C: Often I hold your site up as a best practice example for other companies but the response I get from some IROs is, “We don’t have the same size team as a company like Potash – we don’t have that kind of budget.” What’s your response to that?

T: People think we have a much bigger team than we actually do. We have only just recently hired someone specifically for the web and we’ve been a two-person department up to that point.

The reality is that you can have a good site, regardless of your budget by addressing some of the things we talked about before: navigation, architecture, usability and a good story. These things are not expensive, they just require thinking and strategy – it’s a necessary investment of time upfront in ‘thinking’.

PotashCorp makes it easy for analysts to immediately access data they would normally have to spend hours building models in order to view using the datatool as shown below:

With our site the majority of the cost was in the backend development, but 70% of the effort went into the thinking, planning and strategy.

The big question is, “Have you thought about your story? Have you thought about how to communicate it and the assets you already have in terms of telling the story (photos, presentations etc.)?”

If you do the proper strategic planning to ensure that you achieve your communications objectives and then build the site so it’s easier and more cost effective to maintain and evolve, the time and money you spend will give you a significant payback.

C: Potash tends to put more content on its site than most organizations do about the company, market opportunity, investment proposition – information that provides a broader context. Where did the idea come from to do this? Did you find that investors were asking questions about this kind of information?

T: Absolutely. We struggled for many years because we are in an industry that not many people are familiar with. If nobody understands your business, it’s not going to be easy to get people to invest. So we’ve focused a lot of energy on how we tell our story and how we’ve evolved it.

Potash provides good context and background on their company, their markets and their investment proposition via the “Why Invest” as shown below:

C: Your story is really tight now – it’s very compelling.

T: And it continues to evolve and improve. That’s the great thing about the web. If you go out to a conference and you’re telling the story and you feel that something is not quite where it should be, you can go back and tweak it. It’s easy to evolve your story online – you don’t have to wait for the next annual report to come out in order to do this.

C: Prior to doing the things you’re doing now, before investors understood your story, did you find that conversations were taking place at a much more basic level? Were the calls more repetitive than they are now? In other words, do you find that now your conversations with investors are more enhanced, because they understand your company better based on the information they are able to access on your website?

T: Absolutely. This is the payback. We have a very small team relative to other companies. We had two people, so when the interest in agriculture exploded in 2007, (and with it the interest in PotashCorp as a major play), we were under water with the demands for information. And approximately 70% of the questions we were being asked were all the same. So if you build your site in such a way that the information users are looking for is easy to access, people are willing to do their own work to find it. So by the time we’re talking with them, much of the basic information has already been dealt with – and if these same questions do come up, you can direct them to your site.

C: We have a client who used to get 50 calls a week from individuals in the early stage of the investor life cycle, who asked the same questions in call after call. After structuring the website to better tell their story, the number of repetitive 101-type calls reduced to just 2 per week. Now the calls she is getting are with investors who already have a basic understanding of their company and value proposition.

T: That again speaks to the payback. People make excuses as to why they can’t do a more effective job of the web – but look what they’re missing!

C: I like the way that you don’t try to cover everything in an FAQ. Instead, you thoughtfully layer your story so the user gets more and more information as they move through the site. It’s very engaging and it makes a big difference to the experience.

T: That’s what we set out to do. One of the biggest changes we made with the new site was not to cut and paste content from documents like the annual report, but instead to specifically write content for the web. Doing this allows us to layer the information more effectively and in a way that makes it easier for users to digest the information.

C: What about your analytics – are they telling you that site users are looking at the context you provide around your organization? Or are they just looking at the filings and press releases?

T: We use Google analytics and it shows us that people are doing their research – they’re reading the background on the company and the industry. Of course people that come back time and time again are mostly looking for the new updates. That comes back to addressing all phases of the investor life cycle. Overall we get a broad use of content across our site.

C: Is there anything that you think companies consistently miss in planning the strategy for their website?

T: Most companies don’t take enough time to think about their stakeholder groups in terms of ‘what do they want?’ and importantly, ‘what do you want from them?

C: It’s interesting that you should say this. I’ve been saying this a lot lately, especially in consideration of the template providers. It’s not just about making it easy to find things, it’s also about, what does your company want to say? What content do you want your users to see? And how do you present that information to move your users through your priority content?

T: Not addressing that aspect is a fundamental flaw. Companies have a communications opportunity and if they don’t use it, that’s a missed opportunity. Companies have to think about the web that way – it’s a part of a communications strategy. You have people coming to your site, but you’re also outreaching and you have to be telling your story, you have to reflect your brand. There are CEOs and CFOs that don’t understand that there is a payback for doing this right and doing it well happens over time.

You can’t establish the web channel quickly. You have to make the website a good experience – so users don’t have to think that hard and so they regularly come back for more information. This helps establish your channel.

Our strategy really worked for us in the BHP situation. Our stakeholders were already used to going to our website for information and so it made it easier for us to address this situation. We had the ‘go’ (issues) website up and ready in no time. We had the story. We had video of our CEO discussing the takeover on YouTube, and we had a good experience already established. The web was essential to addressing BHP’s acquisition efforts. That’s the type of payback that you get – when a crisis hits, you’re ready.

