Get Social, or Watch Your Stock Plummet

Listen up, IROs and financial communications practitioners. It’s time to stop leaving that “social media fluff” to PR pros and digital marketing folks and learn how to harness the power of social media for communicating corporate information to investors. What do social networking sites like Twitter and Facebook have to do with disclosing serious financial information you ask? Well, the U.S. Securities and Exchange Commission recently announced that information released on social media channels now constitutes as fair disclosure, opening up enormous opportunities for IR professionals. It’s time to buckle down, get social, and strategize some concrete steps for incorporating your company or client’s social media channels into your IR practices.
According to Edelman Digital and Financial, the SEC isn’t the only regulator taking notice of social media. FINRA and the Federal Financial Institutions Examination Council have proposed regulations that require companies to have concrete social media processes and documents for IR practices. All of a sudden, social media for investor relations is moving to the mainstream – IRO’s can no longer ignore these channels and need to find a way to incorporate them into their communications strategy. How do you determine which channel to prioritize? A recent study by the Stanford Graduate School of Business and the University of Michigan reports that Twitter is IR professionals’ new technology of choice for breaking firm news. Particularly for smaller companies, Twitter can play the role of an equalizer by allowing them to make up for lack of media exposure by communicating via social media. And the study results prove that social media isn’t just fluff – Twitter has helped companies achieve more market liquidity for their stocks.
All of this can be overwhelming – there’s a ton of information out there about the merging of investor relations and social media. To help make sense of the information overload, here are three concrete recommendations to help you get started on your “social IR” strategy:
• Get the Word Out: The SEC allows social media disclosure only in cases where investors are aware of the company’s policy; so let your investors know that you will be disclosing material information via social media. The more transparent you are with investors, the less potential for regulatory backlash. Issue a press release, update your website, and/or organize a conference call to share your new policy.
• Optimize Your Channels: As is the case with all corporate communications, you need to develop a unique IR strategy for each of your social media channels. If Twitter is your primary source for disclosing material information, make that clear to your investors so they’re not visiting your Facebook page for news. If you’re planning on using all your social media channels for material news, make sure you have a plan for disclosing information simultaneously across all channels. It’s not enough to have one uniform strategy for all your social media channels – monitor your investors’ online behaviors and strategize accordingly.
• Be Bold. Explore Multimedia: Most companies are still struggling to learn “social IR” so this is an opportunity to stand out and be a leader in communicating to investors in innovative ways. Why restrict yourself to Facebook and Twitter when investors are also using YouTube, Google+ and LinkedIn? Exploring multimedia social channels beyond Facebook and Twitter will make media and investors take notice. Multimedia messages are a more effective way of reaching your investors across multiple touch points and telling a compelling story.
While SEC’s new rule on social media disclosure is still new and confusing, there are many concrete steps that companies can take to communicate more transparently with investors and get ahead with their “social IR” strategy.