I would just like to thank Dominic for his time answering my questions below, much appreciated and really valuable insights for all those involved in Communications and IR.
I would also to thank Dominic and Pam Agnew of IR Web Report for the fact that whenever an IR Web Report Update appears in my RSS Reader, I not only enjoy reading it from beginning to end every time, but always learn something or get thinking about new ideas and concepts for online communication.
I definitely recommend subscribing for email updates or RSS for the IR Web Report Blog Here
Me: What motivated you to launch IR Web Report?
Dominic Jones: I started IR Web Report in 2001 to share best practices for investor relations websites. The core idea behind the site has always been to reduce the barriers to investors learning about your company by using the web effectively. If you make financial information easier and more attractive to access and understand, both investors and the company will benefit. It’s a true win-win. The only reason to resist doing this is because you have something to hide or you’re unaware that you’re doing something wrong.
Unfortunately, I still spend a lot of time on the blog criticizing the big investor relations website vendors that have become near-monopolies in the US market. They are the biggest barriers to effective online investor communications. I wish I didn’t have to be critical so much, but companies need to know that they’re getting rubbish from these vendors and that using them is hurting their effectiveness. Of course, this hasn’t ingratiated me to these big vendors and those who rely on them for funding and support, including the leading investor relations organizations.
Me: Who should read your Blog and what are three other must read websites/blogs that all IR Professionals should bookmark or grab RSS for?
Dominic Jones: IR Web Report’s readers currently fall into three groups. Investor relations professionals and corporate secretaries at public companies; employees at large and small vendors of investor relations services; and, professionals like IR consultants, securities lawyers and accountants. So there are people who read IR Web Report because they are afraid of what I might be telling their clients, and there are those who are excited to learn new things.
In terms of other sources IROs should follow, there really isn’t a single source of information targeted to investor relations professionals that I think is a must-read, and I include IR Web Report in that. But I guess you want three sources so I’ll give you these: ReadWriteWeb, Steve Rubel, and Jakob Nielsen. None of them is particularly targeted to IR, but they’re probably the most relevant to what I do.
Me: Job Description’s for IR roles typically have had an emphasis on a financial & accounting background. IR Web Report makes it clear that a new critical string to the bow is understanding how to communicate online effectively. If you were CEO of a listed company and had to choose between an applicant with a financial background and an online media specialist who would you choose and why?
Dominic Jones: Ideally, I’d hire both if I couldn’t get their skills in one person, but since I have to choose I would hire the one with the online communication skills because that is the future and big investors prefer to speak to management rather than the IR staff anyway. The person with the finance-only background rarely is able to reduce demand from investors for time with executives. They often are there to run interference for the executives, but I’m not sure that helps the company.
The person with the online communication skills can reduce demand on executives’ time by using technology to broaden access to management. We are seeing dramatic changes to the investment research industry and the fund management business. There are going to be more and more smaller research shops and more research will be done internally by the buy-side. And all of these people are going to be seeking access to management. Without new ways to provide access, the demands on management’s time will be intolerable.
Me: Will hard-copy communications to investors cease to exist? If yes, ballpark guess of when? Also, do you think it is important that companies are careful to give a thought to the 98 year old investor who has never been on the internet?
Dominic Jones: I’m not one of those who wants to see an end to printed communications materials. Hard copy can be an extremely effective way to communicate, but only if it is done well. The problem with print today, as with the web, is that companies don’t use it well.
Companies produce printed disclosure materials for compliance reasons, not because they want to communicate essential information to their stakeholders. Consequently, few investors read the bulky, grey documents they receive from companies because they’re simply unreadable.
At the same time, printed documents that are converted to PDF and posted on the web are also dead communications. Almost no one bothers to read them. Taking something that few people read on paper and putting it online won’t make more people read it.
As long as there are good IR communications professionals, I don’t see print dying because they will continue to use print in situations where it is the best option. They’ll do it because it’s effective, not because they have to for compliance reasons.
- On Investor Relations Websites….