C: What are the top 4 things a company should do to have a great website?

1. Understand your stakeholder needs and your organizational objectives.
2. Start with an overall communications strategy to ensure consistent messaging across all communications and therefore, a better understanding of your story.
3. Build the site in a way that is easy to use – don’t make users have to think to find things.
4. Ensure that your site is easy to maintain and can evolve to keep pace with new advances in the way the web is being used.

C: My feeling is that a website is never finished – so how do you plan for continuous improvements?

T: You’re right – it’s the story that never ends. There’s two things that we do, one hard and one soft:

1. The hard one being the technology side – you need to use programming that can evolve. And we rely on Zu quite a bit for their advice on this. You don’t want to corner yourself with technology that doesn’t evolve.
2. In terms of the soft side – the content and the thinking behind what we do – we conduct research and we rely on our vendors in terms of what they see: Creative Fire, who handled the redesign and were the primary driver for assisting on the communication strategy; and Zu, who were essential in planning and technical  execution (bringing together the big outside box ideas). We talk to Q4 and read your information, we’re involved in the CICA, we’re involved in CIRI etc. The research aspect is about being out there and having your finger on the pulse and looking at what’s going on in the web world – and not just in the corporate world, because ultimately what’s happening beyond ‘corporate’ ends up leaking down. It’s looking at ideas that are working well in other areas (such as B2B and B2C) and then applying these in the corporate environment.

C: Anything else you’d want to add?

T: Just keep up the good work – the research you’re doing, the evolution of your product, it’s very important.

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Recently I interviewed Tim Herrod, Director, Treasury (C.A.) and former Manager, Investor Relations with PotashCorp, who was instrumental in helping to plan both the award-winning former site and current redesign, which was launched in January of 2010.

Having had 18 months since the re-launch to gather feedback and metrics as well as surviving the high-profile hostile takeover by BHP Bilton, I caught up with Tim to find out more about their approach to web communications and the impact this has had on their IR program.

I have excerpted segments of our interview in a two-part series, beginning today:

C: When I heard you speak a few years ago at a CIRI conference, you said, “Potash views its website as being its primary communications channel. How did you come to that conclusion and why do you view the website as being so important?”

T: Very simply, the web is how people get information. We have a large institutional following, but investors are not institutions – they are individuals within the institutions. These individuals may be at very different points in the investor life-cycle and as such, may have very different information requirements. Whether it’s up front where they have to spend a tremendous amount of time modeling, learning the business, learning about the management team and asking questions – everything that’s involved in making that first ‘invest or not’ decision – those investors have to be covered off at that particular stage of their life-cycle.

Once they have that base knowledge established, they then go into another stage of the life-cycle, which is ‘keeping up’. At this stage, they need certain types of information to help them maintain their view and understand the things that are happening at the company – things that are driving our business, our earnings and therefore, the value of the company.

We have to consider that everywhere around the world, we have individuals who are at different stages in this life-cycle. And we have to be prepared to address their information requirements, wherever they are and whenever they need it. The web allows you to do this 24/7.

There is a place for various forms of communication: speaking at conferences, producing an annual report once a year etc., but when you look at how people are getting information today, it’s clear that the web can consistently deliver what they need, when they need it and in a very dynamic way. This makes for a simple value proposition to take to management to say that we need to build out this channel. And that’s what we did. It was a no-brainer.

PotashCorp Communicates transparency right from the homepage (as shown below) where site visitors are invited to ask the COO a question:

C: When you set out to redesign your new site, what were your top objectives?

T: We did a creative brief and set our goals upfront. They were:

1.   To align the site with our organizational goals and key messages. We have a broader communications program – the web is just one part of that, although it certainly is the main component for our investor stakeholders. From a consistency standpoint – so that users understand our organizational goals across all our communications – we wanted to make sure that the website was aligned with everything else.
2.  To update the technology of the site to align with current best practices and better prepare us to evolve with advances in technology. Although nobody knows where technology is going to take us over the next few years, we didn’t want to be held back, as we were with the old site. We are now better prepared for evolution than we were before.
3.  To update the design on a number of levels. We reduced the number of sections to better relate to our primary users. For example, we felt that corporate governance and sustainability were core values “about” PotashCorp and relevant/critical to all our stakeholders, not stand alone main navigational items, so we moved these into the ‘About’ section. We also wanted to make sure that the application of the brand and the look and feel was consistent across the site. The former site had sections that were bolted on and so the user experience was inconsistent as they moved through the site. We wanted to improve that experience across the site and ensure consistency of the brand. Although the IR department drives the site at Potash, we involved other groups in the project, such as HR, and this really helped to build out the content and ensure a good experience for all users.
4.  To simplify the stakeholder experience by eliminating repetition, tightening up the navigation and making it easy for users to access content (without having to think). We accomplished this through things like relational links, the library, the data tool etc. To prepare for our redesign we did a user survey on the old site, where we asked a concise set of questions such as: why they came to the site and what they were looking for – this helped guide our planning. Another key aspect of the simplification was writing specifically for the web, which is something we hadn’t done before. Previously we were copying and pasting from other documents. Writing for the web causes you to think about how you’re going to layer content to take advantage of web tools and make your information more accessible and interactive.
5.  And finally, we wanted to respond to stakeholder needs to provide more relevant and frequent updates. If you look at the ‘News’ section on our site in comparison to other sites, we have it organized by topic, by keyword, by date. And it’s not just for investors – it addresses all our stakeholders. We have industry information, career, community and financial news. Being successful with this approach is about having tentacles that reach out to all areas within the company and saying, “What’s going on?” and then having a content development process for this information. People across the company are constantly thinking ‘this information might be something that our stakeholders would be interested in’ and then the technology has been set up to accommodate the flow of information.

