a leader in using social media for investor relations. I’ll provide more details about that later on.
- One of the first questions that IROs ask is ‘are investors using social media for IR?’ Interestingly if you ask investors if they use twitter or facebook for their job the answer is no. But if you ask investors if they read financial blogs, the answer is more often than not, yes. In support of this, Rivel Research spoke with 257 investors about their use of social media and found that half of them read financial blogs with at least 33% on a weekly basis. What’s also interesting is that 3 out of 5 of those writing these blogs (which also include the financial media) are getting their ideas from Twitter. A Third of them are also using YouTube, with 9% at least weekly –mainly looking for videos of the CEO/CFO talking about the quarterly financials or additional information that provides context around the business. Finally, 63% agree that social media will increase in importance over the next year.
- Further evidence of whether investors are using social media is the emergence and increased use of popular financial blogs such as Seeking Alpha. SA is a financial blog aggregator with about 1200 contributors that gets distributed to news hubs such as Yahoo! Finance. This is a chart of seeking alpha’s website traffic from November 2010 to April of this year. In this timeframe, their active users have grown from 3.2 to 5 million.
- A similar trend is the growth of StockTwits (ST’s is a social media platform for the investor community to share real-time information and ideas about companies). In the same period from November to April of this year, StockTwits has also seen growth in their user base. This chart shows an increase of more than 100% to 120,000 users on StockTwits.com and 500,000 unique visitors/month if you include their blogs. StockTwits also syndicates news out to a variety of financial portals such as Yahoo! Finance, Bloomberg and Reuters.
- The big impact of financial blogs can be described through what we call the ‘Information Foodchain’. For example, think about social media at the bottom of the food chain (or the microplankton). Individual blog posts and company assets are being shared on social media. In turn, this information is then being consumed by smaller bloggers who are also on these same platforms. These smaller bloggers are seeing trends happening and they are writing blog posts about these trends. And then you have the more professional bloggers from larger media outlets such as CNN $ who are then consuming these smaller blog posts and writing about larger trends. Lastly, in the purple area there is the traditional news outlets such as Forbes that write about much bigger trends that are then consumed by institutional investors. Essentially information is being shared and or written about your company on financial blogs.
- The lines between your website & social media no longer exist. To optimize web communications for IR you need to stop using your website as an island that pushes out information, and start thinking of it as the hub of your investor communications. Here’s the new online universe: At the heart sits your website. You then need to start ‘feeding the foodchain’ and can do so by driving users to your website for additional information from virtually every other online channel. Another way to feed the foodchain is to make the Content on your website viral and more engaging. For example, you can embed videos on YouTube or Vimeo. This makes it easier to view and share. Further, your website needs to be connected to all of the social channels you use. Information and links see users travel in both directions – from your website to your social channels. From your social channels to your website. For example, posting a video on your website as well as YouTube will be viewed 6 to 10 times more than just on your website alone.
- This slide shows stats from two whitepapers we issued on how public companies are using social media for IR. The first one was released in summer of 2010 and analyzed 362 public companies. The second report analyzed 629 companies and was issued in June of this year. As the chart indicates, Twitter was found to the most popular channel in both 2010 and 2011 to share investor-related information. But we’re seeing growth in all channels. Of note, we know there are over 1,000 public companies on Twitter. However, there was so much information to analyze I stopped at 629.
- Our initial research found that companies use Twitter to broadcast previously disclosed information that resides on their website. Popular information to tweet includes press releases – especially ones around earnings. This time around, I found some new IR related materials that companies are sharing on Twitter. But before showing you examples, I’m going to talk to you about what sectors and countries use Twitter the most.
- This slide shows a sector breakdown. As you see, Natural Resources and Technology companies have the highest percentage of adopters who use Twitter to share investor-related material. After technology, the next sector with the highest adopters is Services (such as insurance co’s or Fedex), followed by Industrial Goods/Basic Materials that includes companies like Bombardier. Then finally consumer goods. In addition to investor-related material, all of the companies in these sectors use Twitter for a mix of product offers, store news, customer interaction and feedback.
- The companies who use social networks for investor-related material – particularly Twitter – come from all over the world. As the chart shows, the US uses Twitter for investor-related material more than any other region. Canada comes in second with Germany and the UK not far behind. Our July 2010 found popular things that companies Tweet include links to press releases and live-tweeting an earnings call. Our latest report continues to support these earlier findings, but we are also seeing new expanded uses of Twitter, which I discuss next.
