It used to be the news wasn’t really new. By the time the average individual investor got wind of your corporate news it had already been digested, interpreted and filtered by the entire news media. And the Street had already acted on it. Yesterday.
Today, news is truly new and the investment playing field is level. All it takes is a few deft clicks from a computer mouse in the IR department (plus a little magic from the wire service company) to electronically disseminate a news release directly and almost instantaneously to a huge audience. Venerated disclosure channels, financial news media, sophisticated money managers, and the wired public around the world all have equal, and virtually simultaneous, access to the news. And the full text of corporate news releases now resides – intact and unexpurgated – in an amazing, interlocking web of cyberspace archives ready for any curious eyeballs that chance, choose or register to view it over the internet.
‘Really what the internet has done,’ says Michael Terpin, chairman and chief strategy officer, Internet Wire, ‘is to break down that wall where, in the past, if you didn’t get the Wall Street Journal interested in writing about you, then nobody saw your story. It ended up dying on the cutting room floor.’
Make no mistake, news dissemination today isn’t about supplanting the revered art of journalism. From an investor relations perspective, it’s still about disclosure, but it’s also about getting attention.
More interactivity
Act is the operative word. Vibrant and fresh, today’s news triggers an ever-growing menu of interactivity. ‘Once you get a news release, it comes alive with various links,’ says Melanie Kurzuk, Canada NewsWire’s vice president of corporate communications. Hyperlinks may jump to corporate web sites, e-mail addresses, photos and logos, charts and graphics, webcasts, and even stock quotes. Even the driest of earnings announcements now sports, at minimum, a link back to the company web site.
Business Wire, which distributed 250,000 news releases for clients last year, reports that about 5-7 percent of news releases so far this year carry links to photos. It predicts interactivity will continue to grow as IR and PR professionals employ more high-tech multimedia content to enrich their communications.
Another kind of interactive link embedded in a news release lets readers sign up to automatically to receive any future releases from the same source. Push technology now enables investors ‘to make choices’ and ‘register at the sites of the companies they follow,’ explains Kelly Leung, director of Gavin Anderson & Company. ‘We recommend that our clients use some form of push technology that allows a person to go on their web site and then register for specific information they are interested in. That may include press releases or an updated calendar of events for earnings announcements and conference calls,’ she adds.
The delivery mechanism has completely changed, comments Mitch Haws, Reynolds & Reynolds’ vice president of investor relations. ‘Four to five years ago, blast-faxing was state of the art. But today an e-mail distribution list is often cheaper, a lot more efficient and easier to maintain. And the speed with which you can deliver messages to key audiences is a lot faster.’
However, Leung says, you shouldn’t assume everyone wants information e-mailed the same way. ‘You still need to find out from your audience what their preferences are.
For instance, many companies don’t want employees to open attachments. So if you are sending a press release and it’s a Word document, some people might have a problem with that. They might prefer to have the content directly pasted into the e-mail.’
Focus on individuals
‘The individual investor is becoming more important,’ confirms Cathy Baron Tamraz, chief operating officer of Business Wire. ‘They have direct access to the company… the news comes direct from the company to anyone with a PC.’
Individual investor advocates speak positively about the channeling of information from public companies directly to investors. ‘We are excited about all the wealth of information and data that individual investors can retrieve now through the web that was only available to professional money managers or analysts four or five years ago,’ says Jonathan Strong, manager of membership development at the National Association of Investors Corporation (NAIC).
Of course the major new addition to individual investors’ arsenal of investment research weapons is the webcast conference call. Why not link directly from your news release to your webcast? And from there to other interactive features such as viewer-driven slides and question-submission capabilities?
Stephanie Day, vice president of investor relations at Adaptive Broadband Corporation, already has a ‘hot button’ right on her company’s home page to direct interested parties to the quarterly earnings webcast. ‘We let everyone in,’ says Day, noting that she began opening up earnings conferences way before Regulation FD arrived. For investors not yet fully wired to the internet, Adaptive provides a toll-free information line where they can listen to a recording of the entire conference call and access an interactive telephone menu for additional information.