PotashCorp integrates news for all stakeholders and allows information to be accessed by date, topic or searched by keywords (as shown in the image below):

Another example of how we responded to stakeholder needs is in the creation of our financial data tool. We went from having 7 analysts in 2006 to having 32 analysts now. This is just on the sell-side, and if you think of the buy-side and the people around the world who are building their own models, that’s a lot of effort going into something that you could make easier for them. Instead of leaving them to do that work, we built a data tool and populated it with the information that people are looking for. Then we can say, “Go to the website.”

C: Your site has already won some prestigious awards. What kind of feedback have you received from your stakeholders?

T: The feedback we get from investors is very positive in terms of how well we address their needs.  The bankers tell us that when people have questions about the company or the industry… they say, “Go to the Potash website – it’s the best website in the world.” You know you’ve hit the mark if you get feedback that the early stage investors get the information they need.

C: I think that if you design a website properly – and by design I mean look & feel, structure, navigation, content – it almost acts like a conversation.

T: Yes, and if you put a face to it, then you know who the conversation is occurring with. That’s why you see so many photographs on our site of our people and management team. You can’t meet with all people face-to-face but our approach shows that we are trying to connect with people – we are trying to let them see the whites of our eyes.

You can’t just focus on the actual content – the words only – because how it’s presented is so much more important. If you can’t deliver it successfully, the web just doesn’t work.

C: I agree. When I look at investor sites, particularly in the U.S. where templated IR websites are so dominant, they are often little more than repositories of regulatory filings and data feeds. If you want more context about a company and its investment proposition, you really have to dig for it. And frequently that information is just not there, so the site is doing nothing more than addressing compliance requirements. Do the companies who have these filing cabinet sites just not understand the web or have they just not prioritized it?

T: It seems that they just don’t recognize the opportunity they have with the web or the impact that a good site can have on their IR program. I just gave a presentation a couple of months ago to the CICA with Tony Zuck from Zu and Kelly Freeman, Manager Investor Relations at PotashCorp – the person responsible for our website now. As we prepared for this presentation, Tony spoke of numerous examples of companies who had great stories that were buried deep within their website or in a PDF tucked away in a library. Most users would never see this great information. This is just a lost opportunity.

For any publicly traded company, the number one concern of investors is “what’s the big bogeyman that is hiding out there – that I don’t expect – that’s going to get me.” The way you communicate on the web can show that you are transparent, that you’re putting the information out there and investors can see the whites of your eyes. It helps to build trust. That’s a very important thought process that you have to go through in planning your website.

The web is not just a document repository; it’s a communications opportunity, a management opportunity, a strategic opportunity. The companies that do the best job of brand and brand governance, not surprisingly, also typically do a good job in their web strategy and their stakeholder outreach. These companies are thinking about brand governance when they are creating their communications strategy for the web.

C: With the recent market volatility, I have feedback from some IROs who have been charged with cutting communications budgets, including reducing their spend on web communications. It seems strange to be cutting back on communications at a time of heightened investor uncertainty and concern. What do you think?

T: I absolutely agree with you. We did not pull back budgets, although I’m not sure it’s a budget question only. It’s more important to communicate in a crisis (of any kind). You may get sucked into an economic crisis by no fault of your own, but the business has to have a strategy for facing these challenges and investors and other stakeholders need to understand your strategy, and hear from you often. Uncertainty adds risk, risk reduces valuation, and transparency can help to offset that. There are newer, more innovative and less expensive ways to communicate MORE. So if facing budget pressure, be more innovative – and the web/social media provide great opportunities.

We’ll be issuing part 2 in this series soon – stay tuned!

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1. PotashCorp: The Makings of a Best Practice IR Website – Part 2 This is the second part of an interview I conducted...
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Here’s a list of interesting things we’ve been reading and sharing on Twitter this past week. Lots of great articles, we hope you find it interesting!

