With its ability to drastically improve communications with key company stakeholders, social media has become a vital tool in the modern world of Investor Relations.
In April 2013, the Securities and Exchange Commission ushered in a new era in investor relations in the United States when it announced that public companies could use social media outlets in order to share vital information with stakeholders. There were two caveats: the information must comply with Regulation Fair Disclosure, and investors must be informed of the specific social media outlets that would be used for dissemination.
Institutional Investment’s New Era
Two years after the SEC’s announcement, Greenwich Associates released a comprehensive report about the state of the institutional investment market today. A total of 256 corporate and public pension funds, endowments, foundations, and insurance companies across the U.S., Asia, and Europe participated in the survey. The study confirmed what many IR professionals already suspected: that social media has come to play a key role in the decision making process for modern investors.
According to the report, nearly 80% of institutional investors have integrated social media platforms into their regular workflow, and 30% reported that information gathered through social media platforms has made an impact on their investment decision process. Moreover, nearly 50% of the respondents reported that tips received via social channels caused them to look into a specific industry issue or topic.
The statistics also illustrate the degree to which information gleaned from social media affects work interactions. 37% of respondents have shared information they learned on social media with decision-makers in their companies, 34% have worked with a client or company based upon information gathered through social channels, and 33% have contacted their investment consultant based on a social media-generated tip.
Within the coming year, Greenwich Associates expects that about 40% of the world’s investment institutions will increase the emphasis on the role of social media within their existing strategies.
Social Media In Action
According to IR Magazine, some companies are expanding the scope of their programs beyond “The Big Three” (Twitter, Facebook, and LinkedIn) in order to reach their audience in new, meaningful ways. In June, Deutsche EuroShop used Periscope, a free, live streaming video app, to broadcast the firm’s CEO transition. Leading up to the event, the company did little to advertise the live Periscope broadcast, only going so far as to mention it on the company’s Twitter feed.
Deutsche EuroShop’s Head of IR, Patrick Kiss, explained he was expecting about three viewers, but was totally blown away by the actual response: 117 people tuned in to watch the event. As the app is completely free, Kiss remarks that “it’s an unbeatable cost-benefit ratio.” But more importantly, this type of engagement is clearly something company stakeholders are looking for.
As Talkwalker explains, by keeping a steady eye fixed on social media, companies can monitor patterns in online dialogue. This allows organizations to stay one step ahead when it comes to PR — moreover, businesses can use social channels to highlight positivity and minimize potential damage in the event of problematic exposure.
On a grander scale, social media networks help companies stay abreast of industry trends and best practices, along with valuable insights into investor needs and expectations, which are constantly evolving. Not only will this help companies shape future business and marketing strategies, but it will also enable them to remain in-step with the competition.
(Main image credit: Sean MacEntee/flickr)