Based on these findings, on June 14, 2011 Q4 sponsored a Lunch ‘n’ Learn session at the NIRI Annual Conference which sought to answer this question:

‘Is now the time for all companies to adopt social media disclosure and move beyond compliance to a more efficient and effective model of disclosure?’

During the session, Darrell Heaps, Q4’s CEO moderated and asked pointed questions that prompted insightful input from a great panel including: Robert Williams, VP IR at Dell who discussed their success using social media for IR, including Twitter, StockTwits, SlideShare and YouTube as part of their quarterly reporting process.  We also had Chris Bullock, VP Corporate Solutions at StockTwits who answered why their social investing forum is growing so fast and his thoughts on some driving forces behind the increased use of social networks and blogging by the investment community.  Lastly, Dominic Jones of IR Web Report talked about his research comparing the reach of PR wires vs. social media disclosure.

The audio file from the session has been synched to the slide presentation below (a special thanks to the NIRI 2011 Annual Conference organizers for granting us permission for use of the file on our blog):

The Q&A session was also recorded and questions from the audience are fielded after the panel discussion ends.

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On June 21, Lou Thompson who is a recognized expert in corporate disclosure, governance and communications and served as President and CEO of NIRI for nearly 25 years before he retired from the organization in 2006, wrote an article for Compliance Week: ‘Navigating Reg FD in a Hyper-Connected World’.

I thought the article was timely as it discusses some of the ideas brought forth in the Lunch ‘n ‘ Learn and reiterates some key points (that have been discussed in the IR community but nonetheless merit repeating) that IROs should consider before using social media for investor relations.

For example, the author doesn’t discourage using social media for investor relations but suggests that before IROs get their feet wet, they should monitor what others (particularly marketing and marketing communications) are doing with social media.

IROs can gain a lot of intelligence from other departments that are using social media to communicate and engage with stakeholders. In particular, they can see how questions can be handled i.e. directing specific questions to the appropriate department. In the case of investor-related questions, a contact name and email address will take the conversation out of the ‘public’ forum.

The author also underscores the importance of developing a sound social media policy and offers the following tips to help companies mitigate regulatory and compliance risk when using these tools to increase shareholder and customer engagement:

1. Adopt a comprehensive and integrated social media policy and guidelines for using social media.
2. Proceed with extreme prudence. Deloitte, in its Enterprise 2.0 Harnessing Social Media, warns companies that the need for caution is clear in executing a well-planned social media strategy given that you have little or no control over content once transmitted through the social media.
3. Create a working group under the chief compliance officer or the general counsel (in companies without a CCO) consisting of representatives of marketing, marketing communications, investor relations, corporate communications, human relations, and any other function using the social media to connect with their respective audiences. This working group would assess regulatory and compliance risks in using social media and develop an integrated social media policy to eliminate or mitigate potential risks.
4. On an on-going basis, the working group would monitor the company’s use of social media to identify potential regulatory violations.

I really like the idea of creating a working group with the key departments – as it gives each group a voice and a sense of accountability in adhering to the guidelines in the policy. Also having regular meetings to discuss the document will help ensure the policy remains relevant and evolves accordingly to keep up with the ever-changing regulatory environment.

As the author states, there has been little regulatory guidance for companies to go by when it comes to using social media for investor relations. Until then, companies should monitor and ‘establish policies that take advantage of social media as a means for enhanced communication’.

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As it is earnings season there was a very low turnout.  In spite of this, I had a good conversation with @trevorheisler. Thanks also goes out to @fredmcclimans for joining us near the end.

Q1: ‘Is anyone surprised at Microsoft’s move to website disclosure?’

@trevorheisler: ‘Not really. Sure other mega caps will follow.’
@q4websystems: ‘Do u think smaller co’s will still think it’s not for them?’
@trevorheisler: ‘For the most part, yes. They don’t have the same level of awareness in the markets or online.’

@q4websystems: ‘Agree. But what about multipronged approach as suggested by marketwire: http://bit.ly/c4Hvjh?’
@q4websystems: ‘I agree smaller co’s don’t have much awareness in mkt, but dissem. releases over newswires is costly.’
@trevorheisler: ‘I agree that a multi-pronged approach is the way to go for smaller companies needing to generate awareness.’

