Similarly, they also use Facebook to connect and engage with shareholders and also populate this channel with company news, frequently post commentary on happenings in their industry and provide links to relevant sites.

So in a continuing effort to share how public companies are using social networks, I contacted Mike and Trina Elliott of NETGENPR, who helped CBAI develop their social media strategy. Of particular interest to me is how they manage their Facebook community; on the discussion board one of the topics is entitled “Removed Posts Board” where they archive the posts deemed inappropriate under the Discussion Guidelines and Terms of Use and give the reasons why they were removed.

What follows is a discussion with Mike who is Co-Founder & Head of Digital Strategy.  We talked about how CBAI’s strategy unfolded, how success was measured and how the “removed posts board” evolved.

SJ: You predominantly work with OTC clients – can you take us through a case study on Cord Blood?

ME: Sure, Cord Blood was officially our first public company client.  Their CEO, Matthew Schissler deserves a lot of credit for being an early believer in social media and embraced the possibilities with a great deal of patience and determination.  He was also committed from the beginning to providing us with the time and resources we required to do our job.  I don’t think I can stress enough how important it is to have buy-in from the CEO.  There are those that may want to give social media a try but lack the resolve and patience to stick with it when no meaningful ROI has materialized after a month or two of activity.  It really requires some vision and patience from Management and Mr. Schissler had both.

We knew a comprehensive strategy was going to be one of the keys for success.  Setting up a Facebook Fanpage and a Twitter account and then feeding in some automated content mixed with random posts or Tweets just wasn’t going to cut it.  There had to be a sense of purpose and social media objectives had to somehow relate directly back to business objectives.

The depth of the analysis is important on many levels but most of all it gives us a common reference when strategizing about communication.  We can train, facilitate and in some cases manage the social media channels for our clients but at the end of the day we can’t tell their story for them. We also can’t build relationships with their constituency for them either.

After conducting our initial audit we formulated a two pronged engagement plan consisting of:

1. Content component which was comprised of the digital multi-media content stream we would produce and distribute online; and an
2. Interactive component which consisted of the conversation and community building for the brand.

Social Media Engagement Plan

For our initial course of action we used (and do for all of our clients) a document called the Social Media Engagement Plan (SME). The SME is the roadmap that helps our team and the client’s team stay on the same page with regard to social media communication.  It also serves as a reminder of the purpose of the engagement from the standpoint of how it benefits the client’s target audience. In many cases the tools and technology take center stage and there is a lack of focus on purpose. We try to help our clients focus on the reason they’re occupying the online social networking space to begin with and what value they will strive to bring to their audience.

Once that purpose is articulated, the SME breaks down the objectives by target audience segment, message theme, platforms used, distribution strategy, media type, topics and complementary interactive strategy.  Each objective is built around fulfilling a brand need and an audience need so they align communication in a mutually beneficial manner.

SJ: How do you manage their Facebook Community?

ME: The deployment of social media tools implies a desire to serve your ecosystem in a diplomatic manner conducive to positive social interaction.  Within any social setting there are inevitable questions, comments, etc. that materialize which have the potential to cause alarm and discomfort.  Our intention as we help our clients build communities is to present to them the possibilities that community can provide long term.

Online conversations need to be managed diplomatically, openly, honestly and in a neutral manner.  If this is done consistently it will begin to earn trust for the brand.  Organizations must understand that people trust the opinions of their peers more than any other because they’ve been subjected to subterfuge from the commercial realm for so long that they’ve come to expect it.

CBAI was very proactive on Twitter announcing and linking updates on Facebook.  Soon after they gained a substantial fan base on Facebook and some fans  became quite active on the discussion board.  Some comments emerged that needed to be moderated which made it necessary to publish a set of Terms and Conditions to layout the expectations for appropriate dialogue. This provided the “rules of the road” and gave us a common reference for removal of posts which violated those Terms.  We wanted the audience to get the sense that we weren’t just removing posts because they were questions that made us uncomfortable but because they violated a specific rule which had been clearly spelled out.

When someone posts a negative comment or asks a difficult question if it’s framed as constructive and addresses something specific it can be addressed and in doing so will earn trust in that community. We then decided to archive the posts and the reasons they were removed – this shows a willingness to be transparent rather than hide things or “sweep them under the rug”.

In this manner we were able to turn some detractors into advocates. While their initial posts and inquiries were uncomfortable when they saw that we were listening to their concerns it had a big impact because they just don’t expect it.

SJ: How do you measure success?

