Social Media for Public Companies

What does it cost to acquire an investor? Every public company has expenses associated with attracting — and keeping — investors.

Social Media for Public Companies Presentation - Sky Alphabet - Oct 2021
“Social Media and the Capital Markets” presentation slides (PDF). Oct 2021.

Social media represents the lowest cost channel to attract and engage a variety of capital market participants, including investors.

But there are other opportunities. Access to millions of individual investors buying stocks on phones. Additional volume from quants and trading algorithms. And increased awareness and the ability to showcase your story.

For many reasons, you may wonder why you didn’t push to make the move to social earlier.

And thankfully, you have found the corporate social media masters.

6 reasons to integrate social media into your IR program:

  1. News releases aren’t moving the needle like they used to
  2. Trading volumes are down while trading volumes of lower quality peers that use social media are up
  3. You’ve haven’t kept up with what’s happening with investors on social media
  4. Short sellers and short interest is rising or is expected to rise
  5. There are negative comments from trolls on social media about your stock
  6. News is coming and you want people to know about it

Don’t know where to begin? Contact us or keep reading.

We know that 80% of institutional investors use social media as part of their daily workflow. Twitter is indispensable as a communications channel, and is largely responsible for the success of new brands and equities. Tesla, the blockchain, cryptocurrencies are but a few examples.

Steve Yanor, Sky Alphabet Social Media

With more than $45 billion in capital markets experience, we represent one of North America’s leading social media agencies for public companies.

  • 15 years of hands-on experience working with some of the world’s largest public companies
  • In-house creative and strategic resources
  • Unique knowledge of fintwit (financial Twitter)
  • Audience management and the ability to engage with strategic segments (ie short sellers)
  • End-to-end coverage of all investor social networks

Whether you’re trading on the TSX,TSX-V, OTCQX or another exchange we’ve got the expertise to help you tell your story to the widest investor audience possible.

Strengthen Your Corporate Social Media Strategy

Social media offers 5 major benefits to public companies:

  1. The largest investor cohort is millennials, which is also the largest cohort of social media users
  2. Trading algorithms rely on social media data to execute trades which can significantly improve liquidity
  3. Social media immediately expands your influence with investors and the financial media
  4. Social provides an exceptional opportunity to differentiate your equity security and its investment thesis
  5. No other medium provides a platform for planning and executing strategic campaigns ahead of an announcement or liquidity event

Helpful resources:

  1. Article on corporate social media strategy
  2. This presentation on YouTube in case you want to flip through
  3. This deck as a PDF
The social media playbook for public companies

We wrote the playbook for public companies.

Considering adding more social to your investor relations program? Good call. With so many reasons to get your message out to a wider audience, why wouldn’t you?

This page provides information for public company executives and IR officers. Recent changes to features central to brand safety on Twitter have made Twitter an ideal corporate communications tool.

Social media as the most powerful strategic communications channel

As a social media agency we spend the most time with four major platforms: Twitter, Instagram, LinkedIn and Reddit. These networks are the most popular with investors.

In the last year, we have seen a dramatic surge in the use of social media platforms by regulated companies.

“There are three areas that every public company can adapt safely and easily: audience intelligence, social listening, and social campaign planning and execution.”

Social media for IR is here to stay.

Public companies are starting to commit more resources to leverage the audience and power of social media. It is now viewed as a legitimate and preferred channel for disclosure and corporate communications.

We conducted extensive research and research done by others about investor use of social media.

To our knowledge, this is the first in-depth analysis that has been done on how social media use is becoming widespread and more important to publicly-traded companies.

Today's presenter is steve yanor from sky alphabet social media. Steve has $45 billion in capital markets experience including 3 of the world's largest IPOs.
Steve Yanor wrote a book ($73 on Amazon) on how equity securities are marketed to investors.

Social media is not optional

For public companies social media is not optional.

Public companies that embrace social media are successful relative to those that have not. Social media provides data that automated trading algorithms and a growing base of retail traders clamour for.

The quality of posts, frequency, sentiment, timing and length are all factors when comparing two social media accounts. How active a company is one social media can be an indicator of how “in touch” it is, which can translate to a multiplier when valuing one equity security versus another.

This has spillover effects and creates an uneven playing field for those companies that are not as comfortable with using social media for ongoing, regular corporate communications.