@q4websystems: ‘Smaller co’s may think it will stymie the reach of their news & Newswires argue won’t get sent 2 Bloomberg, DJ.’
@q4websytems: ‘Investment portals get notified once co files their release with edgar, so argument re: not reaching key media IMO is moot.’
@trevorheisler: ‘Agreed, newswire dissemination can be expensive, but there are ways to minimize that cost.’
@trevorheisler: ‘Companies that include financial statements could save newswire costs by just linking to financials on website.’

@q4websystems: ‘@irwebreport has made a good point here: http://bit.ly/avqaIC re: providing earnings releases in mult. formats and….’
@q4websystems: ‘Using social media 2 increase awareness by posting release & earnings pres on Slideshare (which sld also b posted on IR website).’
@trevorheisler: ‘Don’t forget the IR blog.’
@q4websystems: ‘yes! I liked your recent take on the merits to start an IR blog: http://post.ly/17fHs.’
@q4websystems: ‘Many good examples of co’s using IR blog to provide colour around earnings.’
@fredmcclimans: ‘Question on the IR blog: at what point do you have too many sources of information (diff 2 coordinate)?’
@q4websystems: ‘Hi Fred! I would limit to either CEO or IRO comment. If q’s come in re: product, designate 1 person.’
@q4websystems: ‘I also feel that earnings releases r cookie cutter & providing commentary on IR blog can help to clarify invest, prop.’
@fredmcclimans: ‘Agree – see the value. Thinking that a controlled “few” sources of into plug a wide #SM funnel would work very well.’
@q4websystems: ‘Precisely. Linking to various social media portals essential.’

Q2: ‘Anyone else think the resignation of office depot chairman & CEO too coincidental?

Q2: ‘Interesting article from Harvard law school: ‘The perils of implied messages and RegFD” http://bit.ly/9YCg23.’

Q2: “This just tweeted…timely to #irchat: RT @footnoted: Hefty payout for Office Depot’s departing CEO? http://bit.ly/d0WaDh.’

As you can see, not a lot of discussion was generated around the second question…I would recommend reading the two articles cited above – very interesting!

Don’t forget to join us every Thursday @ 11:00 a.m. EST. In the meantime, if you have any questions you’d like to submit for an upcoming #irchat, DM @meetthestreet or @q4websystems.

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Over the last couple of years we’ve been successful in working with our clients to create a customized approach that drives IR website traffic, expands content distribution and increase investor engagement. Over this time the Q4 platform has evolved and now can provide a true competitive advantage to public companies by expanding their reach, attracting investors and building better relationships.

These new features provide even greater capability for our clients to benefit from the web and the integration of social media into their investor relations efforts AND with the rise of web disclosure coming, our platform provides all of the tools required to be successful in the new world of online investor relations.

The list of upgrades is below, you can also check out our new website at http://www.q4websystems.com to learn more.

We hope you like them!

Darrell Heaps

UPGRADES NOW AVAILABLE

Simultaneous Web Publishing
Direct integration with Twitter,  Facebook and Bit.ly APIs allows for real-time simultaneous publishing to both of these platforms along with email alerts and RSS feeds. Real-time simultaneous web publishing alleviates compliance issues relating to selective disclosure so information can be accessed on all channels at the same time. Using RSS feeds to publish your content to Twitter and Facebook can result in various delays due to how RSS works and the reliance on third party services.

Real-time integration of social media content
Q4’s social media integration enhances client websites by automatically including content from YouTube, Vimeo, Slideshare and Flickr. Once content is published to any of the aforementioned sites, it is automatically pulled into your website and organized by tags.

Real-time Alert Filters
As press releases, presentations, events or reports are published through Q4, real-time alert filters read the content and distribute it automatically to email, Twitter and Facebook. For example, press releases can now be searched as they cross the wire in real-time and depending on the content, be sent to different email lists, your Twitter account and company Facebook page.

