Social media will become more important for investor relations, new survey shows
Institutional investors globally remain skeptical but recognize growing importance of social media
TORONTO and MONTREAL, Jan. 21, 2014 /CNW/ - In a new global survey, a majority of institutional investors around the world said social media will grow in importance as an investor relations tool, even though seldom consulted today by investment professionals.
According to data compiled by NATIONAL Public Relations and the AMO network of financial communications agencies, 56 per cent of institutional investors surveyed said that they consider social media to be "not yet significant but growing in importance" as a professional tool for investors.
Over a third (37 per cent) said that social media - including investment forums and blogs - were a welcome innovation making news dissemination more direct and rapid. And 33 per cent also said that they consider such sites to be a useful "heads up", especially during exceptional times such as takeover bids or proxy fights.
Asked which sites they visit most often for professional purposes, those interviewed indicated investment forums (39 per cent said frequently or very frequently), followed by LinkedIn (34 per cent) and investment and financial services blogs (32 per cent). Only 22 per cent said they consulted Twitter frequently or very frequently for professional purposes, compared with 10 per cent for Facebook.
A clear majority of the institutional investors surveyed said they considered the main newswires to still be their main source of investor information, consulted very frequently by 76 per cent of investors. The investors who were surveyed consistently ranked the newswires as more reliable than other news sources such as newspapers, radio & TV or social media. 87 per cent said the newswires were always or usually reliable, compared with just 17 per cent for social media sites.
But even if they do not consult the sites often or find them reliable, only a small number of the investors dismissed social media outright, with just 17 per cent describing it as irrelevant to their work.
The new survey, which covered 105 institutional investors in 12 countries managing a total US$3.83 trillion, was carried out by the AMO network to help investor relations executives at listed companies determine how to adapt their IR strategies to the digital age.
"The AMO survey shows that investor relations professionals should be examining how to incorporate or expand their social media capabilities to reach institutional investors. Today, investors are skeptical of the value of the information conveyed using these tools but there is widespread recognition that they will become increasingly important," said Peter Block, Practice Lead of NATIONAL's Financial Communications group in Toronto.
"Social media need not be intimidating, excessively time consuming or a risk of violating securities rules. It should be viewed as an extension of an IR program, which already responds to inquiries and engages in discussions with its investors."
In fact, social media can be particularly beneficial for small to mid-sized companies which traditionally have more difficulty getting the attention of analysts and mainstream media. A recent University of Michigan and Stanford University study found that dissemination of news via Twitter was associated with lower bid-ask spreads and enhanced liquidity.
"We know many IR professionals in Canada are already using a wide range of social media tools to reach investors. Those that are not should see the AMO results as a call to action," concluded Peter Block.
AMO is the leading global network of strategic and financial communications consultancies. Our 'best in class' philosophy brings together local market leaders with unrivalled knowledge of financial markets and cross-border transactions in the key financial centers of Europe, Asia and the Americas. Providing sophisticated communications counsel for M&A and capital market transactions, media relations, investor relations and corporate crises, our member firms have established relationships with many S&P 500, FTSE 100, DAX 30, SMI, CAC 40 and IBEX 35 companies. www.amo-global.com.
With more than 940 professionals operating globally for our clients, AMO is comprised of the following market-leading network members:
- The Abernathy MacGregor Group in the US
- NATIONAL Public Relations in Canada
- Maitland in the UK
- Havas Worldwide Paris in France, Belgium and Dubai
- HERING SCHUPPENER in Germany
- LLORENTE & CUENCA in Spain, Portugal and Latin America
- Hirzel.Neef.Schmid.Counselors in Switzerland
- SPJ in the Netherlands
- Porda Havas in China
- Ad Hoc Communication Advisors in Italy
- NBS Communications in Poland
- Hallvarsson & Halvarsson in Sweden
About NATIONAL Public Relations
NATIONAL Public Relations is the largest public relations consultancy in Canada with offices in Victoria, Vancouver, Calgary, Toronto, Ottawa, Montreal, Quebec City, Saint John, Halifax, St. John's, New York and London. The Firm serves leading corporate, government and institutional clients and offers the full range of communications services, including corporate communications, investor relations, public affairs, employee engagement, public consultation and participation, marketing, technology and healthcare communications, as well as digital communications. It provides medical communications, public relations and clinical trial support services to a wide section of the leading pharmaceutical and medical devices companies internationally under the name AXON Communications. NATIONAL is a subsidiary of RES PUBLICA Consulting Group. www.national.ca
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