ME: Success was measured both qualitatively and quantitatively. We of course focused on Social Media Metrics, i.e. number of users, number of sources, source distribution, sentiment, retweets, postrank score, video views as well as website Metrics like visits, average visit time, traffic sources and then overlaid that data with Business Metrics.

While those metrics are important we also focused on qualitative and engagement metrics. For example Facebook provides some great traffic and engagement data whereby we were able to view post quality, number of interactions, and number of active contributors.  Those numbers are a stronger indicator of success than raw follower numbers in our opinion. Since the intention is or should be to actually engage the audience in two-way dialogue.

SJ: Any words of wisdom for others looking at Facebook for IR?

ME: If the last 18 months has taught us one thing more than any other it’s that companies are going to have problems in this space unless they embrace social media in a holistic manner and incorporate it throughout the entire organization.  Isolated efforts by outside agencies on behalf of brands will soon become a thing of the past in my opinion.  Suffice it to say that the Agency value proposition has to be geared toward empowering organizations to take charge of their social media presence on the Web and teaching them how to formulate a best practices approach to doing so.

As we’ve also discovered most companies are initially inclined to do it themselves to at least some degree so why not help them down the most natural path.  This isn’t to say that using outside Agencies initially or for supplemental support isn’t justified in some cases.  What I really mean is every brand needs to take primary responsibility for its Social Media presence and establish strict guidelines for how that presence is managed.  Cord Blood America has implemented the proper disclosures on its Website, it’s Facebook Fan Page in addition to creating a formal Social Media Policy.  They’ve really led the way as far as I’m concerned in a compliant, best practices oriented deployment of these platforms for a public company.

No related posts.

Over the last couple of months we’ve been fortunate to add new clients at record breaking levels. In order to respond to this demand we’re now looking to add a handful of people to our implementation and client management group. The Q4 office is a fast paced, collaborative and exciting environment. We offer a competitive salary, health benefits, stock options + other perks.  AND we’re located in trendy Liberty Village in downtown Toronto.

If you’re interested in any of the positions below them please send us an email at careers@q4websystems.com and include the position you’re applying for.

Account Managers

We’re looking for experienced account managers to work with our clients on their corporate and investor websites and corporate social media activities.  We’re looking for people experienced in managing website design & development. You need to have at least 5 years experience on the web and be very comfortable with website design & development best practices.

This is a client facing position so you need to be great on the phone, have a professional appearance and be able to present both in person and over the web.

CSS/HTML Web Developers

This position is working alongside our product team on implementing custom web designs to run on top of our on-demand web content management system. We are looking for 2+ years experience in using CSS, HTML, Javascript (jquery) & Photoshop to develop custom websites.  We’re also looking for deep experience in cross browser compatibility solutions (IE. 6,7,8, Firefox, Safari, Chrome) a strong work ethic and the ability to work on multiple projects in agile environment.

As part of the recruiting process you will be required to write a number of code tests to ensure your skills are up to par.

Quality Control

We are looking for someone with strong quality assurance background, very good knowledge of cross browser issues and 3 -5 years experience with front-end client interfaces (CSS, scripting, HTTP, Web 2.0, etc). The expectations of this role are to ensure all implementations are executed to perfection and meet 100% of client requirements.

This is an internal role working with product and implementation teams in an agile environment. You will have to be comfortable working on multiple projects and with multiple teams.

Again, if you’re interested in any of the positions please send us an email at careers@q4websystems.com and include the position you’re applying for.

Thanks and we hope to meet you soon!

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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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During the session participants were provided with an interactive demonstration of how social media is helping other public companies mitigate share value erosion, dramatically increase their website traffic and broaden their reach to potential investors.  As part of his guided tour he also revealed:

• Which social networks are being adopted by companies for IR first and why.
• How these companies are using social networks and deriving value from them.
• Tips to enhance engagement and streamline quarterly reporting.

Darrell’s presentation was loaded with over 50 examples and case studies of how public companies are using social networks like Facebook, Twitter, LinkedIN and blogs to enhance their IR program.

If you’re thinking about if, when and how to integrate social media with your investor relations program, you should watch the video version of the presentation.

I’ll also be providing an overview of the session with lots of links in an upcoming blog post…stay tuned!

Sheryl

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“Due to Twitter’s innovative, yet immediate and informal, nature, tweets made by public companies and their employees may create a higher risk of violating US securities laws because the substance of each tweet may not be as thoroughly vetted as information that is disclosed through traditional channels of communication. Twitter’s appeal as a tool for companies to use to quickly dispense information to the public heightens these risks”.

