A study by the National Investor Relations Institute (NIRI) and Corbin Perception Group found that 72% of investor relations professionals do not use social media for their investor relations-related work.
The good news is that 49% of the investor relations professionals who took part in the survey reported that they will be re-evaluating the use of social media for investor relations communications within the next 12 months, particularly since the Securities and Exchange Commission (SEC) announced that it is acceptable for public companies to share investor-related information using social media as long as investors are notified in advance that this type of information would be published via social media in the future.
However, there are still challenges for investor relations professionals. When it comes to shifting from traditional communications methods such as press releases and SEC filings to social media, respondents still believe that traditional methods have a higher degree of review than social media. Of course, using social media to communicate investor relations information is still in its infancy, so this type of thinking isn’t surprising.
Not only do investor relations professionals have to get out of their own way to better leverage social media for their work, but they also have a variety of other hills to climb. According to the survey results, respondents rank the following factors as the top reasons for not using social media to communicate investor-related information:
- Lack of consumer demand = 54%
- Management does not see the value = 42%
- Insufficient resources = 34%
- IRO does not see the value = 33%
- Inability to control messaging = 21%
- Lack of understanding = 15%
- Company policy = 14%
You can read the full report below.
There is significant opportunity for investor relations professionals to differentiate themselves by learning how to fully leverage social media for communications, but there is also a big opportunity for Authoritative Content publishers to fill the gap that corporate investor relations departments are leaving open.
Taking a look at the study results, 52% of institutional investors who responded to the NIRI survey use social media as part of their investment research process and the vast majority of those people claim that it has influenced their investment decisions at least occasionally. However, this seems to be disconnected from their perceived trust of social media sources, because 92% claim that they don’t believe the information they find on social media sites is reliable. Furthermore, the SEC announcement is moving them toward social media for investor information. 43% claim they will use social media more in their research process since the SEC announcement was made.
Herein lies the opportunity for Authoritative Content publishers. According to 43% of the institutional investor respondents to the survey, financial blogs like Seeking Alpha, LinkedIn, and Twitter are considered to be the most valuable social media sources. That’s nearly twice as high as the number who find company sponsored blogs to be useful in their research (25%).
President of Corbin Perception, Rebecca Corbin, summed up what’s happening in an NIRI press release when she said, “Our objective research finds that although [social media] information is of questionable perceived reliability, it can play a role in the investment decision process. This underscores the need for IR professionals to closely monitor company-specific social media content.”
In other words, using social media to communicate investor information is new today, but it won’t be new a year from now—or even six months from now. It will become one of the primary investor relations communication tools in the future. However, companies need to create a specific social media strategy for investor communications and ensure there is a single branded social media presence for the company’s IR-related content. Some companies operate dozens of corporate-branded Twitter feeds and Facebook Pages and finding the “official” social media profile for investor relations content is difficult.
Step 1 for investor relations professionals and companies: pick a social media account for IR information and stick with it.
Step 1 for Authoritative Content publishers: Keep publishing quality content. In other words, keep doing what you’ve been doing, because companies aren’t getting it done (yet).
Image: T. Al Nakib