Investor Relations 2.0

TOP CONTRIBUTORS

Tom Allinder

Investor Relations 2.0 is the result of Web 2.0. In Web 1.0, information flowed in a one way direction from companies, agencies and positions of "authority" like newspapers and news pages on the Internet to the consumer. Content for the consumer was determined by "authority".

In Web 2.0, the content is determined and often created by the consumer. Web 2.0 is dominated by social media platforms, online communities, online applications and other interactive tools. Web 2.0 is platform based allowing users and members to contribute to conversations, comment on articles or write and create their own content.

So, a simple definition of Investor Relations 2.0 is the use of Web 2.0 technologies, platforms and tools to conduct investor relations. Clever and proper use of Web 2.0 technologies is revolutionizing the investor relations business.

One Way Communications versus Interactivity

In Investor Relations 1.0, communications and content came directly from the investor relations firms and entities or the company itself. Investor Relations 2.0 allows shareholders and prospective shareholders to interact directly with the company and its management team. This enables a level of trust and credibility to be built between shareholders and company management. Success in the Web 2.0 environment is dependent on openness and transparency.

Between the dotcom boom and bust of the early 2000s and the financial crisis of 2008 and 2009, it has become important for investors to have a significant level of trust, with the companies they decide to invest in. This trust is built through a constructive dialog between investors, prospective investors and company management teams.

Marketing

The difference between Investor Relations 1.0 and 2.0 also can be illustrated using the different marketing styles used in Web 1.0 and 2.0. It is the job of an investor relations firm to not only handle communications between investors and the companies they represent but to also conceive of ways to market the company they are representing.

Investor Relations 1.0 marketing consisted of emailing investors and the investment community, mailing investor packages, kits and prospectuses, transmitting faxes, cold calling, producing multimedia presentations on their client companies as well as other forms of one-way communications.

Investor Relations 2.0 style marketing is far more subtle and is essentially permission based marketing. The objective of permission based marketing (or “pull” marketing) is to get investors and individuals in the investment community to subscribe to content. In Investor Relations 2.0, people can subscribe to company news releases, comment on company and investor relations blogs, subscribe to a content feed through RSS (real simple syndication), and interact with company management on social media platforms. Investor Relations 2.0 is not about investor relations or companies pushing a message to the investment community and their shareholders but rather, having people come to subscribe and interact with investor relations and company management teams.

Success Metrics

In Investor Relations 1.0, there was only one success metric to consider: Stock price and volume. In Investor Relations 2.0, while the objective is to obtain more shareholders, increase stock volume and price, the much broader marketing and marketing style lends itself to successful marketing of the client company’s products and/or services thereby having a two-fold benefit. Investor Relations 1.0 is stock price and volume focused while Investor Relations 2.0, by nature, combines Public Relations into the formula and is much more focused on company performance and its products and services.

Success in Investor Relations 2.0 can not only be measured in stock price and performance over time but also the number of subscribers engaged with a company and/or its investor relations firm. Investors are far more likely to invest in a company that has good brand awareness, easily found in Internet searches, has lots of participation on social media platforms, creates and publishes interesting content and that is responsive to its shareholders and inquiries from individuals in the investment community.

Counter Intuitive

Proper use and engagement of an Investor Relations 2.0 program involves unlearning of marketing methods used in Investor Relations 1.0. Rather than “broadcasting messages”, companies and their investor relations firms must find ways and means to make themselves “interesting” to the investment community. Engaging individuals in a “conversational manner”, creating unique and new forms of content, and being open and transparent are completely new concepts that are the cornerstones of success in Investor Relations 2.0. Given the marketing methods used, this makes a considerable number of aspects of Investor Relations "Counter Intuitive".

Investor Relations 2.0 is Far More Complex

Some of the components of Investor Relations 2.0 include:

Website design and redesign – Content management systems (CMS) essentially are the company’s “platform”. Two popular examples of CMS platforms are Joomla, and WordPress. These systems are open-source and have huge communities of developers that are creating new applications and building upgrades constantly.

Using a CMS for a company website is essential for interactivity. These sites enable the company to communicate with their investors, individuals in the investment community, customers, potential customers and clients through blogs, and enable individuals to subscribe to company content through RSS feeds.

Search Engine Optimization (SEO) – A great website and great content is nearly useless if it cannot be “found”. Getting content and having high rankings on search engine results pages (SERP) is the foundation of Investor Relations 2.0. SEO can be done in one of two ways or in combination. Paid SEO is using advertising services through search engines such as Google Adwords is effective but can get expensive. Success in this area of SEO depends on good keyword strategy. The other type of SEO is organic. Simply put, good organic SEO is understanding how search engines work and using that knowledge to have content appear on the first few pages of SERPs. This is a complex subject and beyond the scope of this article to explain the finer points of SEO.