Some of the issues brought to light have been widely discussed in the IR world (i.e. Reg FD).  However, they dig a bit deeper into other areas such as Exchange Act Rule 10b-5, which (like any other statement made by the company) would bind tweets by antifraud provisions.  They also confer on how companies should handle information that resides on Twitter (i.e. can stale information be deleted and/or archived somewhere).

The ideas they present are very thorough.  They even present some suggestions for combating these issues and provide a list of best practices at the end.  It is worth the read, but I thought I would provide a rundown of the main ideas.  Where applicable, I’ll also offer an Investor Relations (IR) perspective based on insights gathered from research Q4 has conducted on the use of Twitter for IR and in speaking with various IR professionals.

Reg FD

In a nutshell, an issuer must disclose material nonpublic information to everyone at the same time.  As we know, the most common way to do this is via a broadly disseminated press release or on a publicized call or webcast to which access is provided to everyone.  The article states that Twitter cannot substitute for other, more broadly used means for disseminating as it is unclear whether a tweet would be deemed a communication to shareholders or market professionals.  Therefore, companies should presume that Reg FD applies to tweets.

In my discussions with IR professionals, Reg FD is one of the top reasons why public companies don’t use social networks for IR.  So the authors are correct when they state that companies should surmise that tweets are governed by Reg FD.

Further, they go on to say, that on its own, Twitter does not distribute the information to the public in a broad, non-exclusionary way.  Therefore Twitter should not be considered a primary method of disclosing and disseminating information, but rather should only supplement the more traditional forms of disclosure and dissemination.  In our Twitter for IR report, we found that virtually all public companies are using Twitter as a channel to supplement traditional disclosure channels.

Best Practice Tip:

If a company is using Twitter in conjunction with some other method to disclose material information, the authors suggest they should provide advance notice with appropriate details, when for example, they are going to live-tweet their earnings call.

I would go on to add that if a company is using Twitter to supplement their other disclosure channels, they should say so.  For example, saying something like “Follow us on Twitter and provide the link: http://twitter.com/q4websystems” which can be easily included in a standard boilerplate or FLS used for press releases and other company documents shared with the public.  After all, why be on a social network if you aren’t going to disclose this to your key audiences?

Exchange Act Rule 10b-5

According to the definition provided in the article “This Act prohibits untrue statements of material fact and omissions of material facts that make what have been said misleading”.  In other words, just like any other statements made by the company, Tweets would be bound by antifraud provisions.  So, employees acting as company representatives are not exempt from any material misstatements or omissions by purporting to speak in their individual capacities.

The authors argue that “the casual and immediate nature of tweets and the appeal of being able to quickly disseminate information poses risk that a statement would create a Rule 10b-5 violation”. They also point out that Twitter’s 140-character limit could create additional risk due to a potential for misinterpreting a tweet based on its brevity.

There are a few ways that companies can mitigate the potential for shareholders misinterpreting a tweet:

• Preparing tweets in advance of the call. This is easily done by extracting key messages from the release and the script. Compiling the information for the tweets prior to the call will ensure consistent messaging and help mitigate the risk of tweeting anything that was not previously disclosed over an approved disclosure channel.
• Providing a link to the materials associated with the live event.  For example, providing a link to the press release and presentation would provide followers with the complete information for the call.

Some additional ways that will also help mitigate liability:

• Company policy that outlines exactly what employees can and cannot tweet about.
• Disclaimers that are provided on Twitter profile and on website about use of Twitter.
• Links to your own website and blog.  You could also reference a link that appears on a page on your website (which may appear in a list of other links) and provides the necessary disclaimers.

Archiving Information

The authors have some interesting observations regarding the information that is now housed on Twitter:

• The brevity that is required for a tweet limits a user’s ability to archive information or delete material that is out-of-date.  As previously mentioned, providing the disclaimer at the beginning of the call will help mitigate liability.  Hashtags are widely used by Twitter users to tweet conferences, quarterly calls and conduct on-line chats.  Hashtags allow users to follow along live.