Social Media & IR Best Practice example “Dell Investor Relations Answers Questions from Social Media” http://t.co/EIPtZBj

FINRA proposes to exempt social media communications from getting prior approval: http://t.co/9OafC4K

Big Changes On Twitter – Everything You Need To Know: http://t.co/vh0Ifjs

New research on social media & IR, Euro focus “IR 2.0 International Benchmark Study”: http://t.co/taz1zoH

Twitter hedge fund beats the market, other funds: http://t.co/5OSpG1Q

Why Social Engagement Is Critical To Business Success: http://t.co/LUg8hPZ

Yes the wealthy are participating in social media: http://bit.ly/r5nVqX

SEC approves NYSE rule for complimentary investor relations services: http://t.co/PtmWBwL

Mind the Gap: http://t.co/Rvp4vxE

Governance Roadshows Prepare for Proxy Season: http://t.co/VdPKW5G

Does “under promise/over deliver” work in IR: http://t.co/yPM3gdA

Computers Rule Wall Street: http://t.co/MiM6QYW

Companies Begin Disclosing ‘Downgrade Risk’: http://t.co/jI6Dxng

Twitter users are more likely to impact your brand than any other social network http://t.co/RzM9VmU

HP To Apple: You Win. http://t.co/Pz9zCtu

Happy Reading!

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That’s why we’ve decided to put together a list of some interesting things we’ve been reading and subsequently sharing with our followers for the week of July 18, 2011:

Is the SEC redefining Insider Trading: http://t.co/XMYHB2B

Google+, Investor Relations and Lawyers’ Panic Attacks: http://bit.ly/mOXqND

First Level 1 ADR company gets verified StockTwits Account: http://t.co/JgR0L4S

55% buy-side expect Twitter for Investor Comms to increase over next year: http://bit.ly/o6Yi2S

Why No One Should Believe Apple’s Earnings Guidance: http://t.co/BzymxAj

Trader pleads guilty to threatening financial regulators: http://nyti.ms/nPQMv6

Social Networking Policy: Write Now or Regret Later: twb.io/jQNBP5

CSA finds 55% of issuers reviewed deficient in corporate governance disclosure: http://post.ly/2TvPv

The next five social media trends and their impact on marketing: http://bit.ly/ohNa3l

Happy Reading!

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The survey polled financial analysts and investor relations officers (IROs) at companies across Canada and the United States on operational and corporate crisis preparedness. It also revealed the biggest mistake companies make during a corporate or operational crisis is lack of communication and transparency with their stakeholders.

Interestingly, the survey also found that half of responding IROs from the financial services and healthcare industries claim they don’t follow a crisis communications plan at all.

Here are some stats:

• Of the companies with a crisis plan, only 29% update it once a year.
• 85% of the analysts surveyed say fraud resulting in accounting restatement has the greatest negative impact on a company’s value.
• Over 50% of the IROs surveyed say their company plan only prepares them for an operational crisis.

Social Media

• Few companies have a crisis plan in place that incorporates social media protocols.
• Over 50% of the analysts surveyed look to the corporate blog for information during a crisis.
• But only 17% of responding IROs say their company uses a blog as channel for crisis communications.
• Less than half of the IROs surveyed monitor social media platforms during a crisis.

Role of the IRO During a Crisis:

• 85% of the analysts who responded said that IROs are a main point of contact – specifically for a corporate crisis.
• 55% of the IROs surveyed don’t know if the crisis communications plan is updated after a crisis.
• 50% of the IROs surveyed don’t know if their company conducts crisis simulations.
• Only 19% of the IROs surveyed contribute to the corporate blog.

Join me on Thursday April 14th at 11 a.m. EDT for #irchat as we discuss steps companies can take to put together a crisis communications plan.

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What follows are ideas incorporated from the discussion (with direct ideas attributed where applicable) as well as commentary prompted by various articles (which will be referenced in the body of this post).

Before I get started a summary of the rule from this WSJ article:

Under the rule, companies will be required to allow shareholders to vote once every six years on how often they would like to cast a “say-on-pay” vote with three options: annually, once every two years or once every three years.

In addition, the provision provides institutional investors with a nonbinding vote on “golden-parachute” payments that are compensation arrangements for top executives associated with merger transactions, acquisitions and going-private deals.

Early results from recent annual meetings conducted this year revealed that most companies want shareholders to vote every three years, but shareholders want the ability to vote on an annual basis.

The votes on executive compensation will be non-binding, which means that companies can ignore the early results (previously cited) that have shown that some shareholders want an annual vote.   This may be a missed opportunity for companies as a shorter timeline can potentially allow companies to tie in compensation targets with corporate metrics otherwise disclosed (@InsuranceIR).

Fully disclosing compensation targets and tying them into the bigger picture will help provide a better understanding amongst shareholders and show them that management is aligned with stakeholder interests and doing what is best for the company.

If companies choose this path, IROs should be well versed in the topic – if they aren’t shareholders could be easily turned off (@brocromanek).

One way to help IROs get up to speed on the contents of the compensation agreements is to work with the corporate secretary to refine wording to remove jargon & legalese that will help the IRO and ultimately shareholders understand the agreements better.

Providing documents that are easier to read (and ultimately understand) may also help reduce the number of calls to the IR department.

Another way that IROs can help reduce the number of calls about executive compensation is to have proactive conversations with shareholders throughout the year that may help alleviate contentious issues before or even during the annual meeting.

Companies should also not forget the power of their IR website.  Adding any compensation-related questions from shareholders to the “FAQ’ section can also mitigate the number of calls. Also providing a direct link to the CD&A as posted on Edgar in the corporate governance section is another way of being transparent about executive compensation.

