When will Investor Relations ‘get’ social media?

This article was originally published in Newsline, a publication of the Canadian Investor Relations Institute.

Investor relations people are not social.

Oh, don’t get me wrong; I know they are in real life. I’ve been to numerous CIRI conferences and have witnessed this firsthand. Great banquets, golf tournaments, galas and hospitality suites – IR has social down pat in ‘meat space’ (what the digerati call the real world).

I mean social media. In fact, let me take it further, most investor relations folks really don’t ‘get’ digital at all. They’ve mostly caught on to websites, sort of, and email is old hat, but Twitter, Facebook, YouTube? Hardly.

In and of itself, this is no crime. Personal participation in the latest thing is purely optional, though statistically most IR pros are on Facebook at home. What is difficult to justify is when a profession ignores a mass medium, engaging in the workplace version of hear no evil, see no evil.

Ignoring a medium that attracts 50% of the Canadian population is like ignoring newspapers.

I’m sympathetic to the plight of oldsters, confronted with a confusing and complicated set of new media. What a bother! Heck, I’m a middle-ager myself, an anomaly for my generation as a very early adopter. Many of my university pals are not active or even on Facebook. My friends, however, are not a random sample, so I have accepted that my personal use and business use of social media will differ. You should too.

From a business perspective we can see social media rapidly moving from bleeding edge to mainstream in other corporate departments. The Burson-Marsteller 2011 Fortune Global 100 Social Media Study reports:

In a short time, social media has gone from an interesting emerging communications trend to a critical part of the media landscape, and companies are reacting to that change.”

The study reveals that 84% of the Fortune Global 100 use one or more social media platforms in their communications.

That study isn’t IR specific, but it certainly indicates mainstream corporate adoption of social media. The question is, should IR use it and if so, how?

Closer to home, in its report Public Company Use of Social Media for Investor Relations 2011, Q4 Web Systems states :

Of the 629 companies in this report 626, or 96%, have a Twitter account. After a careful analysis of the content, we found that 67%, or 418, are using it to provide investor-related material … Almost all of the 629 companies are using Twitter, and two-thirds of them are using it for IR.

The second part of Q4’s report on Facebook use found that 45%, or 216 companies, are using it to provide investor-related material. Of course use of social media does not necessarily indicate using it well.

Simply put, social media is about talking to people. In the complex and highly regulated world of disclosure, IROs are gun-shy about talking to people on social media. They tend to broadcast, treating social media like a newswire or other form of dissemination.

Broadcasting on social media does not add value (I can get disseminated info all over the web) and is seen as a bit spammy. What people are looking for on social media is the colour commentary, the backstory, the MD&A explained.

This is analogous to the Q&A in the quarterly conference call, or at the AGM, or at an investor conference.

One myth that needs busting is that social media will replace something in the IR communications mix. That’s unlikely and in fact unwise. I generally use words like amplify and extend when referring to social media and how it fits in the mix. As in, you can amplify the reach of your conference call by making it a podcast or promoting it on Twitter and then extend its shelf life by leaving it archived for an appropriate period of time.

The idea is to take the content, and the conversation, to where the people are. And sometimes that’s on social media.

Brunswick Research’s 2010 report Digital Media and the Investment Community identified the single most important information source from companies as being direct interaction with management (50% of those surveyed). At the other end of the scale were digital platforms: website at 2% and digital media at 1%.

But is a live Twitter chat with a CFO direct interaction with management or digital media? It’s both, of course.

We know social media is no silver bullet. We know other forms of communications matter more. We know there’s mass adoption by the public and corporations. We know social media impacts business journalists mightily. We know IR is uncomfortable with digital dialogue.

What we don’t know is when IROs will decide to get good at this and weave it into their communications mix.