The Modern Era of Investor Relations
The internet’s explosion in popularity is attributed mainly to the invention of the first graphical web browser in 1993. Since then, the way investors have gotten information on companies and financials has changed dramatically.
Let’s take a look at how modern company websites and social media create a better experience for investors today.
How Investors Get Company News Releases
Then: Companies used to issue press releases to get information to shareholders and potential investors through snail mail and thermal fax paper. Companies would also cold call potential investors to let them know the gist of the news.
Now: Information is automatically distributed in real-time when it becomes available. Websites, social media, email blasts, newswires, and third-party websites get the information out seconds within it being public.
How Investors Do Due Diligence
Then: Investors could not seek out information easily. They relied on new tips from their stock broker, or were contacted by companies directly. It was difficult to fact check information, and investors relied heavily on newsletter writers to supply due diligence and tips.
Now: Today, information is so abundant through the internet that verifying its validity is the most important concern for investors. Reputation is key. Investors can get and fact check information from company websites, government securities websites, social media, blogs, analysts, chats, email blasts, phone calls, professional investor services, newsletter writers, and local conferences.
How Investors Check Stock Prices
Then: Investors could check the price in a newspaper or find it scrolling on a stock ticker on TV. For smallcap stocks, they relied on their brokers. In the early internet days, delayed stock quotes could be found.
Now: Investors can get stock quotes in real-time for free or for cheap. These provide the full depth, showing bids and asks in the primary market to give an accurate picture of the stock’s activity.
How Important is it to Provide Investors With What They Need?
Today there are more tools in each company’s communications toolkit than ever before. A Thomson Reuters Extel whitepaper in 2012 found that the Top 10 European companies with Best Shareholder Communications outperformed the market by 28.8% since 2007.
Keys to Modern Media
Here’s how companies can take steps to help ensure the best experience for investors.
Today’s company websites are a step above the websites of even 5-10 years ago. Not every company has adopted these new possibilities – but for those that have, the investor experience is much better.
Anatomy of a modern website:
- Dynamic homepage: Populated by up-to-date content that is always changing
- Different perspectives: Company news is accompanied by different perspectives on the sector and industry
- Up-to-date media: Presentations, maps, fact sheets, photos, infographics, and other rich media are current
- Easy to read and navigate: The website is simple and intuitive, which allows investors to find what they need.
Other considerations to make a website top-notch include: having accessible stock quote on the company, easy email newsletter signup option, objective feel that is not too self-promotional, and real photos of company instead of stock images.
Website quality and accuracy is paramount, as a recent investor survey by SNL IR Services found that 60% of investors visit company websites either daily or weekly. This is why the teams behind modern websites monitor analytics very closely, such as bounce rates, open rates, the reach of posts, and keywords. It’s important to make the website as useful as possible, otherwise it can be detrimental to the company’s success.
Social media has come a long way in the last five years. Today, almost 80% of institutional investors use social media as a regular part of their workflow.
Good social media content allows investors to:
- Get breaking news on stocks they follow
- Gain perspectives on different topics
- Interact with other investors or industry people
- Become thought leaders on topics
To help investors accomplish these goals, its important for companies to curate their content to cover other topics and perspectives outside of their company and sector.
Media websites provide a means for coverage and eyeballs for all stocks, regardless of size.
Strong media from reputable networks can increase awareness of a stock and liquidity. However, like social media, such coverage can be a double-edged sword. If companies are represented unprofessionally by third-party media, it can backfire.
Therefore, it is important companies do their best to ensure that coverage of their stock is reputable, professional, fair, and accurate.
Originally posted on Visual Capitalist.