In the online world, less is sometimes more. Many IR teams, however, are taking the opposite approach, aggressively adding new features such as video webcasts, interactive annual reports and RSS feeds to their web sites. The result is often a more complete company story than plain black-and-white financial data can provide.
In the early days of online annual reports, most companies would simply make a PDF version of the print annual and make it available for downloading. The majority of companies still do this, despite the lengthy download time and lack of user-friendliness that this approach entails. But many have moved toward an interactive version of the annual report, complete with search capabilities, hyperlinks and an ease of navigation that lets users get to any page of the document in two clicks or less.
According to Steve Chuck, VP at Rivel Research Group, much of the annual report’s evolution has to do with its effectiveness as a true marketing tool, not just an historical record. ‘It is one of the few times that investors can really take a look and understand what the corporate vision is, and investors these days are looking for that,’ he says.
Thomson Financial’s most recent annual web site study, surveying 304 US analysts and investors, shows not only retail investors but also analysts regularly using IR sites to download presentations and video webcasts and get non-financial information in areas like CSR and governance.
Thomson’s David Bairstow says fatter 10Ks and proposed SEC rules for the online distribution of proxy materials are driving the trend toward interactive annual reports.
‘We will see a significant pickup in how things are done online over the next
couple of years. As more and more users are pointed to the online environment instead of hard copy, companies will continue to upgrade what they are doing online to make the experience richer.’
IR magazine’s Investor Perception Study, US 2006 also shows analysts and investors across the board using online resources intensively, with over 70 percent of retail investors citing the internet as a source for finding potential investment targets. The study also finds sell-side analysts spending almost 18 hours a week on the net, with the buy side not far behind at 17 hours.
San Jose, California-based Cisco Systems has started to provide MP3 audio files and PDFs for most of the presentations on its web site. And there are a lot – the tech giant is famous for an educational speaker series that drives a lot of traffic to the webcast section of its site.
‘Back in the day, when we had hotlines and people were making phone calls, there was a big delay in getting information to the investor in real time,’ says Lisa Magleby, Cisco’s IR web communications manager. ‘New technological developments are all about meeting investors’ needs. We now have a lot more investors who are traveling and we need to give them access to information remotely.’
Hotline or not?
With a lot more investors wanting a lot more information than in the past, many IR departments struggle with the decision of whether to include direct contact information on their sites. While most companies, like Cisco, provide general contact IR information on the web, Nokia goes a step further: it believes anybody should be able to contact IROs directly without getting stuck in a queue or voicemail limbo. The Finnish company’s web site provides direct contact information for everyone on the large and international IR team.
‘These days a good corporate IR web site is like hygiene: people would be disappointed if it did not provide everything they wanted, so they expect it to be there and to be adequate,’ says Bill Seymour, Nokia’s US-based vice president of investor relations. ‘The purpose of Reg FD and other such legislation is for companies to serve a broad investor base equally. With a good corporate web site, a retail investor can just go to the web site and get access to everything the institutional investor has access to.’
Seymour believes shareholders come to the IR web site with firm ideas about what they want, and he wants them to be able to find it fast. According to Seymour, topping the priority list for shareholders are contact information, the last conference call, other recent presentations, the last earnings release and the latest filings.
About 45 percent of Nokia’s investors are US-based, with most of the rest spread out across the major western European countries. Nokia, like many international companies, posts its 20F (the annual report filed with the SEC by foreign companies listed in the US) in different languages.
An end to print?
Sallie Cooke Pilot, communications director for UK marketing and communications firm Black Sun, says future legislation may threaten the survival of the print annual report in the UK. As early as 2007, companies may be able to communicate with shareholders entirely via the internet unless shareholders specifically opt to receive printed copies of materials like the annual report. A similar rule has been proposed by the SEC in the US: companies could ask shareholders to opt in to print rather than opting out of it, as the current rule stipulates. Black Sun’s research finds that every FTSE 100 company posted an annual report online last year, with 38 percent presenting the report in interactive HTML format.
‘Demands are being made for more detailed and comparable information to be made more accessible, more quickly, to more people. Against this backdrop, the pursuit of fresh ideas and original thinking in shaping corporate communications is more important than ever before,’ Pilot says.
According to a Nasdaq official, pre-recorded presentations covering quarterly or semi-annual results, posted online as a precursor to a conference call, represent a rising new international trend. Nasdaq also sees a global increase in companies following traffic and gathering information on web site visitors, allowing IROs to communicate more effectively with their existing and prospective shareholders.
Anne MacMicken, manager of IR and employee relations at BFI Canada Income Fund, says feedback about the firm’s web site shows just how important a tool it is. ‘We get a lot of e-mails asking about information on our site, so I know investors are really using it,’ she explains. ‘Use of the net is definitely increasing, and people are going to the web for their initial investment research. With new disclosure regulations, it’s crucial that information is kept up to date and that companies have enough information on their IR web sites for investors to make investment decisions.’
For BFI’s IR web site, MacMicken uses integration software so she can manage information on her own without having to do any complex web design. Like many companies, BFI also provides e-mail alerts that blast information out to the investment audience the moment an update is made to the site.
BFI’s latest online annual, created by PrecisionIR, is designed so investors can view parts of it without having to download everything. Instead they can jump to any section, and there’s a print option for individual pages.
Toronto Stock Exchange guidelines against participating in chat rooms make Canadian IROs like MacMicken hesitant about the newer technology of blogging. RSS, on the other hand, is likely to spread further and faster. This XML application lets users sign up for a ‘feed’ of information as it’s updated on a web site. A lack of familiarity with RSS, though, means IROs are unlikely to adopt it for their sites unless they’ve used it themselves elsewhere. The primary misconception about RSS is that it needs to be understood in order to be used. Bairstow says Thomson’s survey showed that ‘the number of analysts who said RSS was their preferred way to receive information was not huge, but RSS was not even on the map last year.’
RSS, podcasts and blogs – they’re just the latest new twists in the exciting story of the internet, following the plot of webcasts, interactive annuals and other past innovations. Most companies are playing ‘wait and see’ with the new technologies, but their attention, like the attention of many investors and analysts, is on those pioneers bringing innovation to their IR web sites and online annuals.