Tagging
Tags are like keywords that you can add to any content to make it easier to find later.  For example, during earnings as you add content such as events, presentations and reports you include a tag associated with that event such as Q110. This will then auto assemble the content into a Q1 earnings page, and any content you add to the site with the Q110 tag will automatically be added to this page.  Similarly, you can tag content with “Briefcase” and it will be automatically added to an investor briefcase page on the site. Tagging your content allows pages and lists throughout the site to be easily generated at any time.

Social Media Optimization
Using our software along with the web’s most popular social networks and communities we work with our clients to create a customized social media strategy.  We also provide ongoing support on the execution, ongoing management and monitoring of social channels. Working with our clients we have been able to drive IR website traffic, expand content distribution and increase investor engagement.

Approve Press Release via Email
As a press release crosses the wire, an email alert will be sent to specified individuals within your company for approval.  Once they view the title and confirm the release is correct they click on a link in the email which automatically sends it out to your email subscribers. This feature gives you an improved balance of automation and control over your content.

SEC filings
All of your SEC filings are now available in various formats such as Word, Excel, PDF, HTML, XBRL.  This allows current or potential shareholders the ability to download and analyze the information in their preferred format.

Online event Reminders
Visitors to your IR website can now easily subscribe to event reminders and also click to add to their outlook calendar with one click (iCal).

Interactive Analyst Center
Five years of financial information updated automatically from filings, plus ratios, customizable, interactive charts and company/industry specific Operational Drivers – all accessed from your IR website.

If you’re interested in learning more contact us today and we’ll setup a live product demo.

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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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Join us on Thursday, January 14th at 4:00 p.m. ET as we share top IR Website improvements to meet today’s challenging economic environment.  If you’re involved in your company’s IR website, this webinar will show some great examples of best practices from the world’s leading organizations as well as innovative small cap companies and how you can apply them to your own website.

Register now and learn 3 critical improvements to make to your website in 2010:

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 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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With experience as both an in-house IRO and IR consultant, I know the day-to-day challenges that IR professionals face.  One newer challenge has been the question of whether to embrace social media as part of the broader communications strategy.  Although I am not a practicing IR professional anymore, I was curious to hear how consultants were dealing with this rapidly emerging topic.  With that, I asked Trevor to be interviewed with the goal of compiling tips that would help consultants handle client inquiries about social media.

1. What does Equicom stand for and what does the company do?

Equicom stands for Equity Communications. We develop and execute strategic investor relations programs for issuers that enhance the value and utility of their public listings. Our approach is pretty straightforward — by thoroughly understanding our clients’ businesses and by leveraging our expertise and knowledge of “the street”, we help our clients to effectively communicate their key messages, manage expectations and raise their profiles within the investment community.

2. Trevor’s bio

Trevor has more than nine years of marketing and communications experience in the financial services and capital markets industries.  As a Senior Account Executive with the Equicom Group, he provides counsel and develops and executes strategic investor relations programs for publicly listed companies, primarily in the Consumer Products and Retail sectors.  Trevor was instrumental in developing Equicom’s investor relations social media offering and has begun to work with clients to develop and implement their own social media strategies as part of their investor relations programs.  He has an MBA from the Sobey School of Business.

3. How has the firm prepared for inquiries about social media from clients?  Any specifically related to its’ use for IR?

We have set up an internal social media working group that has run education sessions for our employees. Following these education sessions, each Equicom Account Executive was tasked with reaching out to their clients to discuss social media with them to determine whether or not developing a strategy as it pertains to their investor relations programs made sense.

TMX|Equicom Social Media Services

We have also developed a fact sheet, which outlines the social media services we can provide to clients. This fact sheet was recently sent to all of our clients.

4. Have there been cases where the client wanted to jump right in and you didn’t feel it was the right time?  How was this approached?

Not really.  However, we do feel that it is important for there to be clearly defined objectives, and preferably, a strategy in place, prior to using social media to augment your investor relations program.  At the outset, we would at least want to make sure the client had some basic groundwork done first, starting with an audit of the social media landscape to see where discussion about their company might already be taking place and how their competitors might be using social media.

