Social media is a powerful tool with which companies can reach a diverse range of potential investors and customers whilst differentiating themselves from their peer group. Increasingly, management teams are embracing the power of social platforms to get their corporate news and messaging in front of a wider audience than has ever been possible before.
Benefits of effective use of social platforms
- Professional investor reach – The benefits of using social media to amplify corporate messaging are well documented. Investors are also increasingly taking account of content posted on social media in making investment decisions. A Greenwich Associates study showed that 80% of institutional investors used social media as part of their workflow with 30% stating that information gathered via social media platforms had a direct influence on their investment decision making process. So, we know that professional investors are using social media at least as part of their process (whether formally or informally).
- Communicating with the retail community – the marginal retail buyer of a stock will likely be using one or more social media platforms. Placing your corporate messaging on these platforms gives a company a direct line to the retail investor to grab their attention and communicate your message.
- Act as a signpost to other digital corporate content – Putting summaries of news releases into a twitter feed with a link to the release can be a very effective way to spread the corporate message. The tweet is easily shared and, if well constructed has the potential to reach thousands of people who would not otherwise see your release; thereby growing your audience. Once visitors are viewing the material on your website it would be a good idea to monitor the bounce rate (i.e. the % of people who leave after viewing one page or “bounce” from the site). You will then be able to gather data around what is of interest to visitors and modify your content or messaging accordingly.
- Respond in real time – Social media platforms allow company’s to respond to market developments and chatter in real time. Obviously companies need to be mindful of any disclosure requirements stipulated by the relevant invest exchange when considering their social media engagement.
The well known August 2018 example of Elon Musk’s “Funding Secured” tweet is a good example of how not to conduct IR on social media. The tweet set off a flurry of litigation, government enquiries, operational challenges and redundancies. Shares in the electric car maker declined by 38.5% in the 12 months following the tweet. Obviously, not all of the share price declines can be attributed purely to this tweet but I think we can be fairly certain it was not the source of much in the way of positive news for the company or their investors. - Improve SEO and discoverability – Engagement with social media posts and content has been shown to improve SEO rankings, boosting awareness of your brand messaging and corporate message.
- Increase inbound messaging to company – Social media provides a platform for a company to gather real feedback on how the market perceives the stock. Keeping an eye on the comments, tweets (and retweets) as well as the volume of shares on a social media platform can all provide data on how the company is perceived by the market.
The well known August 2018 example of Elon Musk’s “Funding Secured” tweet is a good example of how not to conduct IR on social media. The tweet set off a flurry of litigation, government enquiries, operational challenges and redundancies. Shares in the electric car maker declined by 38.5% in the 12 months following the tweet. Obviously, not all of the share price declines can be attributed purely to this tweet but I think we can be fairly certain it was not the source of much in the way of positive news for the company or their investors.The above is absolutely not an exhaustive list of the benefits of an effective social media strategy from an investor relations standpoint. The markets are continually evolving and your corporate digital strategy (encompassing website, social media, news releases and newsletters needs to move with the times in order to be most effective. Don’t ignore it and get eclipsed by the competition.
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