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It’s Time To Strengthen Your Corporate Social Media Strategy
This page is for you if…
- Your company has ever asked “should we announce this over social media?”
- You need to know how relevant social media is to corporate communications and investor relations.
- You are seeking the latest social media research as it applies to corporate and professional environments.
- You need assistance with your corporate social media.
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This page provides information for public company executives and investor relations officers about how social media has become integral to achieving corporate communications best practices.
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Walkthrough of our capital markets presentation by Steve Yanor
“As a social media agency we spend every waking hour on four major platforms: Twitter, Instagram, LinkedIn and Facebook. In that order.
In the last year, we have seen a dramatic surge in the use of social media platforms as a corporate communications tool. We were wondering if this was or our bias causing us to see things we wanted to see or if this was a solid trend that continues to develop.
We can safely report this is not a blip. Public companies are finally getting on board with social media as a legitimate channel for disclosure and corporate communications.
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.
Our research uncovered some highly relevant research done by others. This includes recent findings that institutional investors use social media and many other facts that investor relations and other executive functions will be interested in learning.”
The guided tour starts now.
Today’s Presenter: Steve Yanor of Sky Alphabet
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.
Prior to moving to New York, Steve was the Senior VP at a prominent Investor Relations firm in Toronto where he headed up the Global Investor Communications team at Imagination (GIC USA) as C.O.O. Imagination is one of the world’s most award-winning design agencies and a prolific global financial roadshow marketing operation.
Steve is also the former VP of publicly-traded Lions Gate Entertainment Corp., where he assisted with the transition of Lions Gate from a private to public company. In the nine months leading up to the transaction that turned Lions Gate into a public company, Steve developed and executed a top secret marketing plan that helped launch one of Canada’s most successful entertainment brands.
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 need advice.
With that introduction behind us, let’s move on.
Social media is not optional
Public companies that embrace social media are very successful relative to those that have not. At least on social they are perceived as being more successful. This has spillover effects and creates an uneven playing field for those companies that are not as comfortable or skilled at using social 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 advertising that appears on social media or related sites.
Any public company that uses social media as either a primary or secondary communication channel is really 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.
Sorry. 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.
Communications is what differentiates “parity stocks”
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, give yourself a star.
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
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:
- Quarterly reports
- Annual forecasts
- Revisions to forecasts
- 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
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
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
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
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
Social media in Canada has massive reach
You can be found just about anywhere with Facebook’s ad network
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.