When we say “using social” we refer to both organic and paid social media. Organic is what everyone thinks of when they think of social media; paid refers to purchasing an audience for a specific length of time.

Any public company that uses social media as either a primary or secondary communication channel is tapping into one reality: millennials now represent the largest group of retail investors.

Millennials are also the demographic that represents the largest percentage of managers and, increasingly, executive management.

As we will see the 25-34 demographic is almost constantly online, and much of that time spent is with social media.

Like it or not, if you’re a public company you need social.

Public companies need social media but not for the reasons you might expect.

There’s no way around it. If you have stoically refused to jump on board with social it’s probably because your company is a legacy business with legacy customers.

Not to worry, though. If you’re not a fan of social media, extinction is probably not imminent. Risk is the most common concern about using social media, but as we will see risk has become much more muted.

We’ll get into the risks in a minute, but until then there are other much more pressing, immediate reasons why public companies need to integrate social into their primary communication and marketing strategies.

Let’s take a step back and look at social media for what it is: a direct, one-to-one and one-to-many and group-to-group communications channel that is both open (public) and closed (private as in direct messaging). Whoa. That’s a big channel.

A big, open communications channel. Two-way. Public.

That’s what used to scare the lawyers. Now it doesn’t as much. At least not at the companies where disclosure is taking place in real-time because the people who are doing the disclosing are allowed to.

So let’s place that notion of risk into basket one: open public communications by people who are not allowed to disclose things that haven’t yet been disclosed.

What are you waiting for?

Investors are searching for you now

Communications is what differentiates “parity stocks”

Communications is often the key contributor to value deltas between two stocks that have identical book value but widely different market capitalizations.

There is a segment of professional stock traders — quants and hedge funds and so-called prop-traders — that are always on the lookout for arbitrage opportunities.

Arbitrage opportunities are most often found in currency markets but there are situations where you find two balance sheets or income statements that are more or less equal, but their valuations are starkly different.

Two stocks that have the same book value but are valued differently by the market represent a classic setup. That’s because as soon as the lower valued company starts communicating better (*more often, with more authority, with more precision, with more quality), the market will move money out of the higher valued “parity” stock into the undervalued security.

Or the traders will start buying options contracts. Same thing.

Now given this setup, what channel do you think communicates that a stock is prepared to communicate better? Social media or a press release?

If you guessed social media, you are correct.

Social media is a superior communication channel to press releases and websites.

One of the most popular tactics small cap companies use in an attempt to get their stock moving is to announce that they have hired an investor relations firm. This is supposed to send a signal that the communications is about to improve.

The problem is, if the new investor relations firm isn’t so great with social media, they company is probably worse off than they were before.

When it comes to corporate comms, now it’s social media that does the heavy lifting

Companies used to rely on their websites and press releases for disclosure. Now social media does the heavy lifting.

There was a time not long ago when real-time information was less valuable. Now people can’t stand information that’s out of date.

The capital markets have become conditioned to expect:

  1. Quarterly reports
  2. Annual forecasts
  3. Revisions to forecasts
  4. Reasons for revisions to forecasts

Beyond this tight set of reporting goalposts is where the value lies. The dynamic between retail and institutional investors is real; institutional investors that take positions want tangible evidence that the firm is communicating like a leader.

Institutional investors use social media as part of their workflow

Eighty percent of institutional investors use social media as part of their workflow. Of this 80%, thirty percent said social has directly influenced an investment recommendation.

An April 2015 study of 256 institutional investors revealed a stunning fact: a full eighty percent — some of which are large pension funds — said they use social media as part of their regular workflow.

Of this eighty percent, 30 percent said that social media had directly influenced an investment decision.

Eighty percent of institutional investors use social media for work.

It seems that institutions aren’t so different than the average person after all.

Almost half of institutional investors said they were influenced by social media

48% of institutions that use social media said it prompted them to do additional research on an industry issue or topic.

Knowing that 4 out of 5 institutions use social media it is not surprising that information they found on social media prompted them to do additional research.

You’re probably familiar with the process: you start researching a new car and you end up on the websites of several car companies. The same thing happens on social media but you have exponentially more power because of the ability to perform deep search functions across several platforms.

