What Can Louisville’s Kevin Ware Teach the SEC and Public Companies About Social Media?

April 4, 2013
by Thomas Becktold, Senior Vice President, Global Marketing

Turns out, quite a bit.  You see, within hours of his terrible injury on the basketball court, fans were flocking to Twitter to offer their support.  Unfortunately, most were initially going to a fake Twitter account and weren’t engaging with Kevin Ware at all.

Following the April 2, 2013 SEC Report of Investigation that says social media accounts fall under the guidelines of their 2008 Interpretive Guidance Report on IR sites, we have put together some tips to help public companies in their IR social media efforts.

Social media engagement should be a part of the communications mosaic, but it is not a replacement for full, fair and simultaneous distribution of news achieved through Business Wire.  Investor relations professionals appreciate that their audiences are diverse and dispersed and use a wide range of platforms and content sources to access material information.

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Social Media Opportunities for Public Companies

  • Social media channels offer the ability to gather intelligence and engage in two-way conversations, and as part of a comprehensive communications mix, are quite valuable.
  • Companies should establish official IR-specific social media channels on key platforms, even if they are not ready to use them.  If the channels are not active, put a disclaimer or keep them dark.
  • For those with a solid understanding of social media and their investor audiences, regular, consistent use of the channels for both good news and bad news is key.  Just like any other disclosure platform, don’t tweet or post only the good results and skip the bad ones.  Once you commit to adding a social media channel to your communications mix, stick to it.  If you discontinue use of a channel, communicate that as well.
  • Establish and publish a clear policy on your company’s use of social media as a supplemental channel to alert investors of disclosure press releases and filings.  Cross-reference those channels on your IR site, press releases and filings.
  • Listen to conversations and track sentiment and influencers, including your company’s Twitter “Cash Tag” – tweets tagged with your ticker symbol preceded by a $.  Business Wire now offers social media sentiment analysis reports for press releases via our partnership with NUVI.  For real-time monitoring and engagement, the NUVI platform provides an easy visual representation of influencers and sentiment based on the terms you choose.

Social Media Cautions for Public Companies

  • Full and Fair Access:  According to Pew Research as reported by TechCrunch, only 16% of adult US Internet users are on Twitter.
  • Privacy: Social media channels have barriers to entry and require the user to set up accounts and agree to the terms and conditions of each channel.  Your company does not control those terms and they may be objectionable to those interested in your news.  Chances are, your own IR site, as a best-practice, does not require visitors to agree to terms and conditions to access material news.
  • Fragmentation: Where’s Waldo meets disclosure.  As an IRO, do you opt for a wide, instantaneous Business Wire distribution or solely post to Twitter or Facebook and hope people find your material information?  Ask yourself, how do your investors, potential investors and media currently access your news?  Chances are, it’s through a widely divergent set of sources.
  • Simultaneity: The fact that users must click on a link to read a full-text announcement (that will reside elsewhere) adds latency and unfairness to the disclosure process.
  • Usability: Is social media going to meet the needs of your audiences?  Is it realistic to ask your institutional investors to hit “Like” on Facebook to get the latest earnings release alongside their elementary school friend’s picture of their latest cake or new puppy?  Should you expect your retail investor to stop relying on their brokerage account to access your news because it’s no longer there and instead subscribe to your Twitter feed?
  • Security: Don’t use social media as your sole means for disclosure: Look at Kevin Ware, the Louisville basketball player and what happened on Twitter just after his recent on-court accident.  Someone set up a fake account because, yes, we know it’s that easy to do.  And, that fake account had more followers than his real account.  Imagine potential investors searching in vain for the “real Twitter account” for your company when breaking news happens?  (Or finding that the official account has been hacked, as recently happened to both Burger King and Jeep.) Want to get a “verified” account?  Good luck —  and it might not make a difference anyway, according to this recent Mashable article. The Business Wire slug ensures a seamless, secure, audited experience.
  • Reliability: Twitter has been riddled with outages as it grows – think how many times you’ve seen the Fail Whale. Business Wire operates at 99%+ uptime.   With your news widely distributed, if one site or system goes down, investors have many others to turn to.
  • Liability: Leveraging a Business Wire distribution ensures full and fair distribution.  Tweeting a release today is akin to walking across a frozen lake in late March.  Your odds of making it across are good, not great.