Companies could even go as far as incorporating a scorecard that explicitly outlines how effectively the company is executing its strategy that reinforces compensation targets with corporate metrics otherwise disclosed.

Coincidentally, in conjunction with the approval of say on pay, as reported by Jeff Morgan, President & CEO of NIRI in a recent edition of NIRI IRWeekly:

The CFA Institute, with the assistance of NIRI and other related organizations, released a “Compensation Discussion and Analysis Template” to help companies prepare their CD&A.

I agree with him 100% when he goes on to say that ‘IR professionals should become conversant in the CD&A and part of the internal strategy discussion for developing and improving this disclosure. The CD&A needs to be a cornerstone of your compensation-related shareholder outreach, so important in the wake of Dodd-Frank mandated say-on-pay. This is an opportunity to show the value of IR within your company – take advantage of it.’

To view some (what the working group who developed the template deem are good) examples of companies that provide CD&As I also encourage you to read a piece written by Dominic Jones of IR Web Report on the CDA Template.

I think the piece sums up the value of the CD&A and how it can help IROs address say on pay nicely with a quote from the working group:

As many stakeholders and markets around the world continue to scrutinize executive pay practices, we hope that this project will improve understanding, serve as a global model for improved investor communications on this important issue, and elevate compensation disclosure beyond an exercise in legal compliance.

Taking the time to work with the corporate secretary to gain a complete understanding of the compensation agreements as well as using tools such as the IR website and the new CD&A template can help IROs effectively communicate say on pay to shareholders.

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A review of how Polycom uses each channel revealed consistent messaging and current and up-to date information.  Some of the senior management team also regularly tweet and are active bloggers providing additional commentary on an industry-related topic or company specific news. With it increasingly difficult to attract and retain investors in this economy, this sends a very clear message in terms of their transparency and their personal interest in listening to their stakeholders.

The fact that the senior management is seemingly committed to the company’s social media strategy and that the company in general was doing such a great job over several social channels, I thought I’d contact them to see how they became to use the social networks they are; which department(s) is responsible for the strategy and who ultimately is in charge of the content.

After doing a scan of all of their social media accounts, I reached out to Caroline Japic (@CarolineJapic), Vice President, Corporate Communications and Customer Marketing as she was listed as the contact on Facebook.  As it turns out, the Corporate Communications team was instrumental in implementing Polycom’s social media strategy.  Here’s what we talked about:

1.    How long has Polycom been using social media? And what tool did you begin using first and why? Polycom employees began blogging several years ago, but we launched the official Polycom Social Media Program in January 2009. We created Twitter, LinkedIn Groups, Facebook Fan pages, and a YouTube Channel at that time. Yammer was already being used inside the company.

2.    Who was responsible for implementing social media? The Corporate Communications team defined and implemented the program, but we recruited the entire employee base (nearly 3000 strong) to participate in the program.

3.    How did the Corporate Communications team get buy-in? The Corporate Communications team researched social media options and brought the recommendations to our Chief Marketing Officer Heidi Melin. Heidi was our executive champion, helping to gain support and buy in from the Executive team.

4.    Any resistance from legal counsel? Not at all—Polycom legal is very progressive. We worked with our legal team to revise our “Blogging Policy” to become a “Social Media Policy”. Once we agreed on guidelines they were in full support of the Social Media program.

5.    Are there any channels that are strictly dedicated to investor relations? Not yet. We use our main “All About Polycom” Twitter account the most at this point, but are expanding our IR activities using other social media channels for our next earnings call in October. We do host archived video streams from our quarterly earnings calls on Polycom.com/investors.

6.    If no, what would be the determining factor(s) to do so? While we considered a direct channel for IR, we found that those interested in IR are also interested in the other events happening at Polycom such as new product launches and customer win announcements. So, we made the decision to use our existing channels to communicate the IR message.

7.    Is there any interaction on any of the social networks with retail or institutional shareholders? If so, do you have a procedure in place to defer to the IR dept? If we receive any IR requests, they go directly to our CFO Mike Kourey who manages the IR program.

8.    Some of the senior management team has Twitter accounts and actively blog.  How did this come to be?
As part of the initial plan, we had a training session with the Executive Staff and helped them set up their Twitter accounts and Facebook pages. Other execs, such as our Co-Founder Jeff Rodman, have been active bloggers for years and were early adopters of social media. We encouraged participation by all Polycom employees and continue to do so in quarterly all-company meetings, using employee contests, and through ongoing training.

9.    The content seems synergized amongst all of the channels, is this driven by one person who informs the others of the information they should share on the channel?
The Corporate Communications team shares our main channels so that the burden doesn’t fall on only one person. We discuss social media efforts during our regular meetings and encourage team members to post relevant content on their respective channels.

10.    Do you monitor your social media efforts? Yes, we use Radian 6 to monitor and measure our efforts. We have daily reports that are routed to the appropriate departments for action where needed.

11.    Is it important to measure the success of your social media efforts?  If so, how is success measured? Absolutely.  At Polycom, we measure all of our Corporate Communications programs. For our social media efforts, we measure trends, mentions, share of voice, tone of voice, activity spikes, and we watch our conversation cloud very carefully. Success is measured by analyzing a combination of all of these factors.