Social media impacts valuation

social media impacts valuation through asset allocations, share of retail ownership in IPOs, liquidity events, rumour trading, trading depths, and perception of management.

With so many institutional and retail investors using social media, it has to have an impact on valuation, right? Yes. Yes it definitely does. That’s if you

If you consider that management credibility and the perception of management’s experience is one of the key factors behind owning a stock, and that rumour trading has the ability to set off large waves of buying or selling, social media definitely impacts valuation, both long and short-term.

Investors love stocks that get more than their fair share of attention

Investors love stocks that receive more than their fair share of attention.

In the book “Roadshow: The Marketing of Corporate Finance” we see much evidence presented by two of the world’s prominent IPO researchers — Jay Ritter and Sumit Agerwal — that demand from retail investors plays a huge role in the first-day trading performance of the stock.

Jim Cramer, host of Mad Money, wrote in his book “Confessions of a Wall Street Addict” that retail orders tend to be stitched together because they are “at the market” unlike strict institutional limit orders. These market orders can cause dramatic runups in the price.

Companies that file for IPOs see their internet searches skyrocket

Once a company files an IPO, searches about the firm skyrocket

Social media in Canada has massive reach

Social media has massive reach in Canada, with penetration among 15-74 at over 95%

You can be found just about anywhere with Facebook’s ad network

social media platforms can be used to target people even when they aren't using social media

The average person doesn’t know that social media platforms such as Facebook can be used to target you even when you’re not using social media. So if I target you using Facebook, my ad might show up when you’re reading the New York Times.

People who don’t use social media can still be targeted using social media

People who don't use social media can still be targeted using social media ad tools.

The number of adults who report being almost constantly online is increasing

Adults 18-49 are increasingly reporting themselves to be almost constantly online.

The average Canadian spends more than 1.5 hours with social every day (this has increased to more than 2 hours)

the newest data suggests the average canadian spends 1.75 hours with social media

Social media traffic crushes traffic from Google.

the top three social media sites crush traffic generated by google.

The top three social media sites generate 1.8x more traffic than Google

Twitter, Facebook and LinkedIn drive one point eight times more traffic than Google generates. This number is growing.

Social media is the largest source of potential investors

With so much traffic, social media is the largest potential 
source of investor eyeballs.

Social media is influential

Social media is influential. It has the ability to change perceptions and frame issues.
Credibility is by far the leading factor buy-side investors consider when evaluating whether to buy a common stock.
Social media influences product purchase decisions.
Social networks are a critical source of consumer research.
Consumer research includes research about stocks.
Social media provides tactical opportunities to exploit word of mouth effects.
There is a continued reliance on social media as a real-time source of news.
More time spent with mobile devices means the liquidity pool continues to deepen. More users means more potential investors.
As the social networks clean up, they have become unmatched forums for public storytelling.
Social media is a tool to accomplish key strategic objectives.
 10% of the social media accounts are posting 80% of the content. You want to be in that 10%.
Who get more views? A tweet from Justin Trudeau about the Raptors after they won the NBA finals or...
Did just in trudeau get more views or a boring corporate tweet from blackstone announcing their conversion to a corporation?
The boring corporate tweet got many more views!
A private equity firm with 83,000 followers got almost 1 million views.
Social media is a growing source of news for major media.
Social media is too consequential to ignore.
Reasons to invest more in social media: 1. massive reach; 2. high interest in investor-related information; 3. identifiable affinity audiences, and 4. alignment with digital transformation.
By how much should you increase your investment in social media?
In what areas should you increase your investment in social media?
Two approaches to social media investments: the all-in-one plan or the paid ad plan.
Social media creates value for public companies by reaching investors at scale.
The #1 goal of investor relations is to enable two way communications.
Win with social by Sky Alphabet Social Media (778) 814-7800 info@skyalphabet.com

About the Author

Through fifteen years of working at investor relations firms and agencies directly engaged with companies operating in the capital markets, Steve Yanor has overseen the marketing of more than thirty IPOs including some of the world’s largest.

In 2015 Lambert Academic Press published Steve’s book titled “Roadshow: The Marketing of Corporate Finance,” a marketing playbook for companies raising money through an Initial Public Offering (IPO). At five hundred pages, you can call Steve if you want to discuss your public company’s social media.