- A new trend we are seeing is a growing number of companies sharing industry-related information from financial blogs. This is not surprising based on the growth of financial blogs I talked about earlier. This tweet is from Advanced Explorations who shared an article on Seeking Alpha that talks about their sector. While the article is not specifically talking about Advanced, sharing sector-related news can help the company become a credible source of information. Smaller companies also typically have a harder time gaining coverage, so monitoring what is being said and having a presence on financial blogs can help increase awareness about their company. Which may perhaps lead to gaining coverage down the road. I’d like to also point out how they use key industry words such as ironore and mining and append them with hashtags. Using hashtags will help this tweet come up if someone is searching for these keywords – which can help increase awareness of the company.
- There are differing schools of thought about providing links to analyst reports on Twitter – specifically only posting the ‘positive’ ratings. Same rules apply here as they do about media coverage. It is our opinion that if you are going to post analyst coverage, then ALL should be posted – not just the favourable information. Royal Dutch is a good example, as they post both the positive and negative analyst ratings. In the tweet shown here, they provide a link to a research blog where the analyst maintained their ‘outperform’ recommendation.
- Of note, within a week or so Royal Dutch also tweeted that the company was ‘Downgraded’ and linked to the report as shown in this slide. The fact that the company tweeted both the negative and positive ratings shows they take full disclosure and transparency seriously. Of note, while less common, a few companies are using Twitter to let investors know they have new analyst coverage. A typical tweet of this nature states what firm initiated coverage, as well as the rating and target price.
- We also found a few companies who proactively tweeted links to information that will help shareholders better understand the rationale behind a partnership or acquisition. Texas Instruments is a good example as they sent two tweets about their acquisition of National Semi.
- The first tweet shown here links to commentary on their blog asking ‘What does the acquisition mean for customers?’ The commentary in the blog post is more than just a regurgitation of the press release – but instead provides additional information and colour on the acquisition.
- The company issued a second tweet the next day with a link to videos of the management team discussing the company’s acquisition.
- The videos are housed on the company website and that’s where the link goes (as shown here). Having a video of management discussing the acquisition provides context around the deal that helps investors understand what it means to the company and how it fits into the overall business strategy. A video is also a good way to humanize your CEO and it also supplements the blog post and press release as it provides more context than could be extracted from these outlets by themselves. Of note, the company did not use YouTube, however they make it easy to share the video on various social networks. They also provide an embed code (which is easily extracted and can be cut and paste virtually anywhere) which makes it easy for a member of the media to use the video as part of their story.
- Several companies are also using videos to summarize quarterly earnings results. For example, we are seeing a lot more companies post videos of their CFO/CEO providing additional context to their financials, like Agnico-Eagle does here. The video has also been integrated into a Quarterly Summary page – which makes quick and easy access to all of the supporting financial information. Talk about having YouTube/Vimeo account: Benefits of having company channel (voice of authority) Respond to erroneous information if necessary (being in same channel will allow you to respond in same channel).
- More and more companies are also adopting the practice of live tweeting their earnings such as Polycom. Polycom recently began this practice, but they do such a good job I used them as a case study in the whitepaper. They only do a handful of tweets and begin and end the session with a link to their forward-looking statements. Note, they also append the tweet with #PLCMQ111) which clearly identifies the current quarter they are discussing.
- We are also seeing more companies live-tweet their annual meetings. J&J is a great example and as such I’ve highlighted them here. In general, they provide consistent information about the event over a few different social channels and then link the information back to their website. In this first tweet, they provide all the key information such as the title of the event and a link to the webcast. They also let followers know they will be doing a few tweets and provide the accompanying hashtag #JNJASM.
- The second tweet links to a blog post by Marc Monseau, the company’s corp. comm’s person (at the time the report was written), of his thoughts about the annual meeting. Posted shortly after meeting was over – this could easily be accomplished by gaining access to the annual meeting presentation and/or script in advance, so a blog post could be prepared beforehand and published while still fresh in the minds of shareholders. You may notice that they include their ticker symbol with a $ - this is so this information can be picked up on StockTwits, which I discuss next.
- Companies are also incorporating StockTwits to help increase awareness and broaden access to their information. Like the previous slide showed, J&J appended their tweet with $JNJ – which is built to aggregate messages around tickers. Appending the tweet with the $TICKER will result in pick up like these examples shown here. Essentially it acts like a search engine that gathers all messages that include common messages using the $TICKER tag. Appending the $TICKER will not only ensure message discoverability across StockTwits, but also on Twitter and the wider social sphere. Multiple earnings messages may drive activity in the company’s stream (e.g. retweets, likes, etc.). This activity, in turn, may result in a “trending ticker", which can help drive exposure and build followers.