12.    Do you have a social media policy? Yes, we do. It covers all employees and their social media efforts.

13.    Anything notable you’d like to share i.e. increased website traffic or other less tangible things such as better consumer relations etc., you have seen from using social networks? We compare the social media results with the results from our Customer Experience program to identify trends. We’ve also improved our customer service efforts–anyone who has a challenge with a Polycom product and Tweets about it will be contacted by our customer service team.

14.    Now that you have been using social media for two years, have you changed your strategy for its use? We haven’t changed our strategy, but we’ve evolved it. A good example is that we are adding more IR activities, but not changing our overall strategy.

15.    Any advice for other public companies of the value of using social media? Don’t be surprised if there are many nay-sayers when you start the program. However, progressive companies need to stay abreast of how their various audiences (media, customers, partners, etc.)  are receiving information, and social media is an important information source for many. Social media creates a unique opportunity for conversation, and that conversation is happening with or without you. As the traditional role of the media continues shifts to social media, those who are listening and participating in the conversation via social media will be the ones who win.

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Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Google is able to do this based on the SEC guidance from Aug 2008 regarding the use of websites for disclosure. This guidance states that under certain circumstances, companies can rely on their websites and blogs to meet public disclosure requirements under Reg FD.

As we all remember all too well, shortly after this regulatory change the market collapsed and this new channel quickly faded into the background, while most companies fought to survive the worst recession many of us have ever seen.

However, with 2009 behind us and the recovery underway, the first quarter of 2010 has seen the most activity on the web disclosure front yet, with a number of companies testing out new tactics. Let’s take a look at some examples.

BGC Partners (Nasdaq: BGCP)

BGC Partners, Inc. (BGCP 6.51, 0.00, 0.00%) , a leading global intermediary to the wholesale financial markets, today announced that it plans to issue an advisory release after the close of market on Wednesday, May 5, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the “Investor Relations” section of http://www.bgcpartners.com.

Expedia (Nasdaq:EXPE)

Expedia, Inc. (Nasdaq: EXPE) today announced fourth quarter and full year 2009 results through a press release that is available now at http://www.expediainc.com/ir.

From Q4 Earnings Call – Seeking Alpha Transcript “You may also have noticed we have changed the way we are distributing our earnings release. Rather than put the release out over the newswire, we are pointing people to our IR site where they can pull down the PDF version. You should expect us to continue this practice going forward.”

Google (Nasdaq:GOOG)

MOUNTAIN VIEW, CA–(Marketwire – April 15, 2010) -   Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Marathon Oil (NYSE: MRO)

HOUSTON, April 6, 2010 – Marathon Oil Corporation (NYSE: MRO) announced that the Company will begin issuing advisory news releases notifying investors and other interested parties when new and material information is available on its website, in compliance with the U.S. Securities and Exchange Commission’s guidance regarding “notice-and-access” news releases. With this change the issuance of full-text financial news releases via a wire service will be discontinued.

Reis (Nasdaq: REIS)

Reis, Inc. (Nasdaq:REIS), a leading provider of commercial real estate market information and analytical tools, announced that it plans to issue an advisory release before the opening of The Nasdaq Stock Market on Monday, March 15, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the Investor Relations portion of Reis’s website (http://www.reis.com).

Tellabs (Nasdaq: TLAB)

NAPERVILLE, Ill., Jan. 26 /PRNewswire-FirstCall/ — Tellabs is announcing its fourth-quarter and year-end 2009 results and new quarterly dividend. A complete version of the news release is available at http://www.tellabs.com/news/2010/4q09.pdf.

We are certainly still in the early stages of web disclosure, however it is interesting to note that only Google has announced the intention to use its website exclusively and to no longer use advisory releases (aka “notice and access” press releases) . For the rest, each has moved to a shorter release with a link to their IR website for the details.

As expected we have heard from both sides of this debate, pro web disclosure and pro wire disclosure. Here are two of the popular posts:

Google moves to web disclosure for Reg. FD
http://www.irwebreport.com/daily/2010/04/16/google-moves-to-web-disclosure-for-reg-fd/

Is Google’s Latest Move Evil?
http://www.fool.com/investing/high-growth/2010/04/19/is-googles-latest-move-evil.aspx

In addition to the above posts I’ve been a part of two great discussions on the topic on LinkedIn. Both in the NIRI group (you have to be a member of NIRI to view) and also in the IR 2.0 group.  Each provides a good balance of opinion on the pros and cons of web disclosure.

In general, I think that only large companies with a significant following are a good fit for web disclosure. Companies like Google and other well known brands, have the ability to use their websites as a recognized channel of disclosure and can instruct the market to use their site and all available alert options (email, RSS, social) to keep abreast of news.

For most companies, either continuing to use a full-text press release alongside with posting it on their website or using an advisory/notice and access release are the two remaining options.

I am not against using press releases. In fact here at Q4, we use press releases when announcing big news.  I can easily say it is not a silver bullet, but used in conjunction with web and social channels, press releases can help increase awareness about your company.

