Benefits and Risks of Social Media for Financial Communications
By Mike Stiles on Aug 05, 2014
Today (Aug 5), we’ll be doing one of those highly informative, timely webcasts we’re in the habit of doing. This one is on the SEC’s disclosure guidelines for you brave souls trying to do social for financial services companies. We’re trying to keep you out of trouble. So let’s turn the blog over to one of the presenters, Serena Ehrlich, Director of Social and Evolving Media at Business Wire.
In April 2013, the SEC announced that with proper promotion, public companies could utilize social networks to meet material news disclosure. This decision was met with cheers and jeers. For some, this was proof that news distribution and consumption had changed, and moved online to a wider, more transparent audience. For others, this opened a can of worms, as IROs scrambled to determine if this type of communications matched their audience base.
In truth, there are pros and cons to this decision. For many, the cons of using social media as a sole disclosure network outweigh the pros. For these IROs, instead of utilizing these platforms for disclosure, many IROs have found great success leveraging social networks as both a listening tool and a way to enhance traditional disclosure methods.
Social Media as a Disclosure Tool – The Good:
Social Media Is A Discussion Platform – And People Are Talking About You!
Search Twitter for your ticker symbol, cash tag ($ + ticker symbol), company name, or senior leadership and you will see a wide range of conversations occurring about your business. Look deeper and you start to see themes highlighting the good, and bad, truth and lies, about your company. This free focus group allows you to see what is being said and adjust your program accordingly.
Social Media Can Be Planned
While many conversations in social media are generated somewhat spontaneously, once you know the general conversations that do take place, you can craft some pre-approved response messaging, or even decision trees, to help you manage your involvement. Decision trees highlight the steps to take based on each type of potential conversation – from a misunderstanding, to a crisis. Being organized helps you respond faster.
Social Media Increases the Reach of Your News
Share your news across social channels and watch interested parties pick it up and reshare it with their own audiences, a perfect addition to traditional news coverage. Include a photo or video with your social media update, and increase social shares of your news by up to 100%! In addition, utilize blogs to provide additional information surrounding larger events to provide journalists easy ways to round out their stories.
In addition, many IROs are utilizing Twitter as a means to live tweet their earnings or large announcements. This is a terrific use of the service and very easy to implement. This allows interested parties to receive updates in real-time, just as if they had dialed into your earnings call.
Social Media as a Disclosure Tool – Be Wary:
Social Channels Are Not Real Time News Distribution Services
One of the biggest downsides to social media platforms as disclosure vehicles is that social platforms do not provide real time news distribution. Since the revenue of social platforms is mostly dependent on advertising, social networks do alter feeds based on user preferences.
Lack of Access to Social Networks
Even in 2014, many financial institutions do not allow employees to access social channels from their work computers.
140 Character Limit
In many cases, the downside to social only disclosure is the character limits for news updates. Can you tell the entire story you need to share in only 140 characters?
Less Media Coverage
Unfortunately, for many companies utilizing social media for disclosure, this distribution method has impacted their overall news coverage. If your goal for financial news is coverage within key publications, limiting media relations to social only, social media news distribution is not for you.
Social media platforms are incredibly powerful communication tools. Used properly, they will increase the relationship between an organization and their key constituents as well as provide insights into company perception, company message alignment and provide an early head’s up to potentially negative news. To learn more about the 12 reasons why companies should or should not utilize social media for financial disclosure, download our guide now.
And, of course, try to make today’s webinar. If you can’t, it will be recorded for your listening pleasure.