Much has been said, written and blogged about social media’s value in cultivating relationships with customers and generating market opportunities. Less attention has been paid, however, to the power of such media as a tool to engage investors, who are using the Web in growing numbers for their investment due diligence.
We believe social media platforms offer public companies a cost-effective channel to further differentiate themselves with investors, particularly those small- and mid-cap companies which typically have significantly smaller communications budgets and much less – if any – sell-side analyst coverage than their large- and mega-cap brethren. In addition, the Securities and Exchange Commission has begun recognizing corporate blogs as a means to disseminate certain types of material information.
Some companies are already using innovative ways to communicate with shareholders and raise awareness with potential investors. Microvision, a developer of display and imaging products, is one example of a small company taking advantage of the Web to do more than just posting releases, filings and presentations. Its corporate blog – Displayground – not only provides up-to-date commentary and information from the company’s team of contributors, but also invites investors to post their questions in advance of the quarterly earnings call. The company reports that numerous investors have responded. The resulting posts have helped management prepare for the call and ensure that they are addressing all issues of interest.
Other companies are successfully communicating to investors through such means as distributing news releases through Twitter and Facebook, conducting facility tours or product promotions via YouTube, and creating truly interactive annual reports. During a recent analyst day held by eBay, investors were able to follow along on Twitter and comment on the proceedings.
For these companies, social media tools not only help to stretch their investor communications budgets, they are also helping to level the playing field in the competition for investor awareness.
Before developing a social media strategy, your company should first determine which tools would be most effective in achieving your specific objectives. There are several questions to ask:
- What are you hoping to accomplish?
- How will you measure success?
- What sites are your target investors using, and what are they saying about your company, if anything?
- Who are the influencers within those communities?
- What online tools are your peers using to reach investors?
Armed with answers to these questions, you can determine if social media is right for you and, if so, which channels would be best to use in your effort to further engage with investors while amplifying your value proposition.