Is the internet an important investor relations tool?
Friday, February 9, 2007/
MARU BETH BAUER has the answers
“I run a small listed company with a market cap of about $60 million. I have not paid much attention to my website. Now I am told it is an important investor relations tool. Is that right, and why?”
Mary Beth Bauer answers: In the past two years, there has been a massive shift in the use of company websites by investors. There has been a doubling, and then re-doubling of the numbers of investors who depend on online communications (primarily company websites) as their sole or primary source of company information. This has occurred not only in the younger investor demographics, but substantially across most age groups, including even a small proportion of elderly shareholders.
: In the past two years, there has been a massive shift in the use of company websites by investors. There has been a doubling, and then re-doubling of the numbers of investors who depend on online communications (primarily company websites) as their sole or primary source of company information. This has occurred not only in the younger investor demographics, but substantially across most age groups, including even a small proportion of elderly shareholders.
Interestingly, investors who are “early adopters” of online information sources reported in group discussions such as focus groups that they are as much motivated by the attraction of helping to use less paper and conserve more trees (and water) as they were by the ease or convenience. We saw this conservation value as a leading trend, one that has been confirmed over the past couple of years as preference for online information continues to grow. It is now clear that this is much more investor driven than company driven.
Companies have been slow to move to online publishing. In many cases, they have been even slower to design their online content to meet their investors’ desire for interesting, succinct, easily accessed information.
Many company websites even as recently as last year were hardly more than “computer-friendly” repositories for reams and reams of printed material. One had only to look at the growing attraction – and attractiveness – of online retail, and online recreational publishing, to realise how far behind the typical corporate website was lagging.
Having found that investors were moving to online information, we began watching just how they used the websites and other online sources.
We found the website is often the “first port of call” for information regarding the company, including press reports about the company, ASX announcements and general shifts in stock prices that might implicate the company’s shares. Any of these events could spark a “visit” to the website – or to another website, even a competitor’s – especially if the competitor had a “better website”, such as more up-to-date information, more comprehensive share price listings, or offered easier access.
We found investors were seeking post-presentation information, press releases, speeches; were checking the brief “elevator pitch” for new initiatives; checking the company profile including the executive team, often with a view to keeping an eye on the “depth” of the business; looking at how executive teams were remunerated, and how the company was contributing to the community.
The online investor information “community” has grown from the first few enthusiasts to a significant percentage of all investors. Perhaps most importantly, the proportion of investors who manage their own investments, doing their own “homework” using online information, is not only trending upward, it is showing signs of increasing the rate of growth. From an almost inconceivable beginning, online information users will outnumber the printed information users very soon.
The website is no longer an “option”. It is already the primary investor relations tool for a significant portion of your investors, and that will become more critical every day.
Mary Beth Bauer is the founder and CEO of Value Enhancement Management, a strategy and investor relations advisory firm. VEM talks to hundreds of investors a year and conducts discrete, in-depth interviews to achieve a deep understanding of investor needs, identify changing trends in investor behavior and advise companies on improving relations with their investors.