They also allow a user to search by the specific topic at a later date and read the thread.  As far as dealing with information that is out-of-date the tweets are clearly time-stamped:

Also with respect to quarterly call tweets, companies like Weg S.A. make it easy to discern what quarter the tweet applies to:

• A post that is later viewed as problematic cannot be edited to include such disclaimers.  As previously mentioned, preparing the tweets using hashtags that specifically denote the session will help avoid confusion as to whether the information is new or not.
• Chronological representation of tweets inhibits the ability to archive historical materials and statements to a separate section of the Twitter page to store the information.  The authors specifically state “….historical statements…cannot be archived on a separate Twitter page to store the information”.  In my opinion, this is splitting hairs a bit, as Wikipedia broadly defines Twitter as “a free social networking and micro-blogging service that enables its users to send and receive messages known as tweets”.   Case in point, research we conducted on the use of Twitter for IR found that the majority of companies are primarily using Twitter for sharing links to materials that reside on their IR website already disclosed through Reg FD channels.  So providing a disclaimer on your Twitter profile that directs people back to your IR website will alleviate any notion that Twitter is the primary place that you post material information.  As for archiving historical statements I can say that hashtags would help a company archive statements pertaining to a specific event (as I have done this for webinars we have tweeted and was able to search for the specific event and compile the tweets).
• Hyperlinks to third-party websites exposes a company to liability if there is an inference that the company approved or endorsed the information.  The authors then go on to cite that the “SEC does not feel a disclaimer alone is insufficient to insulate a company from antifraud liability and encouraged issuers to describe the purpose of the link, use an “exit notice” or “intermediate screen” so that a user knows that the third-party content is not company information and avoid links to only favourable information”.

If this was applicable to tweets, there are a few issues that could be raised to dispute the enforcement of this by the SEC:

• Technically tweet an article or sharing other third-party information you are not linking back to your website, so it would be difficult to say that a company was “endorsing” the information that is being tweeted.  However, a company could preface the tweet by stating for example: interesting article from Wall Street Journal and then link to the article housed on the WSJ’s website.
• If users find interesting information they want to share, it can be retweeted.  Retweeting complicates the liability as should the onus apply to the person who initially provided the link and the person who RT’d it?  Tweets get retweeted all the time, so this would be an onerous policing undertaking for the SEC.

The authors have provided some good examples of potential compliance issues for public companies to consider for using Twitter as part of their corporate strategy.  While some of the arguments are stronger than others, it is important that you read and be cognizant of these issues so you can take the necessary steps to prevent liability problems.

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Register now if you would like to learn:

1. Which social networks are being adopted by your peers for IR first and why.
2. How these companies are using social networks and deriving value from them.
3. Tips to enhance engagement and streamline quarterly reporting.

Register today for this free webinar and learn how social media is helping other public companies mitigate share value erosion, dramatically increase website traffic and broaden their reach to potential investors.

If you have any questions that you’d like us to address please leave a comment below and we’ll be sure to answer during the webinar.

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Right now, the social network predominantly being used to share this material is Twitter.  So what follows are concrete examples from our Twitter for IR report we issued in November 2009.  However, I will also be highlighting a company or two that reported in January of this year who are trying new approaches to engage investors during the quarterly process.

A number of interesting ideas came to light from our research and I have categorized them into three groups: 1) Proactively engaging shareholders before the quarterly call; 2) Keeping shareholders engaged during the quarterly call; and 3) Providing additional commentary after the quarterly call has ended.

Proactively engaging shareholders before the quarterly call

Virtually all public companies supplement their earnings release with a conference call and web cast. The obvious benefits include providing all shareholders, whether they are retail or institutional, with fair access to the management team.

The majority of companies only allow analysts and institutional investors to ask questions, leaving the retail shareholder and financial media in a “listen only” mode. More often than not, this tactic can lead to a barrage of follow up calls to the IR department for clarification on certain line items and can generally take up more time on the phone than necessary.

Social networks should not only be viewed as a one-way mode of communication; rather, they can be used to interact with and engage users. One example of how social media can encourage two-way conversation (and help head off any additional questions after the quarterly call), is to reach out to shareholders to gauge their top-of-mind concerns.

For example, in preparation for third quarter (’09) results, both Microvision and WEG S.A. proactively tweeted to see if their followers wanted to submit questions they would like answered on the quarterly call. Each company asked followers to submit the questions via different networks. For example, Microvision pointed people to their blog and asked them to submit questions there:

On the other hand, WEG S.A. provided hashtags so followers could submit questions directly on Twitter. Hashtags allow the company to easily track the questions that were being submitted through the channel and this allowed others to see these questions:

Proactively reaching out to shareholders indicates the company is truly interested in the issues that are important to them, which will help strengthen relationships on all levels. In return, getting questions in advance about the issues that are important to shareholders can help the company tailor key messages around these issues and, in the end, could potentially limit the number of follow up calls after the conference call is over.

While the upcoming earnings date has not been announced yet, it will be interesting to see if Microvision and WEG S.A. do the same thing for this quarter – stay tuned.