Want to read what journalists and others are saying about the SEC ruling?  Here are a few links – the comments sections often provide greater insight for you to consider as a communications professional:

2 Comments | Business Wire | Tagged: , , , , , , , , , , , , | Permalink
Posted by Tom Becktold, SVP Marketing, Business Wire

Why the Deck is Stacked Against Retail Investors

February 3, 2011
by Neil Hershberg, Senior Vice President, Global Media
Neil Hershberg

Neil Hershberg, SVP - Global Media

The classic Cole Porter musical, “Anything Goes,” is returning to Broadway this spring.

Retail investors won’t have to wait that long. In practice, “Anything Goes” has become the unofficial mantra of Wall Street, the Digital Age’s equivalent of ‘The Wild West” when it comes to disclosure.

Unfortunately for individual investors, who invariably get the short end of the stick, the folks in a position to end today’s information free-for-all have yet to take action.

At the risk of sounding like the Cassandra of capitalism, here’s why retail investors are swimming upstream:

1. Reg FD’s “level playing field” has become the regulatory equivalent of an ecological disaster area; it is eroding faster than many storm-swept East Coast beaches.

Mega-cap companies with huge investor followings have, for reasons best known to themselves, opted for micro-disclosure, dispensing with broadly disseminated news releases in favor of standalone web postings or similar truncated practices.

Rather than providing simultaneous, real-time information access to all interested investors, these best-practice contrarians have essentially decided to ladle access on a sequential basis to anxious  investors clamoring for corporate updates.

Over the past few decades, we’ve regressed from “trickle down economics” to “trickle down disclosure.”  Unfortunately, retail investors are the ones getting hosed.

Ironically, technology trend-setters are among the most flagrant abusers of acknowledged best-practice disclosure practices. These industry leaders should know better than anyone the inherent technical limitations of the Internet, and why the web’s architecture makes it impossible to meet the complex challenge of simultaneity.

2. Retail investors also are unknowingly getting eaten alive by spiders; these automated creepy crawlers have become a hidden epidemic.

While Bloomberg recently generated headlines when it published Disney and NetApps earnings results in advance of their official release, the real concern for retail investors should be the stealth spidering tactics of traders deliberately seeking to stay under the radar.

The spiders unleashed by Bloomberg and Selerity likely have plenty of company. In all probability, armies of incognito spiders are clandestinely retrieving troves of actionable, non-public data for their trading masters.

Even if these spiders fail to uncover non-public material information, their very use provides an unfair edge if publicly traded companies do not broadly disseminate their news via a service such as Business Wire.

The reason is that spiders are faster than the RSS readers that retail investors rely on for news alerts when disclosure is limited to a standalone web posting. Whereas Business Wire distributes market-moving news simultaneously and in real-time to financial information systems, portals, and media platforms worldwide, standalone web postings create a feeding frenzy for these rapacious spiders.

Retail investors have a legitimate reason to be suffering from arachnophobia; they are at a distinct disadvantage to market players that control these powerful technology termites.

3. There is a well-known saying that in life, “timing is everything.” That is certainly the case on Wall Street, where latency and milliseconds rule the day.

Winning on Wall Street is largely contingent on the ability to access and act on information faster than anyone else.

Institutional investors clearly have the necessary resources and technology at their disposal to triumph in today’s trading environment.

Notice-and-access and web disclosure disproportionately favor the professional investor, who can read – and react (perhaps even robotically) – far more quickly than the average retail investor.

The trading activity following Netflix’s recent web posting of its earnings (January 26 at 4:05 pm/ET) illustrates the high stakes involved.

More than one-third of Netflix’s total share volume for the day, or just over three million shares, traded after Netflix posted its earnings.

In after hours trading, Netflix’s shares were up $19.16 (10.47 percent).

Although individual investors now have the opportunity to trade in the after-hours market, they are being steamrolled by institutional traders, who clearly have the capability to react with more immediacy.

Retail investors are forced to play a bad hand. A recent blog post by Jack Campbell at 24/7 Wall Street, “Ten Ways Wall Street Crushes Retail Investors,” elaborates on many of these same themes: http://247wallst.com/2011/01/26/ten-ways-wall-street-crushes-retail-investors/

The common denominator linking all these examples is access to material information.

Regulation Fair Disclosure, in its original iteration, is clear on this point: all investors should have equal access to information at the same time.

The answer to the disclosure dilemma is obvious: the integrity of Regulation Fair Disclosure must be restored if retail investors are to be equal market participants.

Simultaneous, real-time access to disclosure news is the only solution that will put an end to the emerging two-tier access system that is slowly taking root.

It’s time for retail investors to get the fair shake they deserve.

3 Comments | Disclosure, Investor Relations, Reg FD | Tagged: , , , , , , , , , | Permalink
Posted by Phil Dennison, Senior Marketing Specialist, Business Wire

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