Having said that, I think that the hybrid approach of continuing to use the wire to publish advisory releases that link to the IR website for detail(s) is where the market is headed.  The examples previously mentioned are an early indication that this approach may be the one most widely adopted going forward.

Using advisory releases gives companies the additional reach that a newswire can offer, while keeping costs down, and directing investors to the website for the details.  Linking to the website provides many search engine benefits for the company and gives them an opportunity to build direct relationships through subscription options like email, RSS and social channels.

It’s important to note, if you are going to direct investors to your site, you need to make sure it is ready for them.  IR website best practices, enterprise level hosting and accessibility + mobile access are all important areas to focus on to ensure that you can leverage the increased traffic to your site.

The benefits of using your IR website in this matter include:

• Improved disclosure & transparency – linking to your website allows you to share Excel files and formatted documents, which give investors more context and downloadable assets than reading the news on a third-party website.
• Improved efficiency –  putting the full-text release on the website allows you to manage only one version of the release and related financial tables , no longer will you have to juggle multiple versions with the newswire
• Increased investor traffic – linking to your website as a recognized disclosure channel will increase the number of investors to your website and allow you to provide more context  around your business
• Increased direct subscriptions and followers - with more investors visiting the website, there is an increased opportunity for them to register for email alerts, RSS and social updates –allowing you to build relationships directly.
• Reduced costs over time – moving to advisory releases reduces costs simply because these releases are shorter and commercial wires charge by the word.

We’re going to keep track of this trend and will report back in Q2.  If you know of other companies using these tactics, please include in the comments or share with us on Twitter or LinkedIn.

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An interesting discussion developed when Dan Dykens, CEO of Meet the Street and host of #irchat asked “What do you think about Rivel Research’s buy-side survey which suggests that the valuation differential between good and bad IR is 35%?”

This question stirred up quite a debate, especially since no one had access to the methodology or a definition of what constitutes “good” vs “bad” IR.  So the responses were based on the information we had.

Shortly thereafter, Brian Rivel, president of Rivel Research Group, the firm specializing in perception research for public companies posted the following comment:

Glad to see that this data sparked such a debate! One of our most popular findings, as you might imagine. Just as an FYI, the study goes on to define what IS superb IR, according to the buy-side. That result can’t be looked at in a vacuum. I would be happy to provide more flavor to anyone who is interested.

With that, I jumped at the chance and contacted him for an interview:

SJ: Let me begin by addressing something that has been getting a great deal of discussion lately. One of Rivel’s research findings last year dealt with IR’s role in a company’s valuation. There have been conflicting accounts or interpretations of the research; can you clear this up for us?

BR: Definitely. As you can imagine, this is one of our most popular findings as it really comes as close as you can to putting a tangible number on the value of IR. And that always sparks such a fervent debate. Last year we surveyed over 250 buy-side investors from various industries on, among other things, whether or not good IR has a meaningful impact on a firm’s valuation — nearly three out of four said they believe that good IR does have an impact.

We then asked for them to quantify that impact and what we found was quite compelling. IR can account for a total variance of 35% in a company’s valuation – ranging from a premium of 10% for “superb” IR to a discount of fully 25% for “poor” IR. This is notable because just three years ago when we asked the same question, buy-side investors estimated a discount of 15%, so the risk associated with poor IR is increasing, given the level of uncertainty out there.

SJ: Now that begs the question, what constitutes “superb” IR?

BR: Thankfully, we asked the buy-side this follow-up question as well, and what we discovered was while “superb” IR rests on the usual tenets of good disclosure and responsiveness and ample access to senior management, the one standout was transparency.

SJ: But wait, you mentioned disclosure and transparency. Aren’t they essentially the same thing or is there a difference?

BR: Actually there is a big difference in the eyes of the investor. Investment professionals define transparency as clear, unambiguous information through which companies articulate definitive strategic goals, why they are important and the drivers by which they will be achieved. In essence, it’s the clarity of message that brings forward key challenges, how they are being addressed and frank, forthright discussions of the company’s prospects … in good times and bad. That last part is quite important as we’ve seen in many of our custom projects. Being transparent when times are rough goes a long way and is genuinely appreciated by the investment community.

On the other hand, disclosure is simply providing data, metrics, operating figures, what have you, on the many facets of the company, typically in the financial realm, but market share, product development, etc. come into play as well. Normally, disclosure in itself does not provide any color or interpretation on management’s part.

So a company can provide mountains of data on their operations, but they fail to provide any discussion or insight into what it means now or in terms of future performance…for example, how they are connecting the dots between A and B (A being where we are now and B being where the company expects to be in the future). And I can’t stress enough the key to having transparent communications is openness, honesty and frankness.

SJ: I can already hear IROs buckling at the prospect of giving away more information since managements loathe giving away too much disclosure in the interest of their competitive edge. Have you found in your research what the perfect balance is between too much information and not enough, especially as it relates to earnings guidance?

BR: Interestingly, our research shows that the recent implosion of the markets has altered expectations about guidance. First of all, when asked to name the most important aspects of superb investor relations, guidance rarely makes the list. Secondly, guidance is not all about earnings. Relative to a set of five types of corporate insight, earnings guidance ranks fourth. What the investment community is looking for is qualitative insight on the strategy.  How are you going to execute your strategy to achieve the goals you have outlined?  They are saying “connect the dots for us.”