Keeping shareholders engaged during the quarterly call

A select group of the companies in our study “live tweeted” their quarterly earnings call. EBay was the very first company to do this and since then more have followed, including CGI, Garmin, Compellent and Best Buy.

The practice for live tweeting also includes the use of hashtags to allow people to follow conversations and compile feeds on a particular subject if they were unable to take part during the actual call.

Live tweeting the call may seem like an onerous task, but there are ways to streamline this process. EBay’s Chief Blogger Richard Brewer-Hay recommends preparing the tweets before the call starts. This is easily done by extracting key messages from the release and the script. Compiling the information for the tweets prior to the call will ensure consistent messaging and help mitigate the risk of tweeting anything that was not previously disclosed over an approved disclosure channel.

Update:

BMC Software reported their Q3’10 results on January 27th.  They are being highlighted as they “tweeted” their earnings call.  While they did not use hashtags, they kept the commentary to a handful of relevant tweets including the number of license bookings; operating income and revenue.

Google also recently reported earnings (Q4 on January 21, 2010) and used YouTube to webcast their earnings.  They also posted a separate stream of the Q&A session. A lot of investors are more interested in how management handles the Q&A and having two separate streams gives investors an easier option to listen to the portion of the call they want.

However, using YouTube to webcast their call is not quite as innovative as what they did for Q3’09 (recall they allowed people to submit questions as well as vote for their favourite questions using Google Moderator.  They then addressed the most popular questions during the Q&A session).  According to a post by IR Magazine that highlighted Google wouldn’t be using the moderator app “a source close to the tech company suggests Google is still experimenting with different approaches to its conference call”.

The IR Magazine post went out to further state “The change at Google was one of a number of ways in which companies have recently tried to shake up the traditional earnings call model. Last week, Intel published a CFO commentary to its website an hour before its call began, to cut down on prepared comments and allow more time for Q&A. Intel first used this approach for its Q3 results in October last year”.

Additional commentary after the quarterly call has ended

The opportunity to convey your company’s financial story doesn’t stop once the conference call is over. Some companies have posted a video of the CEO/CFO providing commentary on their financials. Cisco provided a link to a video interview that was made available on their website with their CEO and CFO in which they provided insights on the financials:

Similarly, Time Warner provided a link to a YouTube video where the CEO discussed the results:

Providing additional commentary by the CEO/CFO puts a face to the name. By having the CEO/CFO provide more color (without stepping outside of Reg FD) may also help all shareholders in understanding what the results mean to the company’s future success.

As an IRO, you already deal with challenges that include the ever-changing regulatory environment. The current economic situation has imposed additional challenges, with conditions that lead to budget cutbacks and the need to do more with less. The downturn has also made communicating with shareholders more important now than ever.

The growing use of social networks provide another way for companies to reach out to and proactively engage their shareholders. The quarterly reporting process remains an important avenue for telling the company’s story and to connect with the investment community. There is mounting evidence that social networks provide another valid source of information for institutional investors to make investment decisions.

As more companies report their earnings over the next little while, it will be interesting to see the different things they are implementing to enhance the quarterly reporting process.

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IR Website Best Practices

Last week, Catherine Crofton, Q4’s VP, Sales & Marketing hosted a second webinar on IR Website Best Practices.  Interest was high as we had another great turnout with people from around the globe in attendance. I also tweeted the event so if you were unable to join us, you can do a search on Twitter #Q4BP for a feed of the conversation.

This presentation was a follow up to a webinar Catherine conducted on this topic in April of last year in which she discussed five common barriers that block potential investors from understanding a company’s investment story.  Click here to view last year’s presentation and listen to the audio. 

This time, her presentation focused on how to build investor confidence through effective online communications.  In particular she outlined some critical improvements to consider making to the IR website in 2010 including:

1. Providing immediate entry points to all users
2. Providing a company snapshot (industry)
3. Detailing the market opportunity  
4. Communicating a clear strategy
5. Emphasizing why leadership is suited to execute strategy
6. Summarizing ‘Why Invest?’ proposition
7. Using technology to engage & increase accessibility
8. Broadening reach, increasing accessibility & engagement and protecting shareholder value via social media

The presentation included a lot of great case stories and examples of companies using best practices with practical advice on applying them to your own IR website.

Here are some of the highlights:

1. PROVIDING IMMEDIATE ENTRY POINTS TO ALL USERS

• Information on your IR website should be geared to current, potential and long-term investors.  All of these audiences has a different reason for visiting your website.  A good site needs to show users where they are, where they want to go and how to make their way back.  It should also bring key content forward so users are presented with the next logical step in their navigation of your site.  One place this can be addressed is the Index page. 
• Danske Bank has a good investor index page where they present the most frequently sought information, lots of quick links and even asks the question, “Are you a new investor?”. 

