Social Media and IR: Embracing Change to Attract Investors

Listen up IRPs

This year is in full swing and it’s time for publicly-traded companies to gain a competitive advantage by taking a hard look at their social media strategies. Social media is a highly valuable tool for marketing, communications, talent recruitment and… investor relations?  You read that correctly! The days of Investor Relations Professionals (IRPs) sitting on the sidelines and using only traditional tactics are over.

Over the past few years, retail and institutional investors have developed a desire and established a clear need for information to be accessible through social media.  In 2016, Greenwich Association performed a study* that found:

  • Almost 80 per cent of institutional investors use social media regularly at work;
  • Thirty per cent of these investors said information obtained through social media directly influenced an investment recommendation decision; and
  • Forty per cent of these investors expected to increase their use of social media in the near future.

These numbers clearly tell us that there is a real and growing need for IRPs to embrace social media as an essential communications and marketing tool. But where do you start? How do you create content that doesn’t violate disclosure laws? Have no fear – the KLC team has your back!

Disclosure Laws

In March 2017, the Canadian Securities Administrators (CSA) issued guidance surrounding social media use for public companies. Ultimately, publicly-listed organizations must report key information through a news release that is filed on SEDAR before posting it to social media. SEDAR filing is an important step, as it allows all investors to see the same information at the same time.

Disclosing information over improper channels and in an unfair order violates securities regulations and can result in disciplinary action. To put social media disclosure guidelines as simply as possible: don’t shock people on social media with previously undisclosed information!

In terms of the disclosure expectations, there are a series of rules that public companies must follow:

  • Statements must be truthful;
  • Announcements of material changes need to be factual and balanced; and
  • Unfavourable news need to be disclosed as quickly as favourable news.

Louis Morisset, chair of the CSA, had the following to say regarding social media use: “We expect issuers to adhere to high-quality disclosure practices, regardless of the venue of disclosure, and encourage issuers to implement a strong social media governance policy.”

With these regulations in mind, a CSA study from 20171 found that while 72 per cent of publicly-traded companies actively use at least one social media channel, 77 per cent of these companies don’t have a specific governance policy in place to direct their disclosure practices on social media. Uh oh! That’s not good practice.

Social Media Policy Framework

If your company is going to be successful at using social media, a clear, established and widely-available policy is most definitely required. For public companies, dedicated IR and compliance staff should be incorporated into the creation of social media guidelines. The purpose of this policy should be to establish exactly what information can be posted in accordance with CSA guidelines. The policy should also dictate which specific individuals have access to the social media accounts, where content can be posted and when. By clarifying exactly who has access to the accounts and what can be posted, there is a reduced likelihood of violating securities regulations and disclosing information over improper channels.

Active Platform Management

Along with having a solid social media policy in place, active platform management is crucial for successfully using social media. Having inactive or infrequently used corporate social media accounts is like having a car without gasoline – the car exists and belongs to you but is virtually useless.

Active management can include:

  • Reviewing public sentiment following disclosure of information;
  • Monitoring conversations of those that can influence stock prices; and
  • Setting appropriate expectations for investors and financial analysts by speaking openly about challenges and successes. Being transparent also works to establish credibility and confidence within the investment community.

Creating Great Content

Creating amazing content for investors on social media is not nearly as daunting as it sounds.

In order to effectively reach all stakeholders, clear and concise messaging should always be used. There’s nothing worse than alienating your core audience by using overly complex terminology or high-level jargon. The age-old rule of K.I.S.S applies here – keep it simple stupid! Retail investors have fewer tools at their disposal than institutional investors and messaging should reflect this.

Social media users are more likely to share and interact with content that teaches them something. By creating content that informs, companies can more effectively establish themselves as thought leaders in their respective industries.

If you’re looking to spice things up a bit while still reaching key investors, videos and infographics can be wonderful tools for distilling complex information and making it accessible for all investors. Many people simply don’t have the time to read through an entire annual report as they decide to further research or invest in a company. Short videos and infographics are great for capturing attention and sparking interest.

It’s time to step up, put yourselves out there and make some amazing content! Remember to follow disclosure rules and have fun. Happy posting!

If your team is looking to vamp up your social media efforts, give us a call at (647) 725-2520 or shoot us an email at info@kaiserlachance.com to schedule a consultation.

_____

*http://www.cision.ca/resources/white-papers/socialmedia-ir/