CCBN webcast 7,600 investor events last year, and more than 2,800 conference calls in the fourth quarter; Business Wire foresees a dramatic increase in webcasts carried over its network – from a few thousand last year to approximately 10,000 in 2001; and PR Newswire reports a 138 percent increase in the number of earnings webcasts it carried from October 2000 to January 2001. In 2000, Canada NewsWire hosted 300 webcasts by Canadian companies and Kurzuk anticipates that ‘about half of all public companies will make webcasting a standard IR tool by the end of 2001.’
Partnerships
As part of the convergence of the press release and the webcast, Business Wire and CCBN in February announced a strategic alliance to co-market a bundled webcast product called the FD Webcast. Included in the product is a news release which provides advance notice of the event, a CCBN broadcast and an embedded link in the participating company’s earnings release, along with postings on the company’s site, Business Wire’s site and CCBN’s Investor Distribution Network.
‘Now it wasn’t that long ago that the idea of a public company doing a webcast to disclose news was sort of a wacky thought,’ says Internet Wire’s Mike Terpin. Today he predicts that with the expansion of broadcast capabilities in the next three to five years, company news wire services like his ‘will be able to take webcast interviews with CEOs and CFOs and stream them immediately into television stations for broadcast.’
After audio and video webcasts, what’s next in the IR tool bag? Will e-commerce click its way into your news? PR Newswire aims to find out. In February, the company launched a survey in an effort to find out what preferences people have for more interactive capabilities on news releases.
‘We coined T-buttons as an easy way to refer to what will amount to be a transaction of sorts,’ says John Williams, executive vice president, global markets, at PR Newswire. ‘On the internet these days, transaction doesn’t necessarily mean buying something. It means that there’s an action being taken.’
During the first phase of the project, PR Newswire is attaching an optional survey to each press release. Readers’ comments are then dropped into company-specific databases. No-one but the company will have access to them, and companies have the right to go in a password-protected mode to see what people are saying about them. Transaction capabilities will be developed based on the responses.
While there’s still a lot of surveying and market testing to be done, eventually the T-button, or a similar capability, could allow viewers to get more information, order products or even trade the stock of the company issuing the news.
‘People want to trade on the news,’ says Canada NewsWire’s Kurzuk. ‘Information consumers – the media, the financial community and the retail investor – want to act on information. Wireless and e-commerce applications will allow information consumers immediate gateways to decision-making on their investments.’
Is a trading link desirable? Until more details surface, many IROs view the linking of news to trading capabilities with a healthy degree of caution (see sidebar below). Surprisingly, the individual investor advocate is least concerned. ‘Investors simply need to realize that transactions – buys and sells – are easily made in a fraction of a second,’ says the NAIC’s Strong. ‘We tell people that they really need to do thorough homework to understand a company before they invest in it. Therefore, if you have seen all the research and information that you want, and if that latest news release is the confirmation of your homework on that company, then investing or making trades through an online brokerage is fine.’
More enhancements to the news release are expected. Technology will enable more interactivity, more multimedia, more video and more syndication of news and video content over the internet. However, service providers agree that user behavior, perhaps more than technology, will decide how much interactivity is actually incorporated into tomorrow’s news. ‘We could right now have 16 layers of complexity to a news release if the clients were so disposed to want more links,’ says Internet Wire’s Terpin. The behavior of the IR and PR departments will be a very important factor, he notes: When company’s news develops they need to think, Get hold of the video crew instead of Let me write a press release.
Trading on the news
What if a news release provided an interactive link to facilitate trading in the company’s stock? ‘I don’t see it as something I would advocate,’ admits Kelly Leung, director at IR consultancy Gavin Anderson & Company. ‘Perhaps it might have interest on a retail level but I don’t see that a press release is going entice someone on a money manager’s side to right away go and make a purchase. And I think a lot of people are wondering about responsibility for that type of transaction.’
Stephanie Day, vice president of investor relations with Adaptive Broadband Corporation, adds, ‘If you were to link to a broker, I wonder what kind of liability might be involved. Say you were reading a press release and maybe didn’t understand it all, and you decided to click on the link and trade the stock and something went awry. Who would be liable? Would it be the company for allowing you to do that? The whole matter needs further research.’