5. The firm has a Twitter account and tweets client news – is news tweeted for every client?

Yes, we tweet all of our clients’ news releases. We also tweet client roadshow activity, presentations, and notable corporate developments.

6. Did the firm need client permission to do this?  Was there a formal internal discussion that ensued around the pros/cons of doing this? Any standard operating procedures that developed as a result?

We sent out a client communication letting each of our client’s know that we wanted to tweet their news release headings and links using our Equicom Twitter account.  We did not receive a single objection.

Before we started our Equicom Twitter account, we had many internal discussions regarding the use of social media and Twitter specifically and how the tools might be used to build profile for our client companies as well as Equicom itself.  We felt the pros far outweighed the cons. With that we created our social media working group and began formulating our go-to-market strategy.

7. Has tweeting on your clients’ behalf increased awareness for their company?  Equicom?

In general, I would say yes. Tweeting on our clients’ behalf has increased awareness for our client stories, but for some more than others.  Our clients that have benefited the most are the ones which have asked us to become more engaged on their behalf – by adding commentary around their news and/or setting up a client-specific Twitter account and/or sharing additional materials using tolls like SlideShare or Box.net. Clients who have made a conscious effort to implement and maintain a full social media strategy are definitely the ones who have benefited the most.

Through increasing awareness for our clients, we raise awareness for Equicom itself.  It is another avenue that we can continue to demonstrate the diversity and breadth of our client base.  Over time the number of our followers on Twitter has grown and we often have our content retweeted.  However, I think the best example is that we have recently begun receiving calls from non-client public issuers interested in how we might be able to help them use social media to enhance their investor communications.

8. Is there more than one person who tweets on the firm’s account?

Yes.  Our clients are divided into sector focused teams.  Tweets specific to a particular sector are tweeted by a designated person within that group.

9. Does the firm have a social media policy in place for employees?

We have a policy with respect to what type of information can be shared or posted to our Equicom Twitter and SlideShare accounts, and our IRmatters blog.  We have also adopted a separate policy for how we engage in social media on our clients’ behalfs to ensure we act ethically and adhere to principles of accountability and transparency.

10. How many clients are using social networks?  Does there seem to be one network they gravitate towards first?  If so, how do you counsel them on the merits and downside?

A growing number of our clients are either using, or exploring using, social networks.  Importantly, we are beginning to receive interest from non-clients, so we do see this as a business development opportunity as well.

While it’s a small sample size thus far, Twitter has been the primary network used by our clients.  We do our best to explain the usefulness, and the limitations, of Twitter in comparison to other sites.  However, we also acknowledge that this is a new frontier for our clients, and for the most part, for IR in general.  I believe Twitter is an easier jump to make than some other sites because it is easier to understand and use.

11. Do any clients use social media strictly for IR?  Are you seeing anything interesting on this front?

We have a few clients that are using social media strictly for IR.  In these instances, we have found that social media can be particularly useful for providing more detail about a company’s business, its operations, markets, technologies, etc., to help investors understand the company better.  Of note, China Wind Power International was the first Canadian public company to live tweet from its AGM.  We also made a Slidecast of their AGM presentation and have had well over 1,000 views on SlideShare since their AGM on November 12, 2009.

12. Does the firm monitor social networks on behalf of clients?  Is this information presented to them?  Do clients find this information valuable?

We do monitor social networks for those of our clients that have asked us to be more engaged on this front.  Based on the feedback we have received to date our clients have found this information valuable.  Our clients are always seeking more information.

13. What tips/steps would you offer consultants in helping clients get started in social media?

First and foremost, you have to use these tools yourself and get to understand the rules of engagement first hand.  You can not offer up your expertise on something you have never used;

Second, you need to be aware of both the pros and the cons; the opportunities and the risks of using social media for business purposes;

Third, you need to determine which social media tools or sites are best to use for your client’s specific business, starting with where their audience is most likely to participate.  The functionality of a social media tool or site is always secondary to the location of your audience; and,

Fourth, begin taking baby steps with your client.  As they become more comfortable with it, take it to the next level.

