Investor Relations 101

[Tina]

Issue Date: IR Alert - July 1, 2009,

Facing the IR 2.0 Bogeyman: NBC's "Fear Factor" Ain't Got Nothing on Investor Relations and Social Media.

By Serena Ehrlich, Co-Founder, StartUp Army; Past President, NIRI Los Angeles Chapter, Dallas/Fort Worth Chapter

In the past three years, there has been a huge push for companies to get involved with social media. PR teams are practicing social media, advertising and marketing are certainly here—so what about investor relations?

Try telling an IRO that they need to start a social media program today and watch the fear flitter across their face. And for good reason: The SEC spent a good part of this decade monitoring casual conversations and sanctioning IROs for RegFD violations.

What is RegFD—the root of most IRO's fear? This law says that a company must disclose information that may impact the future price of the stock, to everyone at the exact same time. This law requires companies to maintain as much control over their messaging as possible. The penalties are severe. I don't think I know anyone in the investor relations industry willing to risk sanctions such as the ones the SEC handed down to companies like Flowserve simply to join what is still perceived as a the scary unknown of social media.

But in truth, the times are changing. Technologies are changing. The way in which people interact is changing. So despite wishes that social media is a fad, or simply a place to declare your lunch plans, or a scary place that could violate RegFD, the truth is, conversations about your company are happening online—and you can choose to be a part of it or to ignore it. But ignoring social media does not make it go away. In fact, it gives legs to untrue rumors and spreads incorrect information faster than a wildfire.

So maybe it's time to redefine social media and investor relations. After all, it is simply the way IROs have been conducting investor relations—just utilizing a new medium to both decrease the amount of time needed to educate investors and to provide clearer information to current and potential investors, decreasing the chance of rumors and short selling.

In short, social media is an easy way to clearly communicate your company story and engage with those interested via the Internet.

So how does an IRO with no time to spare (and RegFD to consider) jump into "social media" without drowning in corporate red tape? The answer: Start slowly. After all, Dell's blogs were not built in a day…

Beyond that, here are the first three steps that you must take: First, create a corporate policy to include RegFD. Second, start monitoring what is being said about you online, in conjunction with changes in your stock price. (Tip: If you have a PR team, they may have monitoring tools you can utilize). And third, consider blogging. Her are some guidelines and pointers to help get you started in these areas:

Crafting a Social Media Corporate Policy

Does your company have a corporate policy for social media? If so, has it been updated to include emerging sites like Twitter and Facebook? If not, start the ball rolling.

So why do you want a company policy and what should it include? How many times have you received a phone call from an analyst trying to solicit a slip, tip or response they could use in their research/models? Analysts can and are now looking online for that same type of insight. You need something in place to ensure topics that can affect your stock price are never discussed online.

For example: Someone in your company complains online about the slow summer at work or a client's hard won discount. These simply innocuous statements could have potentially damaging effects on your stock.

Making Moves into Monitoring

This is my favorite part of social media. By simply listening to what is being said about you online, you can determine future trends, clear up misunderstandings and your company/products, learn to spot what rumors can be quelled before your stock is affected. Plus, once you set up your search sites, this should take less than an hour a day to maintain.

Sites you should get familiar with:

• Twitter.com: Twitter is a real-time global discussion stream with no restriction on topics. No. You do not have to start Twittering today, but you should do two things: First, create a Twitter account. Reserve your company name. Just in case. Then do a search for your company name and your competitor's name. See what's being said about you. Ever wanted to run a focus group but didn't have the money? Voila. Here is your electronic focus group. To get started just go to http://search.twitter.com. Go ahead, check it now. I'll wait. Click back when you're done.

• Socialmention.com: This is a real-time search engine that searches blogs, microblogs, blog comments, images and more about your search terms. It even has a RSS feed, so you can just add it to your favorite daily reading lists.

• Quantcast.com, Alexa.com, Compete.com: Have you ever seen a negative comment online and wanted to know "who reads this stuff"? Check out these three website traffic measuring sites. I love the data that Quantcast and Alexa can provide, but find that Compete provides traffic figures for smaller blogs. Another place to look? Some blogs have an "About Us" section that provides a visitor count. This is a great way to determine the reach the site has on the Web

Hungry for more? Mashable and the Social Media Club provide great articles focused on social media tips.

Breaking into Blogs

Change your way of thinking about blogs. Traditionally blogs have been seen as time consuming and forced. Wrong. Instead, think of it as a way to answer those questions that you, your PR team, your customer service team, your management team and your board of directors get on a regular basis. By answering these questions on your website you cut down time spent on the phone and begin to interact directly with your audiences online.

So what to blog? Expand upon your FAQs, your press releases, do a Q&A with a department head, blog about new industry developments, get ahead of a potential stock slide (thus requiring you to disclose via RegFD) by using your blog to discuss and disarm potential rumors and threats. Who to blog? To make it easier, many companies create an editorial calendar, assigning articles to various department heads to ensure continual posting at minimal time spent.

And that's it! Yeah, right. That's not everything—not even close. In fact, some critics would say that is nearly not enough. But I strongly believe every IRO needs to get involved in social media and it's the first step to building a program that provides you and your audience access to real-time information about your company.

Serena Ehrlich is one of the founders of StartUp Army, a company dedicated to building Web-based businesses and handing them back for the clients to run. She is a 14 year veteran of Business Wire and past president of the National Investor Relations' Los Angeles and Dallas-Fort Worth chapters. Her love of social media came from working within the newswire industry during the birth and rise of the Internet, industry changes due to legislations such as RedFD and SOX. She can be reached at serena (at) startuparmy (dot) com.