2. PROVIDING A COMPANY SNAPSHOT

• Including a top level view of your company will help provide context for your company’s investment proposition.  At the very least, the investor section should have a company page or section that begins with At-A-Glance information.  The type of information offered in At-A-Glance varies by company.
• For example, Bell provides an overview of the company, business units and customer breakdown.  They also breakout their revenue by segment and product and link to additional information in their company section.
• The At-A-Glance section should also be supported by a downloadable fact sheet.  BASF has a great fact sheet that is updated on a quarterly basis.

3. DETAILING THE MARKET OPPORTUNITY

• Companies should put a lot of time and effort in presenting the case for market demand of their product or service and why they are uniquely positioned to capitalize on the opportunity. 
• Potash does a great job of providing in-depth information on all aspects of their business including global trends and statistics so an investor can piece this information together to make an informed investment decision.

4. COMMUNICATING A CLEAR STRATEGY

• The economic meltdown has made communicating a clear strategy that supports corporate objectives more important now than ever.  Investors need to know that your company is moving into a purposeful direction to increase growth and profitability.
• There are several good examples of companies who clearly outline their strategy like Credit Suisse who discusses their strategy for moving forward and gives investors an understanding of how this same strategy helped to lessen their exposure in the recent financial crisis.
• Shell is another good example. They provide updates on their strategy, which indicates that they are continuously monitoring and evaluating their approach within the context of market conditions and adjusting or fine-tuning as required.

5. EMPHASIZING WHY LEADERSHIP IS SUITED TO EXECUTE STRATEGY 

• It is important to convey that the key players in a company are connected to the strategy.  In particular, that they were chosen for specific knowledge and skills that make them ideally suited to execute the corporate strategy. 
• For example, Nexen has an award-winning Corporate Governance section that provides detailed biographies of their Board and highlights specific areas of expertise.  This information is then connected to a matrix that describes how the Board’s combined expertise helps execute the company’s strategy, while ensuring appropriate oversight.

6. SUMMARIZING “WHY INVEST” PROPOSITION

• A lot of issuers miss the opportunity to communicate why a person should invest in their company.  There are several ways this can be resolved….through a robust homepage that integrates investor content such as providing pull downs to provide immediate access to key content; “What’s New” – which features anything recently added to the site such as quarterly earnings results and conference call archive and upcoming events such as annual meeting; and an IR index page that has a section entitled “Why Invest”. 
• We have found several companies who have a “Why Invest” page or section on their site including Agnico-Eagle which includes a video; Aura Minerals; and Aviva. 

7. USING TECHNOLOGY TO ENGAGE & INCREASE ACCESSIBILITY 

• Technology can help to effectively aid communication and engage users.  A few examples of some innovative things that companies are doing:
 o Strategic use of flash to convey important messaging.  For example, on the Potash homepage, three messages cycle through and link to associated content. 
 o Customize IR Index page – For example, ENI offers the ability to customize the investor index page by using a tool to move modules around on the page.  
 o Design your own info. page – Aviva offers this feature and have made it very user-friendly; you just check off the items you want on your page or choose a profile from a pull down menu that offers a preconfigured set of information. 
 o Sorting & Filtering – We are seeing a much greater use of tools that allow users to sort, filter and search information by date, topic and speaker such as News, Events and Webcasts. For example, Adidas lets users search their Events by topic, month and year. 

8. BROADENING REACH, INCREASING ACCESSIBILITY & ENGAGEMENT & PROTECTING SHAREHOLDER VALUE VIA SOCIAL MEDIA

• We are seeing an increase in the number of issuers integrating social media with their website.  For example, Embraer offers a dedicated IR 2.0 page accessible through a panel that’s universal to their investor section.  
• Verizon is another example and they break down their social media channels by business units and information types including corporate and investor relations. 
• Small cap social media ROI case study: TVI Pacific:
 o Initial objective to use social media (with other tactics) to help increase company awareness and engage stakeholders. 
 o Initial strategy began with a website redesign with prominence to social media through a “Connect Us” section. 
 o I recently interviewed Rhonda Bennetto, TVI’s Executive Director Investor Communications on some preliminary findings of integrating social media into their broader communications strategy.  Click here to read the interview.

Today’s challenging economic environment has made building investor confidence a top priority for companies.  The IR website still remains a leading source for the investment community to verify and gather company information.  There are several things to consider for your IR website.