Me: Speaking generally, are websites prioritised as a communications tool for IR teams? What sectors/sized companies are currently doing IR online best and why? What sectors/sized companies are doing IR Online worst and why?
Dominic Jones: Generally, investor relations departments have only adopted the web where they’ve been compelled to due to regulation or convention. These websites are essentially repositories for information that is prepared for other channels, such as printed annual reports offered in PDF or presentations that are delivered in person and posted online as webcasts and PDFs.
However, there is a small group of companies in most countries that are using the web as an unique channel with original content. There is no one industry or company size that determines the best sites, although we do see that when one company takes the initiative, their peers will often follow.
That said, we do see geographic similarities. For example, German companies have the best IR websites overall, followed by Italian, British and Scandinavian companies. In emerging markets, Brazil stands out.
Me: Why do you put an emphasis on a IR Website review being “vendor neutral” ? Are organisations often led astray by vendors with expensive products that do not actually add value for investors?
We emphasize this because we strive to provide advice independent of any sales incentive. Since we don’t build websites ourselves, we have no incentive to recommend a certain technology or service to gain more business from a client.
It is also important for companies to know what all of their options are, and most vendors will not recommend services or practices that they cannot deliver or which their competitors are better positioned to provide.
I am critical of the big investor relations website vendors because their products are inherently cookie-cutter and designed to serve the basic compliance requirements of companies. Their basic products are of an extremely poor quality and lack communications effectiveness. It takes them two to three years to catch up with new practices and technologies, and often when they do implement new technologies they do so poorly.
However, some of the blame must go to IR department leaders that rely on these big vendors. By outsourcing their websites for the past 8 years or more, many IR departments have failed to gain essential knowledge about what constitutes effective web-based communications.
In my view, this has left the profession severely disadvantaged in the current era of social media and easy web publishing tools. The average blogger today has better access to technology and more experience than the average IR department.
Me: In terms of ensuring an IR Website reflects credibility and accountability, how do the following factors rank in order of importance and why?
-Timeliness of Information (e.g. Info available as released on IR website)
-Depth of Information (e.g. Historical financials, press releases)
-Branding & Design
-Functionality/Multimedia (e.g. Use of Podcasts, Video and other channels like Twitter, Facebook and Blogs.)
-Usability
Dominic Jones: They’re all important to an effective website and weakness in one area can undermine a site even if it is strong in all of the others. Poor usability of IR websites, for instance, has been a recurring concern raised in surveys among investors over the past 10 years. And even though design or look and feel is less important on IR websites than on other types of websites, it still creates an important first impression.
Of course, timely, authoritative content is more important than all of the other factors. Investors will forgive some poor usability, a stale design or lack of video or fancy features if the information the company provides is highly enlightening. I think of Berkshire Hathaway’s website, which is basic but still credible and heavily used. However, most companies are not as recognizable as Berkshire, so they cannot get away with great content alone. They need to do something to entice people to consume the content through design and great usability.
One area that has become vital to credibility and effectiveness is what I call “service attitude.” By that I mean how accessible and visible is the IR department and management team. Can you easily contact the IR team online and how do they respond? Are they using their website to respond to current issues and questions proactively? Can investors interact with management on the site? Does the company provide investors with access to outside sources of information over which the company has no control and which may be critical of the company?
A lot of new technologies and services, such as Twitter or blogs, can support this “service attitude,” but you don’t have to use them to have a credible website. Most important is that the company is using the web as a communication channel, like the telephone, and is making itself available to investors online.
Me: What is the one thing you see on an IR Website and think.. “FAIL!”
Dominic Jones: Actually, we often say fail even before we get to the company’s website. That’s because we start our reviews off of the site on the investment portals and search sites where investors typically will start their visits. The fail often occurs when we find a news release that asks us to visit the company’s IR website for additional information. Instead of providing a direct link, they give you the top-level URL and some written instructions on how to get from there to the information they want you to see. For example, “visit www.ourcompany.com click on investors, news & events and then presentations.” Why not just give us a direct link? We see that a lot, and it immediately tells you this is a company that isn’t thinking about making life easier for investors.