14. Anything else to add?

Senior Management teams should be aware that social media has evolved into a powerful, relevant and targeted communications channel.  On the IR front, by using social media public companies are more likely to discover how investors and other business stakeholders truly perceive them. If planned and implemented correctly, social media communications as part of your overall investor relations program can be an effective and cost efficient way to attract new audiences to your investment story.

With all of the benefits and promises of social media, we also need to be aware of the potential consequences, specifically with regards to regulatory issues.  However, social media is no different than a corporate website and all other electronic disclosure media, in that they should all be considered an extension of a company’s normal disclosure practices and therefore subject to the same policies and regulations.

Finally, as thought leaders in the IR space, we need to keep abreast of change and know when to help drive that change in our industry.  It’s an evolving industry and more and more, we are seeing that social media is a powerful tool, which we believe will be a part of that evolution.  As such, we will continue to develop our social media programs to take advantage of established and emerging tools that can help our clients expand their awareness and achieve their capital market objectives.

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The focus of the paper is how online communication tools, in particular social media, are influencing the communication practices of corporate IR departments at public companies of all sizes. It also examines the question of why corporate IR departments have been slower to adopt social media communications tools than their marketing and corporate communications counterparts.

Dave currently splits his time between teaching public relations in the Department of Journalism and Mass Communication at Abilene Christian University in Texas and works as Director of Investor Relations and Corporate Communications for First Financial Bankshares, Inc. (Nasdaq:FFIN).

While I highly recommend that you take the time to view the presentation in its entirety (below), I have summarized some of the key findings.

LETTING OTHERS TAKE THE LEAD

The use of social networks by public companies has increased, although many companies are still sitting on the sidelines watching to see what evolves. The following stats indicate that the realm of investor relations has been slow in the adoption of social media:

• A study by Barnes and Mattson, confirmed that 57% of all large charities use blogs, compared with 41% for colleges and universities and only 16% for Fortune 500 corporations.
• The same study also found only 28% of the corporate blogs linked to Twitter accounts, 21% linked to corporate videos and only 10% linked to podcasts.
• An informal survey conducted by Bulldog Reporter’s IR Alert of 270 IROs and CFO’s, found that only 12.5% of respondents use social media to disseminate financial information to shareholders and the financial markets.
• Further, large companies (as defined in Bulldog’s study as those with $500 million or more of annual sales) fared even worse, with only 3% using social media as part of their IR communications.

The reluctance of IR departments to pursue social media is surprising given the evidence that institutional investors and analysts are using social media tools for both business and personal reasons:

• A survey of 455 analysts and institutional investors in July by the Brunswick Group found that 42% read blogs and that 20% stated they had used the information on a blog to make an investment decision or recommendation.
• The Brunswick study also found that 58% of its respondents believe social media will become increasingly important in helping them make investment decisions.

Institutional investors and analysts are already using corporate websites to seek out company information. A study by Rivel Research Group supports this, reporting that 75% of institutional investors look for information on corporate websites “weekly if not daily”.

Evidence is growing that institutional investors and analysts, already accustomed to searching corporate websites for information, are now turning to social media. For example, sites such as Seeking Alpha, the largest financial blog aggregator, has hundreds of blogs by ex-analysts, professional investors and fund managers.

LEGAL AND REGULATORY CONCERNS

While some IRO’s are sitting on the sidelines because they don’t yet see the value of social media, the primary holdback to adoption is both legal and regulatory issues.

The SEC has sent mixed messages since they issued their “Commission Guidance on the Use of Company Web Sites” in August 2008. On the one hand, the report praised the Internet for allowing companies to make information available to investors “quickly and in a cost-effective manner”. On the other hand, the same report cautioned that the antifraud provisions of federal securities laws apply to blogs and to electronic shareholder forums in the same way they do to traditional forms of corporate communication.

However, while the SEC may not have given the definitive green light to using social media for IR, some feel they are showing tolerance and they recognize that companies are still trying to figure out whether these newer forms of online communications fit into their broader communications strategy.

