Social Media and Investor Relations: Some Things to Consider in Implementing a Program
Now that the SEC has cleared the way for expanded use of social media in the dissemination of material information what should corporate managers do as they contemplate adding this powerful tool to their investor communications arsenal?
While some may believe that the SEC did not go far enough in providing guidance on the usage of social media, this should not preclude companies from pushing ahead with its use. While the uptake on the application of social media to investor relations may be slow as IROs and their advisors get more comfortable with the media, we offer some practical considerations:
- Implement a Policy: Companies have policies for everything and one governing the use of social media is critical. Companies may have a number of executives engaged in social media activities such as blogging or tweeting and, as such, your corporate communications, investor relations and legal advisors should be working in concert to ensure that accurate messages are being disseminated in keeping with Reg. FD. Of course, “SafeHarbor” restrictions should apply.
- Crisis Planning: People make mistakes. Mistakes are oftentimes made by those unfamiliar with the SEC’s rules on corporate disclosure. Corporate managers are advised to expand their crisis plans to include ways of dealing with inadvertent or inaccurate disclosures which might be made via social media. This is particularly critical in cases of live events (e.g., investor days, conference call Q&A segments and the like).
- Brevity is the Soul of Wit: It also happens to be at the heart of communications via social media. As you know, Twitter allows you 140 characters which means you are going to have to chose your words carefully and make sure your readers know their context (e.g., an earnings release).
- Avoid Entanglement: Corporate managers beam with pride with the initiation of new analyst coverage or an upgrade in ratings; however, tweeting about such occurrences could be viewed as an endorsement of the work of a third party, guaranteed to raise the hackles of your company’s legal department. Avoid this and watch out for who you friend on Facebook (I’m not sure how the SEC might view a situation in which a company “friends” a covering analyst).
- Don’t Be Drawn into Fights: As we all know, open forums often provide soapboxes for naysayers and those who may be shorting your stock and they oftentimes make full use of these to attack management. The Twitter world is no exception. Don’t be drawn into a fight, but rather continue to present the facts in a reasoned tone.
- If You Build It, Make Sure They Know About It: Investors, the media and the public need to be made aware of the ways in which your material information will be communicated. Posting to social media sites like Facebook, LinkedIn and Twitter is one way of doing this, but investors need to know where they should look before the information is released. Once you choose your methods for distribution, you need to be consistent in your approach (any changes need to be immediately communicated).
- Special Situations Require Special Care: Companies undertaking offerings be they public or private need to be mindful of the fact that their use of social media may be viewed as “gun jumping.” Obviously, have your legal counsel weigh in on such matters.
While this is by no means an exhaustive listing, it is meant as a means to help companies get started on ways to integrate social media into their investor relations programs.
We expect the dialogue to continue and we at CommPro.biz will continue to lead that dialogue by bringing together communications leaders to discuss this and other issues in unique forums such as the event we co-sponsored on April 24th entitled: “Social Media and the SEC Ruling: Where Do We Go From Here” (for replay information see: http://www.webcaster4.com/Webcast/Page/10/1347). We also wish to advance that dialogue by providing our readers with insights from our contributors (as an example, please see this blog by my friend Bettina Eckerle which graced our pages recently: http://www.commpro.biz/investor-relations/social-and-traditional-media-buzzing-over-secs-new-guidance-for-corporate-disclosures/).
Of course, your comments and insights are welcome.