•   First, it is essential that you consider your key audiences and provide entry points for potential, current and long-term investors. 
• Second, if you want me to have confidence in your company as an investor, I need a company snapshot in order to understand your industry and your position within that industry.
• Third, the market opportunity (supported by reliable statistical information), must also be conveyed.
• Fourth, I need to know that your company has defined its objectives for growth and that you have a clear strategy to execute on these objectives. I need to know that you evaluate this strategy on an ongoing basis to keep pace with market conditions.
• Fifth, I need to know that your people are connected to your strategy and that they were chosen for specific knowledge and skills that make them ideally suited to execute the corporate strategy.
• Sixth, add to this a robust “Why Invest” section that shows stable growth as indicated in your financials and when results are lower than expected, I need a sound explanation and to see that there’s a clear strategy to address this moving forward.
• Finally, using technology that is suited to your business needs as well as integrating additional tools such as social networks will increase your audience reach, empower people to engage with your company and give them a better understanding of your investment proposition. 

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In particular she outlined some critical improvements to make to the IR website in 2010 including:

1. Key information to include for potential new investors in this economy.
2. Using social media effectively to increase your reach (and website traffic) and to protect your share value – with case stories and examples.
3. New interactive technologies – what kind of technologies increase user engagement and add value.

If we weren’t able to get to your question during the webinar, please feel free to post it in our comment section below or email sherylj@q4websystems.com.

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“My sole objective, and the only bullet on my job description, is to get the share price of TVI to a fair and sustainable value, PERIOD.  I decided the way to do that would be to use all things social media and set some benchmarks for Return on Investment (ROI) so I could measure the results.  Indicators such as increased web traffic, improved liquidity, increased institutional holdings and improved investor sentiment, would all result in a fair share price.”  – Rhonda Bennetto, Executive Director Investor Communications, TVI Pacific Inc.

TVI is still a relatively new user of social networks and in conjunction with the launch of their new website in mid-November 2009, they have reaped some interesting results thus far:

• Website visits are up from 100/mth to 4,000/mth;
• 83 followers on Twitter (as of Jan 11);
• Photos have been viewed on Flickr 1,519 times and they have 696 views of their videos on YouTube; 
•  Average daily trading volume has increased 55%; and
• Their share price has risen from $0.06 prior to launch to $0.12. 

What follows is an interview with Rhonda to provide context for their results: 

1. Tell us a little about yourself and TVI

I have been in IR since it became a profession (IR has grown with regulation surrounding disclosure of information).  I was fortunate to already be doing a corporate secretarial role so I gradually became an IR professional (because no-one else knew what to do) and have been doing it full time since 1995, part time since 1990 as the profession evolved.

By design I found my way into the oil and gas industry in Calgary (what else is there to do here?) and then by accident, I found myself getting a reputation for “stakeholder communication during change” – I have been the IR “go-to-person” for 8 mergers, acquisitions or outright sale of public companies (that’s just life in the Calgary oil and gas patch).  My reputation for communication during change took me into mining where I recently helped prepare a Denver based gold company for sale (for a premium).

I joined TVI Pacific (copper mining company) because they had some very specific challenges.  They have a legitimate story and a platform for growth, but are largely unrecognized in the market.  This was a result of a lapse in production during the financial crisis and a soft Management reputation issue – both challenges were appealing to me.  Complacency does not sit well with me – I’m too ADD! – I stick with small cap companies, where I can shoot the gun, then go chase the bullet.

2. What were your objectives for TVI before you went ahead with this project?

My sole objective, and the only bullet on my job description, is to get the share price of TVI to a fair and sustainable value, PERIOD.  I decided the way to do that would be to use all things social media and set some benchmarks for Return on Investment (ROI) so I could measure the results.  Indicators such as increased web traffic , improved liquidity, increased institutional holdings and improved investor sentiment,  would all result in a fair share price.  I think too many IRO’s and senior managers spend too much time watching the share price.  If you have a good, credible story and can back it up with tangible growth plans and share that information with your stakeholders, the share price will follow – it should be considered a lagging indicator.

3. Was it difficult to get approval from sr. executives to use social media?

I’m probably a minority among IRO’s in this regard but my senior management team (of which I am a member) and Board of Directors have been extremely supportive.  Even though most of them were unfamiliar with Social Media (other than the hype they had heard) they just trusted my judgment and my vision (which I wasn’t 100% sure of myself) and let me run with my program.  Of course, as you’ll read a little father down, it’s been more successful than even I envisioned.
 