On IR websites themselves, probably the most common fail is making people register to access information that they have very little incentive to access. Archived webcasts are the main culprit of this. Presented with a registration screen, research shows that a large proportion of users will just go somewhere else. There’s no reason to make people register for this information, but companies just do it because that’s the default in the webcast vendor’s process.
It’s often not the company’s level of disclosure that causes the fail. Companies can justify not providing certain information for a variety of reasons, but they can’t justify bad usability or stale information. Usability issues suggest that the company is not focused on users’ needs and lacks expertise to provide an effective website. But nothing is worse than obviously stale information because it tells investors that they cannot rely on the company’s website because the company is not maintaining it properly.
Me: Can you summarize in a Twitter post what investors actually want from an IR website?
Dominic Jones: Investors have four motives for visiting an IR website: news, reference (too look up a specific fact), service and discovery. That was 125 characters.
- On IR Strategy & New Media…
Me: Should organisations roll out new media tools & channels as part of IR strategy as the tools emerge to communicate with shareholders? How do they know the time is right e.g Investors are aware of, comfortable with and regularly using these tools?
Dominic Jones: I’m convinced they should, but I think it’s a little too early to know for sure what is most effective. Companies have to be willing to experiment because this is new terrain, but there’s little or no downside because the costs are minimal and the potential upside is huge.
Small companies looking to build profile should most definitely be looking at using social networks, blogs, RSS, widgets, and sharing tools to increase their visibility.
Companies have to take their stories and their information to where their audience is. They have long done this by sending out news releases or mailing annual reports to shareholders and prospects. The difference now is that people are congregating in new places where these traditional vehicles either cannot reach or are not effective.
For many people, social networks like Facebook are their new inboxes. Companies have to be willing to engage with people in these places. They also should be making themselves attractive to be talked about, what I call “enabling conversations.”
One concept companies need to become comfortable with is that they are no longer in control of their information once it is published. You can’t make people come to your website or listen your presentation the way you want them to. You can’t control how or where the company will be discussed. You can’t control the message and, in fact, if you try to you are increasing your risks of failure.
The most important thing now is to be talked about, and then to participate in these conversations where the need arises. The wonderful thing about this is that it’s a level playing field for everyone – from the big multi-nationals to the average individual. If you are willing, the opportunities are there for the taking.
Me: Should IR professionals just get used to the fact that their professional landscape will continue to change and you are always going to need to keep learning and monitoring for emerging technologies?
Dominic Jones: We’ve seen a lot of change in technology over the past three or four years. The rate of change has been extremely rapid, but my sense is that we are entering a bedding down period. Things will slow down somewhat on the technology side, but the major changes will come in how and who is using the technologies. They are moving to the mainstream and IR departments will have little choice but to use them.
Social media is the new telephone. And IR departments need to learn how to converse on this new medium. That’s going to be a big challenge. You can’t come to Twitter with the idea that you’re going to push out key messages and be successful. You have to be willing to receive feedback and to engage. You have to approach it with humility and a willingness to serve people who are interested in your company. If you can’t do that, you’re going to fail.
The next challenge is cultural more than technological. This might sound silly, but it’s true – IROs need to learn how to be human in their online communications.
Me: Is there anything else you would like to add speaking to an audience of Comms, IR and PR professionals?
Dominic Jones: Yes, every IR department needs someone dedicated to the web channel. Most companies don’t have this position and so they’re missing out on many opportunities and leaving themselves vulnerable to regulatory action. In fact, it is getting so that I think some companies will have two people dedicated to the web – one to handle the company’s website, and one to handle the company’s presence on external sites. IR departments are generally far behind marketing and public relations professionals in this regard. This is ironic because PR and marketing people generally aren’t required by regulation to use the web whereas IR people increasingly are required by regulation to post information online and in very particular ways.
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Blog: http://investorrelationsblog.org/
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