There is a general consensus within the IR field that social media is a supplement to existing disclosures and won’t replace news releases, SEC filings or conference calls in the near future, if ever. In a recent webinar hosted by Business Wire, Carol Stubblefield, a securities and corporate law specialist with Baker and McKenzie reinforced the aforementioned by stating “You should do social media on top of what you are already doing, not as a replacement”. She then emphasized the importance of establishing social media disclosure policies and informing employees about the company’s policy toward their use of Twitter, blogs and other channels for discussing company business.

SOCIAL MEDIA PIONEERS

Despite the ambiguity of legal and regulatory issues, a small-but-growing number of companies are using social media for IR. Within this group, Twitter has emerged as the early favorite due to its simplicity and ability to link back to news releases, conference call announcements and other disclosure information thatresides on the company’s website.

Research that supports this includes:

• A recent study by Q4 which identified that 55% (of a sample of 80 companies with Twitter accounts), are using Twitter for IR, with the companies mainly providing links back to their earnings release, conference call notice and webcast.
• A few of the companies included in the study – eBay and CGI group even live-tweeted the earnings call. Both of these companies type the tweets out ahead of time, which are derived from the conference call script, ensuring that they only post words on Twitter that are being communicated on the conference call.
• Other uses of Twitter by public companies include reporting from annual shareholder meetings (J&J and EMC Corp) and analyst days (eBay).
• Dell does have a Twitter account, but they are believed to have the first corporate blog dedicated to investor relations – each quarter, Dell records a video conversation (Vlog) with its CFO to announce and explain recently disclosed earnings results.

Robert Williams, Director of IR for Dell was interviewed for the report and said he’s “surprised” that more large-cap companies have not followed Dell’s lead and established IR blogs. He cites the following three reasons:

1. The small size of most IR departments. Unlike Dell, which has seven people on its IR team, the average company has only one or two employees dedicated to IR.
2. A lack of understanding about blogs. Williams said many corporate executives worry that blogs will be difficult to manage and that they won’t be able to answer users’ questions.
3. The fear of disclosure mistakes and shareholder lawsuits.

Williams feels that it would be hard for a small (one or two person) IR department to manage a blog along with all other expected tasks, but in a recent webinar he listed five things for larger companies to consider before starting an IR blog:

1. The blog should not be used as a substitute for news releases, SEC filings and the traditional means for communicating material information.
2. It must be credible by communicating factual and accurate information and avoid expressing opinions on investor issues.
3. It should be strictly for investor communications and should not be used for marketing the company’s products and services.
4. An IR blog can be an effective tool to counter misperceptions about the company without responding to specific rumors.
5. It’s important to view the blog not only as a means for distributing information, but as a way of listening to what your investors are saying.

Public companies who are using social media for IR are finding they can leverage their time and investment by coordinating their efforts using multiple social media tools together. For example, both Dell and eBay use Twitter to announce new postings on their blogs and Dell posts its Vlogs on YouTube. This can significantly expand the audience and drive more traffic back to their website and blog.

OTHER SOCIAL NETWORKS

As stated, more companies seem to be using Twitter for IR than are using Facebook, LinkedIn and YouTube. For example, although Facebook is being used by public companies the pages appear to be managed by corporate communications, PR or marketing departments, not by IR.

Many companies in this study were found to include links from their corporate websites or blogs to accompanying information on Twitter, Facebook, LinkedIN, Flickr and YouTube. No companies were identified that use MySpace for IR.

Another emerging category of tools are document-sharing or “content” sites that allow IROs to expand the distribution and improve the display of existing types of corporate documents, such as news releases, presentations and SEC filings.

For example, SlideShare is one of the more popular document-sharing sites that enable companies (and individuals) to post PowerPoint presentations, PDFs and other document formats on a public site where they can be viewed. In a recent webinar by Q4, SlideShare was described by Q4’s co-founder and CEO, Darrell Heaps as “the YouTube of presentations”.

SlideShare makes it possible for a company’s presentation to go “viral” and be spread from investor to investor, either via e-mail, embedding on a blog or website, or through a host of other tools.

