Are IROs unfollowing social media?

Nestlé was something of a social media trailblazer, setting up a dedicated IR Twitter account in September 2011, but four years later the Swiss food and beverage giant decided to wind down its @Nestle_IR account, having amassed just 935 followers. Across the four weeks when Nestlé warned its Twitter followers the account would be ‘merged’ with the @Nestle corporate account, several commentators applauded the mega-cap company for making the move.

‘A lot of people got excited about social media for IR in the same way they got excited about social media for everything,’ says David Bowen, founder and senior consultant at Bowen Craggs & Co. ‘Then it sort of matured and [companies] weren’t just being pushed along by fashion. Things that worked tended to stick and those that didn’t, didn’t. The evidence seems to be that people are losing interest in Twitter for IR. Bowen Craggs & Co looks at websites for the biggest companies across the world and there are relatively few IR-specific feeds.’

In fact, while more than 90 percent of companies said they used social media channels to publicize news and events in 2013, this figure drops to 65 percent in 2015 (see chart below), according to the seventh annual IR survey from Citigate Dewe Rogerson in June 2015. It also reports that the popularity of IR blogs has nearly halved, with just 12 percent of teams using them, compared with 23 percent in 2013.

In Europe ‘companies also appear to place lower value on social media as market intelligence tools, down from 31 percent in 2013 to 24 percent in 2015, with a declining number of firms taking time to monitor rumors generated on these channels at 38 percent against 43 percent in 2013.’ That doesn’t mean social media for IR is necessarily dead, however. The authors add that 35 percent of European companies still have a dedicated IR Twitter account, and cite research by Investis showing that the use of social media continues to rise in the US.

Darrell Heaps, CEO of Q4 Web Systems, says Nestlé is actually ‘late to the party’ in dropping its dedicated feed, citing FedEx, Home Depot, PepsiCo, Zillow and Ford as examples where investor news and live-tweeted earnings are posted to the corporate account. The difference is that these companies never had a dedicated IR feed to start with.

Stephanie Harig, senior account executive and member of Dix & Eaton’s IR practice, also says Nestlé made the right move, though she does point out the benefits a dedicated IR feed can bring if done well, such as separating IR content from the noise. ‘With IR on social media, there are peaks when you might have a lot of content and other times, if you’re on the road or it’s a quiet period, when you’re not posting that much,’ she explains – but what’s needed on social media is constant activity. ‘Otherwise it’s a bit of a self-fulfilling prophesy. If you don’t post, people aren’t going to follow you and then when you do post you feel like it’s not reaching anybody.’

Her advice? ‘Ask yourself if it’s worth your while,’ she says. ‘Especially if you’re only reaching a few hundred people and aren’t growing your followers. If IR teams start looking at it that way, we’ll see more of a move toward an integrated corporate account.’

Poor following

The lack of followers is a problem for ‘most IR Twitter accounts,’ says Heaps, who advises IROs to leverage the many more followers usually found on the corporate feed instead. For example, Nestlé’s corporate Twitter account now has 127,000 followers, while its IR account had fewer than 1,000 when it closed. But the low numbers weren’t the only reason Nestlé decided to scrap its IR feed, says head of IR Steffen Kindler, though he admits the handle had ‘a very limited number of followers’ and that, even within that number, many were not relevant to the content. The other issue was simply that the company’s investors do not use the medium.

‘Our clientele – and we’re a large-cap company, we deal largely with institutional investors – wants high-quality information,’ Kindler explains. ‘They get that on our website, in our annual report or directly through us, and when they get it directly through us, 99.99 percent of them want a direct conversation.’ Moreover, many institutions simply don’t allow their professionals to use social media in their offices.

There was very little reaction to the decision to shut down the dedicated IR feed, he adds. The Nestlé IR team also tracked both accounts to see how many followers switched over to the corporate feed, explains Sheida Hatami, IR analyst at Nestlé. ‘We didn’t see many people switch, which led us to believe that either they were already followers of the corporate account or not the core investor following we would want,’ she says.

Investing in the future

While Kindler believes Twitter isn’t the right medium for investor relations – for now, at least – the current lack of a large institutional following isn’t important to all IROs. At World Wrestling Entertainment (WWE), for example, the IR Twitter handle @WWEinvestor has more than 41,000 followers – despite the team having sent just 186 tweets since signing up in April 2012.

WWE’s approach to social media comes very much from chairman and CEO Vince McMahon. ‘He gave the company a mandate some years ago to use social media across all our businesses,’ explains Michael Weitz, head of IR at the entertainment behemoth. In keeping with this mandate, Weitz says the IR team created independent accounts for IR – on Twitter, Facebook and YouTube – though the first two are the team’s primary social media focus. ‘Social media is an incredibly important platform,’ he says. ‘It’s probably one of the most potent, effective forces for communicating with a broad audience globally.’

Weitz has no illusions about the number of investors on social media, however: ‘We are aware that many surveys show institutional investors really aren’t using or relying on social media.’ Having talked to institutional investors, WWE’s top shareholders and the analysts who cover the stock, he says their views largely mirror the many surveys on the subject. ‘It’s not a key platform for them yet,’ he acknowledges.

This hasn’t put off the IR team, however. What the WWE approach to social media for IR is about is futureproofing communications and Weitz is confident that over time, institutional investors will migrate to social media in greater numbers. ‘I want to lead the pack in being prepared,’ he says.

In IR Magazine’s social media research last year, those IROs who are using the medium largely agree with Weitz. ‘Companies want to remain flexible, in case there is more demand in the future, with roughly a third planning to increase their activity over the next 12 months,’ the research report states. Heaps, however, recommends that most companies, with perhaps a few exceptions, follow Nestlé’s move.

Weitz, on the other hand, says that for a company as large as WWE – and with such a massive and dedicated fan base – the segmented approach works. ‘I want to keep the financial information apart from communication about our talent or a wrestling event, for example,’ he explains.

Despite this, there’s no doubt WWE’s fan base is largely behind its high Twitter numbers (the main @WWE account has 5.69 mn followers). But many of the fans are also stockholders, with around 20 percent of the shareholder base made up of retail investors. ‘We do have a proportion of our investor base that we call fan investors – they’re retail investors,’ says Laura Kiernan, director of IR at WWE. ‘Those types of investors wouldn’t necessarily follow more traditional communications means such as our public filings or press releases, so from a retail standpoint the Twitter feed is a very good additional touchstone.’

Weitz recognizes that not everyone sees social media the way WWE does. ‘When I talk to other IROs there seem to be four areas of discomfort,’ he says, offering the following advice:

• SEC and Reg FD concerns: ‘By being cautious and linking to public documents, you can get yourself comfortable with having a social media presence and complying with Reg FD’
• 140 characters isn’t enough: ‘You can redirect people to websites and other sources – the limitation isn’t as bad as you think’
• Company information gets lost in the noise: ‘Social media is an important part of the story, and will increasingly be so. Think about how you want to control the platform’ 
• Institutional investors aren’t using the platform: ‘While they don’t show up in surveys now, over time that will change.’

Weitz believes that for almost every argument against social media for IR, ‘there are reasons to say, Hey, maybe I should get more comfortable with developing a presence in social media and being prepared for the future.’

In fact, even Kindler hasn’t ruled out a return to Twitter for Nestlé IR. ‘We think we do what is relevant to our audience being a Swiss staples large cap,’ he says. ‘I don’t know whether other firms and other industries are different but you should be pragmatic and think about what your audience needs – and think about it every year. The fact that we closed down our Twitter feed now doesn’t mean we’ll keep it shut forever. In three years’ time, if we realize something has changed, we’ll reopen it.’