Holmes Report 18 Apr 2013 // 11:00PM GMT
On April 2, 2013, the US Securities and Exchange Commission (SEC) issued an unassuming, matter-of-fact statement that may in hindsight be seen as the tipping point that could usher in widespread use of social media into the realm of investor relations and financial communications.
What happened? In its statement, the SEC issued a clarification: US public companies may use social media channels for material public disclosure purposes. The ruling noted that issuers can remain in compliance with Regulation Fair Disclosure (Regulation FD), provided investors are alerted beforehand as to which channels the companies intend to use.
Significant momentum was added by Bloomberg, whose terminals aggregate financial information especially for investors. Bloomberg announced that it would include live Twitter feeds on listed companies in its ongoing data flow to investors, traders and analysts. This not only opens up new opportunities within financial communications – it also forces the hand of communicators in a field that has been somewhat reluctant to adopt social media strategies that have long become a staple of marketing and corporate communications.
What has long been a legal gray area has become much clearer, carrying with it both opportunities and challenges for investor relations (IR) and corporate and financial communications professionals.
For years, using social media to disseminate material corporate information has been limited in the United States by legal concerns over falling afoul of Reg. FD that requires that all stakeholders receive simultaneous disclosure of such information via an approved newswire or other such outlet.
Other major financial markets, for instance in Europe, had not explicitly excluded social media, but professionals have so far largely steered clear of this option. Now, with the SEC clearing the way and Bloomberg leveraging its vast network to amplify this type of disclosure, social media has become relevant to both issuers and their investors. Companies can extend news announcements into conversations that are more accessible and digestible to a broader audience. They can add rich context to data to strengthen their engagement with stakeholders. They can share qualitative insights and market-moving news to investors in real time.
In short, they can finally apply best practices in online listening, community management, content creation and influencer/stakeholder marketing to financial communications and maximize the value of corporate social media. They may also find that this channel helps them once again engage retail investors and those who view equities as a long-term investment rather than traders with a more short-term speculative trading mindset.
New ways to engage
Untethering corporate social media elevates the importance of community management in a corporate information environment. After all, message amplification and syndication still rely on influencer networks. This holds especially true of the Twitter feed Bloomberg has incorporated in its information flow: rather than scanning all tweets, Bloomberg has resorted to curating a yet undisclosed list of Twitter influencers. Companies will now have the opportunity to build real communities and authentic connections between themselves and stakeholders; ie, more two-way conversations and fewer links.
The power of social media for consumer and B2B marketing is well documented. With the SEC ruling, we can now add the category of B2I (business to investor) marketing. However, this channel may not be for everyone. Companies in industries with tendencies toward wide performance swings, or those with smaller communications staffs and risk-averse management may prefer to monitor the activities of first adopters in the social media space for financial communications. But for public companies with relatively stable business models, strong brands and the resources to invest consistently, social media is an opportunity to build powerful influencer communities, strengthen engagement with stakeholders, add compelling context to their stories, and enhance credibility and reputation overall.
Wanted: A new breed of financial communications consultants
The upcoming paradigm shift in investor relations and financial communications has implications for all players: in-house communicators, bankers, analysts, and quite significantly for external communications consultants. So far, most strategic advisors shy away from dipping deeper into social media. This will have to change – the combination of the SEC announcement and the fact that Twitter has become an integral part of the Bloomberg information flow means that clients need guidance on how to navigate this new territory. Most classic social media consultants lack the financial communications gravitas and skills, while many financial communications specialists will need to overcome their reluctance. In the meantime, the rare breed of social media-savvy corporate and financial specialists can pave the way for an always-on engagement between listed companies and their investors.
Linda Recupero, (@lindarecupero1) is firector of MSLGroup's New York corporate practice. Brad Wilks (@braddwilks) is managing director of MSLGroup's North America Midwest pperations and former chairman of the board of the National Investor Relations Institute. Wigan Salazar (@wigansalazar) is CEO of MSL Germany. Stephanie Agresta (@stephagresta) is MSLGroup’s global director of social media and digital and a member of the board of directors of the Social Media Advertising Consortium.