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Social media are becoming powerful tools for financial calendar work, as they become accepted elements in the investor relations mix. The SEC’s recent ruling on financial disclosures via social media are an important milestone, and it’s only a matter of time before similar policies spread among other global financial regulators in the future.
The acceptance of social media as channels for financial disclosure can be considered broadly in two ways. Firstly, the new guidelines simply mean that IR teams have the option of adding social media channels to those they already use to disseminate information for results announcements. This is a relatively straightforward consideration and the only additional workload is to craft content that will be effectively shared by users on social media.
The second dimension is slightly more complex: communications departments need to find effective ways to respond to shares, retweets and questions posed via social media. If history is any guide, rules of the road will emerge, set by early adopters, and regulators will undoubtedly set rules that also guide adoption.
But what will IR teams need to consider before handling the multi-way conversations that will emerge on social media around results?
Handling multi-way conversations during results announcements
Each announcement event will have different characteristics and the allocation of resources in the social media team during an announcement will become more effective over time. The challenge is to balance a number of competing demands:
- Volume of relevant social media mentions during the results announcement
- Influence and reach of those posting, commenting or sharing
- Resource of the social media team
The misallocation of social media resource during financial announcements could result either in slow responses to questions or issues arising online, or over-resourcing. This second outcome is less of a reputational or regulatory risk than being under-resourced, but could easily lead internal teams to judge the entire use of social media a failure, which is a risk in itself.
Dealing with the information flow
The key to handling the flow of information during a busy announcement period is to develop a cadence that matches the resources available and the volume of conversation being handled. As a start point, a social media monitoring team might provide updates every 15 or 30 minutes, as this can allow time to aggregate questions or posts into short-form reports containing recommendations no responses. In some cases, the volume of posts or questions may require less frequent updates, but it would be better to prepare for a high frequency of reports and not need them than vice versa.
Responding to questions or issues arising online requires careful consideration. The conditions that make posts more likely to demand a response would include:
- Rumours or speculation spreading that can be valuably countered
- Questions are by highly influential individuals, such as journalists, analysts or major investors
- Errors with the potential to affect reputation or share price
Judgment will be required when it comes to responding because once a social media team starts responding to some questions, they may become culpable for failing to respond to others that were judged less important at the time. One simple solution to this is to adopt a clearly articulated position that individual questions will not be answered, but that updates may be published in response to general questions emerging from the conversation during the results announcement period.
In practical terms, responses may be best made in long-form via blog posts, live FAQs or video, and then linked to via short-form social media such as Twitter or Facebook. Creating and approving such content will require all relevant parties to be in close proximity for the duration of an announcement period, and for many organisations dealing with questions or issues arising at the pace of social media will be a new experience.
However, it is a similar approach to handling questions during investor calls or meetings, and indeed those on results days can provide much of the content required for social media responses, as long as teams are working in an integrated way.
The future adoption of social media for investor relations
We would expect social media use during financial disclosures to follow a similar pattern to its adoption in other fields, such as consumer brand marketing or corporate communication. In the first instance, adoption appears risky and a minority of early adopting organisations adopt the new protocols. However, over time, the laggards end up being in the riskiest position of all, as they lack the ability to respond effectively and immediately to issues arising. Issues that can affect reputations and share prices can arise very quickly online or via other channels such as traditional media, via influencers such as analysts, or via other digitally vocal stakeholders.
As adoption of social media in investor relations spreads, the onus on all IR teams is to test the water as soon as possible, to learn how handle the process, which will be unique for every organisation. However, those who fail to adapt at their own pace may ultimately find themselves being forced to do so in response to events outside their control.
There are as yet no firm rules. What would you consider to be the most pressing concerns facing investor relations teams as social media enter the mix?
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