Lastly, Docstoc is another document sharing site with an emphasis on content other than presentations such as news releases or reports, which can then be shared by readers or embedded on their website and blogs.

IR & SOCIAL MEDIA: LOOKING AHEAD

According to Dave, “A growing number of IROs already understand the potential of social media, and it may be only a matter of time before social media tools become as mainstream as websites and conference calls in modern corporate IR work. The SEC could encourage this development by providing more definitive instructions to guide companies as they chart their way through these new waters. Those instructions would help eliminate the most worrisome objection to the use of social media at this time, the fear of regulatory and legal risk. Hopefully the SEC will partner with NIRI, the stock exchanges and other interested parties to develop critical guidelines for the use of social media in corporate investor relations practice.”

I completely agree, and (without dating myself too much) remember the day when people worried about having conference calls – now the investment community raises an eyebrow if a company doesn’t have an earnings call! More direction is needed by the SEC – while some companies are taking the first steps and becoming pioneers in their use of social media, others need some guidelines to help them get started.

I previously blogged about tips that can help IROs get the C-suite on-side with adopting social media for IR. Perhaps if concrete guidance is put out by the SEC, IROs could use this guidance (in addition to research that shows that public companies are using social networks for IR), to provide to their legal and management teams as evidence that social media can be used effectively if executed within regulatory guidelines for IR.

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By reading their reports and following their guidance, any IRO in North America can improve the standards of their company’s stakeholder communications.

To familiarize you more with their work, I have provided an overview of their most recent study, Corporate Reporting to Stakeholders.

Many of you may be familiar with the CICA’s annual Corporate Reporting Awards (CRA) – a program that honours excellence in financial reporting, corporate governance disclosure, electronic disclosure and sustainable development reporting. This high profile event is now in its 57th year. (Darrell and I have volunteered as panel judges in the Electronic Disclosure category of the CRA for 5+ years and through this experience; have come to highly respect their work).

The CICA’s Research Studies Department examines all aspects of corporate reporting, and document their findings in detailed, thoughtful publications. (For a list of publications relevant to this topic, see Performance Reporting).

The purpose of our presentation to the group was to provide input and spur further discussion regarding the implication of Web 2.0 (social media) on corporate reporting for their upcoming research publication, Using the Internet for Corporate Reporting (a first draft is expected to be completed by Fall ’09).

Our presentation turned into more of a conversation as we discussed the growth of social media in investor relations, the factors driving this growth, the various ways that issuers currently use social media to expand their reach and ‘participate in the conversation’, the ways in which stakeholders are consuming information online and our thoughts on future trends. (We’ll cover much of this in an upcoming webinar on social media in investor relations, so drop us a line sherylj@q4wbsystems.com if you’d like to attend).

The group was so engaged in their work that I decided to reread their 2008 publication Corporate Reporting to Stakeholders and highlight a few things.  I encourage you to check it out.

The document examines practices and important trends in corporate reporting by looking at 125 companies across a number of years and considers various reporting formats, including corporate/IR websites.

It begins by examining the purposes of reporting, the various audiences, their information requirements and the priority of this information.

The report identifies and defines all required content types that comprise each information category (e.g. Corporate Overview). It documents the percentage of the companies studied who provided this specific content. It references and quotes existing research relevant to the topic. It then provides the study group’s deliberations and conclusions on the priority of content types within each category, and also lists specific examples of companies who exemplified the specific requirements in their reporting. Appendices for each category provide guidance for those responsible for corporate reporting and include a series of questions that “merit consideration if corporate reporting is to more effectively meet the information needs of investors and other stakeholders”.

In my mind, this format gives the IRO everything they need as a benchmark for their own improvements.

I have listed the various categories here and have pulled out a comment for each to provide a flavour for the document, but in no way does this represent a complete summary of the information included in the report.