4. What were the tactics that you put in place? (website, social networks, etc.)

Less than a year ago I was intimidated by Social Media and couldn’t seem to separate the noise from the product/benefits, I was scared it would bite me “you know where”.  As everyone should do, I created a twitter account and just watched….for 4 months… and it became  quickly apparent who is worth following and who isn’t, who has good information and who doesn’t.  Although I’m not a huge fan of George W. Bush, I live by something he said once “I don’t need to know everything, I just need to surround myself with people who do”.  So, I went to the people who I watched consistently provide valuable information (like Q4 Web Systems and Communicatto, a Calgary based digital marketing, public relations and investor relations agency). We talked about TVI’s audience (large retail base), which social media tools and platforms would be appropriate for my audience and then we all worked together to put it in place.  I admit, I was a bit nervous but having professionals in the field by my side, it all came together.  Our new and very cool web site (www.tvipacifc.com) is merely the platform for Phase II of TVI’s IR program.  For my audience we use our website as the “information transportation portal” for everything – we have links for RSS feeds, Twitter, Facebook, Flickr and YouTube.  I also have an account with a couple of e-mail service companies where I can send one e-mail and it tweets, posts to facebook and uploads photos or video, all in one shot.  It still amazes me what can be done with a click of a send button!
 

5. What were the results?

Our numbers speak for themselves – Website visits are up from 100/mth to 4,000/mth.  Last time I checked, we had 78 followers on Twitter, our photos have been viewed on Flickr 1,519 times and we have 696 views of our videos on YouTube.  Our average daily trading volume has increased 55% and our share price has risen from $0.06 to $0.12.
 
6. Were you surprised by these numbers?

Oh Hell Ya!  I never, in a million years, expected to see these types of numbers.  Truthfully I hadn’t set a specific number – I had set a goal of “increased web traffic”. A note for new SocMed people, you can’t set a target for something you can’t control – set a goal instead, don’t limit yourself by putting a box around something so fluid.

7. How about your executives?

Yes, they are very impressed – I think it might be a good time to ask for a raise!  Seriously, I was not able to exactly identify what this program would look like 120 days ago and I was honest with them about that. I was still in learning mode myself so I could only quote other success stories and list other credible companies using Social Media and now… WE ARE ONE!  Very exciting!

8. How has your findings help you fine tune your IR program

Most notably we’ve been able to identify where we can cut back on marketing costs – something in the neighborhood of  50% – and have roughly tripled marketing effectiveness (measured by lead generation volume, cost per lead, press coverage, and other quantitative metrics).  I still believe in face-to-face meetings at conferences and with fund managers and analysts. What Social media has done is enabled us to provide timely, accurate information to all shareholders so they don’t ask to see us as often (which was always my IR philosophy but we spent a lot of time on the road).  Now we pick and choose where and when we need to be and are way more efficient.
 
9. What are you plans moving forward?

Now that we have our web site and social media platforms running smoothly, the next step , which I want to EMPHASIZE, is to constantly communicate.  You can’t go to all this trouble and then not use it.  I post pictures from our mine site, I upload stories from our PR crew in the Philippines (where our mine is), I speak openly to shareholders on our discussion forum on Facebook and I Tweet when I have news. I honestly have no idea where Social Media is going to take my IR plan (I didn’t know I’d be here), but it can only be “good places” if we consistently rapport with our stakeholders.

10. Advice for other small caps considering social media?

Open your mind, admit you don’t have to know everything and hire someone who knows what they’re doing.  There are pitfalls but they are easily avoided with the right experts. This is a relatively inexpensive way to get your story out (make sure you have a story) and your ROI will be huge in numbers and credibility.

11. Any other closing remarks?

Yes, don’t put numbers on what you expect from social media, it’s too fluid and you’ll limit yourself. Believe in what you don’t know – hire the best people in the profession and leave lots of room for pleasant surprises!

Something I’ve lived by (through a couple of market downturns and one big-a** financial crisis) – If you communicate with your shareholders, ALL THE TIME, with good and bad news, they will remain loyal, require less maintenance and, as I’ve recently learned, support you in public when an unhappy shareholder says anything negative.  I honestly have shareholders ‘working’ for me!  We have one shareholder who consistently bashes TVI on certain chat boards – here is what a shareholder, happy with our efforts, had to say in return. 

“I’ve never seen anything like this from an IRO in ANY stock listed company – Very impressed, Great job”
”I’ve been in the stock market for over 25 years and never seen anybody do a job like Rhonda”
Is Social Media worth it?  Clearly.

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