But to answer your question, we haven’t done a definitive study on such a balance since it really varies between types of companies, their sectors, etc. Anecdotally, I can tell you from many of our custom research studies that investors do understand the competitive nature of their business and are aware there’s a fine line between too much and not enough. So they get that. But what they prefer is a sufficient level of disclosure surrounded by a discussion on what management thinks about it. They don’t want volumes upon volumes of data they can’t use. They want management’s take on the data and how that translates into future financial performance. After all, managements theoretically have the best view of what’s going on in their company and their industry.

SJ: So, in a sense, you are saying management has to do more to appease the investment community, even if they think what they are giving is adequate?

BR: In a manner of speaking, yes that’s the case. But it gets back to the original question about IR and valuation. Since the IR program is almost always viewed as an extension of management, if a company wants that premium of 10%, then becoming a superb IR department means having to provide transparency in their communications. It’s not necessarily MORE information, rather, the right information and the right level of transparency…“this is our strategy, these are the key elements, this is some detail around those key elements and this is how we think this will produce future financial performance.”   Without it, you risk being judged on the poor side, and with the continued market malaise, why run that risk when detailed and transparent investor communications are entirely possible with the right amount of work on the company’s part?

SJ: Sounds like a prudent move, but I wonder if management balks at giving such insight in what is a heavily controlled Reg. FD world we’re living in nowadays.

BR: I’m sure there are many internal discussions (or debates, I should say) between the IRO and their management about this subject. But in the end, our research shows that transparency helps set the stage for management credibility, which is at the core of investment decisions today. Having credible senior leadership always tops the list of factors investors take into account when making decisions about a company.

Transparency is also an IR code word for education since now more than ever, educating the investment community is an imperative for IROs as preconceptions about a company’s investment attractiveness are challenged by new economic realities.

SJ: Thank you, Brian for enlightening us on this ever-fascinating topic of IR’s role in valuation. If you have an update to your research, please let us know.

BR: Thank you, Sheryl. I will be sure to that.

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What follows is some of his advice to IR professionals for keeping pace in this rapidly changing regulatory environment.  He also discusses current challenges and opportunities and ways to address them. 

CHALLENGES & OPPORTUNITIES

Combating External Communications 

Regulation is evolving so rapidly it has become one of the key challenges for IROs right now.  All of these regulations clearly have an impact on how companies are currently conducting business and IROs should be good at:

1. Staying at the forefront of communications and keeping on top of what is being said externally about the company.
2.  Taking that information back to management and incorporating this into your strategy for dealing with shareholders.

Doing More With Less

The current economy has imposed budgetary constraints on companies which has made looking for ways to “do more with less” another key challenge.  Some ways to be more efficient and effective include Notice and Access tools and making improvements to your IR and corporate website.  The IR website is the dominant channel for investor communications and is one of the first places that investors, analysts and the financial media go to for company information.  So it is extremely important that is conveys your investment proposition and outlines your business strategy so potential, current and long-term shareholders have current and up-to-date information at a click of a mouse.

NIRI understands the importance of the website, as they will be launching a new version of theirs in mid-July.   They want members to use it as a first access point and are slowly revamping how information is laid out.  For example, they will group information they put out in categories or ways members will naturally go about seeking that information. The changes are expected soon.

Shareholder Communications

Another challenge facing IROs is how they communicate with shareholders.  Social networking can increase audience reach and allow companies to get to know their shareholders better through direct interaction – as traditional press releases, earnings calls and corporate presentations can be viewed, shared and disseminated on Twitter and discussed on blogs.

Jeffrey sees IR as the gatekeepers in social media and with companies slow to adopt these tools, feels IROs are well positioned to take the lead on implementing this into their communications strategy. “I think IR is in position to work with it. Whether we like it or not, this will happen around IR people. It will touch IR in a way where you can’t be sheltered. So you will have to deal with it—and it’s a good idea to start in a position of leadership, instead of waiting for it to happen to you.”

To summarize, in the coming year, there are three areas that he feels IROs will have to improve their professional skills:

1. Legal – as the leader in FD compliance, IROs must keep apprised of all of the regulation changes and stay on top of understanding what those changes mean. 
2. Social Media – IROs “must understand those communication vehicles. It’s incumbent for any IR person to try blogging, Twitter and using social mediums to bring the discussion back to company. Become an expert in it—that’s my advice now. That also relates to the regulatory and legal side. By understanding this, you can understand how to use it in compliance with Reg FD.
3. Financial Education – IROs need to become educated on alternative trading systems such as dark pools to help them understand who is trading their stock.

All of the aforementioned are ways in which IROs can increase their importance within the company.  For example, staying on top of all the regulatory changes can help elevate you to a key resource within the company.  Secondly, being proactive and communicating in social media forums will help you build better relationships with shareholders and increase your company’s profile.  It may also help you address contentious issues and address them head on in a timely manner before they escalate into a crisis.  Lastly, keeping apprised of alternative trading systems will help you understand  who your investors are and may even provide insights on the hedgers in these areas.

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