• Corporate Overview – the areas where companies scored lowest were in providing information on company ownership and control as well as management committees.
• Social Responsibility – defined as “measuring, disclosing and being accountable for organizational economic, environmental and social impacts”. Although increasingly relevant to stakeholders, there are no standards for reporting in this area although “New global reporting standards are being developed to provide assurance on matters such as financial implications of climate change.” Scores indicated that many companies were still not reporting on social or environmental responsibilities.
• Review of Operations – interesting that only 66% of companies provided information on competitive conditions in their market or industry while only 12% provided a ‘response to change’ – information on how the company has responded or plans to respond to changes in the operating environment and external factors.
• Financial Summary & Analysis – the majority of companies included the required content types for this category with scores being in the mid to high 90s. Analysis of cash flow and historical summary were the areas where companies fell short.
• Supplementary Information – fewer than 46% of companies provided a glossary of terms even though it was considered important to “facilitate the assessment and interpretation of an organization’s activities”.

Additional topics included:

• Enhancing Corporate Reporting – moving beyond the numbers and dense, jargon ridden text. This area included a number of findings and recommendations including:
  o Readability – most corporate reports did not include enough white space, photos, illustrations, graphs and charts.
  o Delivering Key Messages – reports need to maintain a narrative thread to provide investors with a clear linkage from markets, to strategy to key performance indicators, to future goals.
  o Communicating Effectively – must be mindful of all audiences, recognizing the various levels of financial literacy, diverse interests and disparate needs. The first four pages of the report continue to be key – “many casual readers do not look beyond this point and even sophisticated analysts need a reason to read on”.
• Summary Corporate Reporting – Information overload is a big problem in corporate reporting. Research referenced in the report indicates that “Decision-making performance can be impaired by heavy data loads”. Consequently companies need to access not only the information requirements of each user group/audience, but also the level at which you need to address each piece of information.  Paul-Emile Roy, a principal in the Research Studies Department, said that communicators need to evaluate whether a piece of information, “Simply requires ‘commentary’ – 1 or 2 sentences; an ‘explanation’ or a detailed ‘analysis?”. A seven-step process was provided to address information overload. The group concluded that the three most important criteria for Summary Reporting. In order of priority these were:

1. President/CEO letter

2. Financial and operating objectives

3. Performance compared to objectives

• Corporate Reporting on the Internet – In an analysis of corporate investor websites, 90% of surveyed companies did not include more than 8 of the 24 essential information items. Five essential items were not included at all. This led the group to conclude that the majority of companies use the corporate website only as a library to store company reports.

The 202-page report is filled with interesting observations and recommendations and is available as a free PDF download or $47.50 for a hard copy. I highly recommend this report and suggest that you keep the CICA and its publications on your radar screen.

The study group on Corporate Reporting to Stakeholders has committed to three remaining reports that will include:

• Using the Internet for Corporate Reporting – the corporate/IR website is now recognized as the primary source of investor information.  As the reach, immediacy and speed of the Internet continues to grow – along with the variety of online formats and applications, a detailed study covering corporate reporting on the Internet will be a welcome resource. A draft of the study is expected this fall.
• Corporate Sustainability Reporting – I found the group’s perspective on sustainability a telling sign of how far we’ve come in this area. “We see corporate sustainability as a key driver in the health of an organization and an important aspect of a company’s strategy. It sits at the centre of how a company conducts business”.  As most companies use the  website for reporting on sustainability matters, there is quite a bit of overlap between this topic and Using the Internet for Corporate Reporting. But the group will be separating these two topics as much as possible to isolate specific recommendations. It is expected that a draft of this report will be available in the spring of 2010.
• Governance Disclosures – again overlap exists between this topic and the previous two. Governance is clearly tied to sustainability. The group has not determined a release date for this publication.

IROs would be well advised to explore the work of the CICA and its research department. Their in-depth analysis conducted by IR professionals and industry experts and summarized in low-cost reports offers a tremendous value to companies looking to improve their corporate reporting to stakeholders.

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Companies using our  Q4 web platform will be able to easily embed SlideShare presentations into any area of their IR websites and publish directly to both their IR website and SlideShare.com. Additionally, SlideShare is launching a separate Investor Relations category. Companies will also have the opportunity to promote their investor relations presentations to SlideShare’s 18 million visitors in a targeted manner.

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