Q: How can public firms avoid compliance issues and conduct online social media more effectively?
A: Social media have grown in popularity, with 80 percent of adults online discussing products, services and investments with their friends and colleagues. Studies show that 85 percent of US financial advisers under 50 are active users of social media (LederMark Communications), and 47 percent of European and US institutional investors have read blogs – leading 20 percent of them to an investment decision (Brunswick Group).
What does this mean for public companies? As share price is a direct reflection of broad investor opinion and the markets are dictated largely by human psychology, a publicly listed company needs to be ‘in the room and in the deal’ if it wants to maintain control of its message, squash any potential rumors and connect in a real way with its investor audience.
An investor, for example, can potentially ‘re-tweet’ a public company’s message to hundreds or thousands of his or her followers, so it’s prudent on the company’s part to be aware of what is being said about it online.
In order to achieve a healthy online presence, public companies can engage in positive, open dialogue through relevant websites and networks such as Facebook, Twitter, blogs, SeekingAlpha, and many others. For example, following a six-month social media campaign, Commerce Resources, the Canadian exploration and development company, experienced greater awareness of its brand, thousands of online document views, investors ‘sharing’ the company’s messages with each other and an increase in stock price and liquidity. Positive news contributes to this success, of course, but so does having more effective ways to connect with the audience.
Compliance is the biggest apprehension the C-suite has concerning social media – and rightly so, especially if management members are not familiar with using them personally. Public companies can come out on top by assuming an active listening role to learn what the tone of the discussion is, establish a baseline for engagement through the right channels, communicate company policy on social media, have employee guidelines in place and discuss only public information in a clear, concise manner.
Doing so will greatly diminish a company’s risk of breaching securities regulation and will deliver a significant competitive advantage over peers who resemble deer in the headlights. As Dale Carnegie might say: ‘The sure-thing boat never gets far from shore.’
With adequate preparation, knowledge and strategic expertise, social media offer a powerful communications channel to tell a company’s story and reach the people most likely to become loyal shareholders and supporters.
Loa Fridfinnson is chief creative strategist of Activ8.