Blogs – Anyone can write a blog; it is free through platforms such as BlogSpot and Wordpress. However, writing good, original and interesting content is challenging. A great blog can dramatically increase a company’s ability to be “found” by prospective shareholders, clients and customers. Good SEO is a must for blogs to be found and subscribed to. It is not only important for company management and investor relations firms to write a blog, but also to read and comment on other’s blogs. Commenting and participating builds “personal brands” and increases the chance of being “found”. The Web 2.0 environment is much more individualized and personal in nature. A CEO or other management team members can build a great deal of credibility by participating in blogs- writing, reading and commenting.

Social Media Platform Presence – Social media platforms such as the very popular Twitter, Facebook and LinkedIn are essential to a good Investor Relations 2.0 program. Proper engagement on these platforms is a must though. Individuals who register on these platforms then go on to do Web 1.0 style (push marketing; broadcasting a message) find limited, short-lived or no success. These platforms are for conversations and building relationships, not marketing a company, its products/services or stock. If one thinks of the social media platform environment as a “cocktail party”, they will be successful. A person who goes to a cocktail party or BBQ and takes business cards and spends their time trying to sell their goods and service and/or getting people to buy stock in their company will be shunned by the party-goers and will be effectively “blacklisted” by being unsubscribed to. It is also important to note that excessive spamming on these platforms will likely result in the users account being suspended. Posts on social media platforms leaves a permanent record that is difficult to overcome. Incorrect use of social media platforms will do more damage than good to the individual and the company they are representing.

Conversation Monitoring and Tracking – Another important aspect of Investor Relations 2.0 is tracking what is being said about the company and/or its management team in cyberspace. There are both paid and free methods and means of accomplishing this. Important data can be gathered from monitoring and tracking; increase or decrease in mentions or posts about a company, sentiment about the company and its management team, reviews on quality of products and services as well as many other important items. Good monitoring and tracking enables a company and its investor relations firms to gauge the success of their current operations. If things are not going well, strategies can be changed. Management teams and individuals in their investor relations firms can also respond and engage people in conversations about their company, its products and services, news releases and developments. Staying on top of changing sentiment regarding a company is a big advantage and is being used extensively by many of the Fortune 500 companies with a great deal of success.

Social Media Press Releases – A new tool in the Web 2.0 environment is the social media 2.0 press release. Almost all of the news wires offer this service now. They also offer training and use of this new format of press release. In the past, news releases were all text. With the social media press release, company logos, videos, photos can be part of the release. The real power of this new format is the SEO aspect. Good use of keywords and good content with multimedia added in gives the press release a much longer shelf life than the old text-based news release. Because of the links and keywords built in, Internet searches will turn up the press release weeks and months after it has been put out. A good social media 2.0 press release can be picked up on blogs and other news services effectively replicating itself endlessly over time.

Content – Internet searches usually yield video, photo, slide show and blog links at the top of the page. Clever use of multimedia can dramatically aid a company in being found. It is also important to realize that in this day and age, people are looking for unique content. A dull and boring “talking head CEO” video will not get as much traction as a CEO who is dressed casually demonstrating his or her company’s products or services. CEOs and other management team members can use video in a huge variety of ways effectively. Their imagination is the limit to their presentation. Because video is such a huge part of the Internet, something different or imaginative will garner a bigger audience than mundane presentations. The individual who is subject of the video must be enthusiastic and have a personality. An amateurish video of a person that is passionate, uses humor and other attractive personality traits will have a chance of much greater distribution and interest than an expensive studio video that has been the standard for so many years.

Another important point is that videos should be hosted by high traffic sites such as YouTube and Vimeo. Videos hosted by a company website alone will not have anywhere near the audience that they will get if hosted at a popular video site. Videos can be uploaded to a high traffic platform then streamed to the company’s website. Interesting slide shows hosted at platforms such as Slideshare and [1] are more interesting than reading text. The human mind thinks in pictures, not text so the more pictures, video and other multimedia you can use, the better.

Training, Education and Research

In a world that is changing exponentially, it is imperative that company management teams and their investor relations firms stay on top of the latest trends. Things change so fast that by the time a book is written on how to do something, it is virtually obsolete. A red hot social media trend or platform may not be hot tomorrow and may be gone altogether the next day. Subscribing to good content on trends, platforms and tools used in Investor Relations 2.0 is more important than ever. The Web 2.0 environment is dynamic and it literally takes a team of researchers to stay ahead of trends.

Conducting Investor Relations 1.0 was easy and required little imagination. Investor Relations 2.0 and beyond is so dynamic that it appears to be complete chaos to many people, especially management teams of publicly traded companies. Within the apparent chaos however is a certain elegant and simple order that did not exist before. Understanding Investor Relations 2.0 absolutely requires the unlearning of all methods and marketing of Investor Relations 1.0.

The best training and education in the Web 2.0 environment is not gleaned from books but rather from content that is created on a daily basis by intelligent and intuitive people that understand the environment. A completely open and imaginative mind is best suited for success in Web/Investor Relations 2.0.