A public company’s marketing dream or compliance nightmare?

Social media continues to grow in popularity and is now used by many Fortune 500 companies. In the venture world although slower to catch on, management and their investor relations representatives are beginning to recognize that investors are active online and a significant opportunity exists to build a community of targeted followers.

Fact: 79% of the top 100 companies in the Fortune Global 500 index are using at least one of the most popular social media platforms: Twitter, Facebook, YouTube or their own corporate blogs (Burson-Marsteller Fortune Global 100 Social Media Study)

Communicating through social media reaches people in a conversational manner, humanizes the company’s brand and allows it to connect with stakeholders in a meaningful way. In addition, as venture companies are often overlooked by the press and sell-side analyst coverage, social media sites like Twitter have shown to improve direct connection to investors and affect the liquidity of the company’s stock. Read this interesting Stockopedia study republished by IR Web Report.

Transparency is an important factor in building trust with any potential buyer, especially when people are investing their hard earned money into a public company’s future. Companies with closed cultures that aren’t listening to the communication needs of their target market are being left behind for those that do. It’s highly beneficial for all businesses public and private, to learn how to harness new technology and cultivate key relationships online. And remember, conversations start by being a good listener.

Fact: 58% of institutional investors and sell-side analysts in the U.S. and Europe believe new media will have increasing importance in helping them make investment decisions (Brunswick Group)

“The internet, and in particular specific social media sites, provide access to a much broader range of opinions which enhances our decision making process on investments”, said Brent Woyat, Senior Portfolio Manager with Ocean Forest of Raymond James Ltd. “There are now thousands of intelligent individuals worldwide presenting commentary and analysis on everything from macro-economics to insights on individual stocks, adding so much more perspective.”

A major concern for publicly listed companies, and rightfully so, is that social media remain compliant with securities regulation. Online communications related to the capital markets presents new challenges for regulators wondering how to catch up with evolving digital platforms and how to effectively monitor the massive volume of conversation happening every second of the day.

Public companies that are already active or want to be engaging with their audience through social media must be compliant with existing disclosure rules and be cognizant of how to behave online. The overall level of business transparency has certainly increased therefore it is more important than ever to ensure what is said in social media channels is honest, clear, consistent, straightforward communication consisting of information that has already been publicly disseminated and, would be suitable for the corporate website. Review the TSX electronic disclosure guidelines for more information – slightly dated but still generally applicable where the rules are concerned.

Previously disclosed information is easily distributed through all of a company’s core social media channels. Thanks to the rise of search engines and sharing of information between like-minded investors, items such as corporate news, reports, videos, pictures, media coverage and other relevant content can be posted by public companies to engage investor audiences. Facebook, Twitter, YouTube, Flickr, Slideshare and other popular social media channels make it a breeze for businesses to get their message out, although it should be done correctly and as part of the company’s overall marketing strategy.

Another benefit of social media is when a question is posted by an investor publicly everyone in the company’s social media “room” has access to the answer. This helps to reduce incoming telephone inquiries and increases the time available to spend on other marketing activities.

Fact: 85% of financial services professionals under 50 are active social media users (LederMark Communications)

The number of financial professionals using the Internet for their businesses and research purposes is growing. Although finance is a late comer to the social media party due to compliance requirements, regulators are coming to understand that they can’t unwind the digital revolution and must adapt to 21st century communication methods.

Soon a greater number of financial services firms will be using social media most likely starting with blog entries vetted internally by compliance officers. I suspect LinkedIn will be the next logical step for financial advisors to reach out as the firm can more easily monitor their profiles, posts and the groups that they belong to.

Following are a few guidelines for public companies who are interested in communicating effectively online:

  1. Most important ensure that your company’s website, the hub of all your communications (on and offline), is professional and up to date with all corporate information in one concise location.
  2. Do your homework and gain knowledge of how social media integrates with corporate growth objectives and other marketing strategies.
  3. Have a solid understanding of the social media ecosystem beyond putting up a Facebook and Twitter page.
  4. Set internal guidelines and policy around what to post and not to post, learn proper online etiquette.
  5. Employee online conduct is critical to a company’s reputation. Use the Internet for good, not for evil!
  6. Become familiar with each specific channel and the objectives, strategies and tactics best for it.
  7. Include disclaimers and the company’s position on the corporate website and in its social media channels.
  8. Listen intently to what your audience is saying about the company and industry. Learn the “tone” of the conversation. Tools such as Google Alerts will help you track keywords.
  9. Good content to distribute is press releases, e-newsletters, images, blog entries, media coverage on the company and industry articles, to name a few.
  10. Engage where the conversation is positive, create a dialog and never “poke the bear” if someone is being antagonistic. Address concerns in a diplomatic manner.
  11. Only disclose information that has already been made public. Regular securities rules apply.
  12. Do not post any misleading or vague information on the company or its stock – this is a no brainer.
  13. If there is a drop in your share price or a sudden rise due to events which were made public, this can be explained through your core channels. Anything material requires a news release as per the status quo.
  14. Utilize your internal communications people by sending them for professional social media training. Do not simply “try it out” without knowing all the pitfalls and strategies or it could hurt your brand, and your stock.

Social media is a powerful addition to existing Investor and Public Relations outreach however it doesn’t replace face to face meetings, phone calls or regular news release dissemination and filings. It is a place where every public company needs to have representation as investors large and small ARE discussing your business.

It’s better to be aware and in control of the message by delivering relevant and timely information that people can easily find, share with their networks, and engage with you as part of the community.

As our world continues to evolve and technical advances bring us closer together, niche communities will drive the reputation and ultimate success or failure of businesses everywhere. And yes, this will affect your stock price.

Still not sure if social media is important to your public company? Check out the newly expanded “Social Media Revolution” video by Erik Qualman, author of Socialnomics: How social media transforms the way we live and do business.

Loa Fridfinnson, formally a registered investment advisor, is the Chief Creative Strategist at Activ8 Corporate Relations, an integrated marketing agency empowering its clients with digitally enhanced engagement programs. Contact her at 604-687-2004, loa@activ8inc.com , www.activ8inc.com or www.twitter.com/activ8inc