- Essentially, we define engagement to refer to the ways in which companies are interacting with followers in conversation. On Twitter, there are three ways to interact with followers. The first I mentioned earlier is the use of hashtags. The remaining two ways to engage are via @replies and Retweets.
- @replies allow users to directly respond to another user in public view on Twitter. Our previous report found that @reply conversations ranged from a simple ‘thank you’ for retweeting a companys’ blog post or press release, to answering q’s about a co’s products or services. In this tweet, Symantec thanks a follower for their favourable comments about the company’s Facebook page.
- When we are talking to IROs, we also often get asked whether companies are actually engaging with investors on social media. Our report revealed a marked increase in what we deem as interactions with investors on Twitter. One caveat, it that it is difficult to discern whether a person is an investor on Twitter, so an assumption was based on the nature of the question. NovaGold who is very active on Twitter is a good example of a company who engages with investors on the channel. As such they are constantly monitoring the conversations and are able to respond as they deem necessary. In this tweet, the company thanked the follower for the mention and pointed out that they are not in production yet.
- Put simply, retweets is how Twitter users share interesting tweets from the people they are following. Although it is not a direct form of dialogue, it can be a good way to help a company build a relationship with its followers. For example, sharing industry-related information provides more context around a company’s business and will help investors better understand the investment opportunity. It can also help establish the company as a credible source of information on their industry and build trust with investors who will see the company as wanting to help them understand their market and overall opportunity. For example, Xerox republished a tweet by Proctor & Gamble that linked to a video from an event P&G hosted with Xerox and other tech companies.
- Okay, now for some examples of return on investment
- The Ross School of Business at the University of Michigan conducted research and found a direct correlation between company Tweets around NEWS events/ and tighter bid/ask spreads in the company’s shares. This correlation was found to be most significant with small cap firms that typically do not receive news coverage. If you’re not feeding the information food chain you are restricting your ability to increase awareness about your company – this study is a further testament to this fact.
- TVI Pacific was looking to increase awareness about their story in the market as their traditional channels of communications weren’t working. After taking a four-month test run of Twitter, they approached us to help discern which social media tools and platforms would help get the word out about their story and engage stakeholders. TVI’s strategy began with a website redesign using our web platform. The website was designed as the main information channel for the company and gave prominence to social media through a dedicated "Connect with Us" section which offered links to RSS feeds, Twitter, Facebook, SlideShare, Flickr and YouTube. After a few months, they had some compelling results: Their website visits increased from 100 unique users per month to 4,000 Their trading volume increased by 55% And their share price almost doubled.
- Prior to implementing Q4 and integrating social media, TVI Pacific received about 50 calls a week from investors, asking the same 101-type questions. After, this dropped to just 2 calls per week because more of the discussions were now taking place at a higher level. I don’t want to mislead you into thinking that these results happened over night and without dedication to monitoring and ‘feeding’ the foodchain. TVI’s IRO has put effort into ensuring their shareholders have equal access to everything discussed. For example, after speaking with investors, she posts the Q&A on Facebook and provides a link to this on Twitter.
- After Twitter, TVI implemented a discussion board on Facebook. Little did they know it would attract so many comments (mainly by retail investors). The company’s IRO was dedicated to answering the questions on the discussion board and soon it grew from a few posts to hundreds – at one time spanning 47 separate discussions. As a result of this explosion on the discussion page, in a news release issued on April 22, 2010 , the company recognized the discussion board on the company’s Facebook page as its “official Corporate Discussion Forum.”
- Dell recently expanded their social media use and saw astonishing results in terms of increased reach. Initially Dell used YouTube and their blog, Dell Shares for Investor Relations. They were wondering whether institutional investors were following their information in social channels so they conducted a survey. They found that 60% of the buy side and 36% of the sell side, actively read the information on their blog and watched their videos. These findings encouraged them to expand their social channels. So they added Twitter, StockTwits and SlideShare and increasingly incorporated these channels as part of their quarterly reporting process. The results are amazing as in Q2 & Q3 they used Twitter only and their reach went from 1.8 million to 5 million in Q3. Q4 is where they really saw an uptick in reach as using additional channels such as StockTwits, SlideShare and Twitter, their reach increased to 12 million. The company continues to use these channels to supplement their earnings their reach is now 20 million. This is further evidence of the effectiveness of feeding the information food chain. Dell’s IRO saw that providing more context about their company and pushing this out through social channels- enhanced the quality of his conversations because they had already established a base level of understanding about a particular topic. Some compelling stats…