The Changing Environment >>

As securities regulators have become more and more comfortable with electronic disclosure, there has been an increasing trend towards posting key information online.

In fact, the recent reporting reform has been largely driven by the capabilities of the internet and the emergence of continuous disclosure environments. Technology today of course allows instant access to information as soon as it is published. Reports that used to announce the financial results for a company twice a year are now largely pre-empted by media releases uploaded to websites and published online, concurrently with SX announcements.

Couple this fundamental shift with the emergence of blogs, RSS feeds, webcasts, video sharing, social media, mobile web and much more, and it’s little surprise to find investors are  bombarded by streams of information from a full range of sources pretty much in real-time. The landscape for how companies disclose and how investors receive that information has shifted dramatically.

While the cost savings of these actions are obvious, it is vital that companies change their view of their investors to better suit the new requirements. Our experience shows that what is required now is for companies to think of their investors as a form of customer. That’s because, in buying shares, investors are actually looking for the levels and styles of information that they expect as consumers. In other words, they are just as likely to be attracted by emotional factors as they are by rational arguments and numbers. So they not only require different information, but that information needs to be presented to them in different ways than in the past.

That’s why companies are increasingly looking at the communications they send those investors as a form of marketing, designed to engage shareholders and provide them with information that reinforces the benefits of, and prospects for, the investment they have made.

Your Company's Right to be Understood >>

With the global market for investment opportunities continuing to increase, it’s vital that public companies can message their real value and potential quickly, effectively and in a way that differentiates them from other stocks, in their sector and beyond.

Strong annual reports have always been about more than the results. In addition to housing full financials, great reports help investors make decisions by providing information and insights on credibility, vision, talent resources etc.

That information is still decision critical – but the opt-in laws mean it is very much in danger of being lost if companies simply default to putting their numbers online.

That’s why we believe there is a real need, now more than ever, for companies to actively invest in and manage the reputation they seek to grow in the market and the manner in which they speak to investors through their communications. And that requires a carefully balanced mix of offline and online communications. IR Landscape helps you achieve that careful and highly effective mix.

Pull and Push >>

There are essentially two ways of communicating with investors: “pull” strategies, where you motivate people to seek something out; and “push” strategies, where you have control of the communication and you send it out to your audience.

The web is an example of a pull strategy, because people need to be induced to find something online. Printed material on the other hand is a push strategy - the company proactively communicates with the entire constituency, and takes more control over how they want to be understood.

IR Landscape shows you how to  use a combination of both pull and push channels to involve, inform and empower investors.

What’s Happening Offline? >>

Offline, we’re seeing the “technical” annual report stripped right back to bare compliance bones - essentially the financial section with a Directors’ Report and Corporate Governance, produced in black and white and printed in minimal quantities. This is the new iteration of the Annual Report, and a printed version of this still has to be available for those who request it in hard copy form.

However, while this Report fulfils compliance requirements, it also creates a gap in investor communications, because there is still a story that needs to be told to ensure the business is best understood by investors. The need to bridge that gap has led to the creation of a new communications’ channel, the Annual Review.

Early indications are that these Reviews are 16 – 28 pages, and are much less formal in their style than the Report. They tell the back story, outline brief performance and future strategy and outlook, profile some resource talent, and give large-type/highly graphic versions of top line financials

We’re producing such documents for Air New Zealand, Commonwealth Bank of Australia and Lion Nathan already. And because they are not annual reports, they can be legally sent to all shareholders (unless those shareholders specifically ask to be removed from the mailing list).

To fill out that understanding, market-leading companies are using  the cost savings made possible by the new legislation, to communicate with their shareholders more often, mailing them the review twice a year, and sometimes even having a quarterly newsletter sent in between the Annual and Interim Reviews.

The reason is simple. As investor research from one of our clients indicates, while many investors don’t see value in the full traditional Annual Report, they do want to ‘feel as though they matter’ to the company, and want their relationship to be ‘acknowledged’ on a regular basis, as it ‘legitimises, values, and respects’ their role. These findings clearly show the influence of consumer attitudes and values. Regular communications enable public companies to achieve those objectives.

Meanwhile, Online …

The temptation is to believe that all communications can be achieved online. However, because the internet is a “pull” strategy, relying solely on the web means shareholders must make a conscious effort to access information about the company. The questions are, will they do so, and can you afford that communication risk?

Online is ideal for sourcing information, data, downloading financials etc. It’s also perfect for frequent updates and topicality. However, online has inherent disadvantages from an investor communications’ point of view. It’s not a great medium for telling the stories that make the investment a compelling proposition, for building investor loyalty, for making an investor feel they have a stake in the company, or for totally reassuring about the value, present and projected, of their investment.

It requires much more effort for users to respond to, for example, proxy mailings online. That also means the opportunities for distraction and procrastination are higher than with the traditional model. Evidence from the US shows that only 4 percent of retail shareholders voted in 69 company meetings in 2007. Compare this with 17 percent the previous year when the same companies could not use default electronic delivery. The number of retail shares voting was also down  - by a whopping 50 percent - to 13.3 percent, from 28.0 percent the previous year (source: www.thecorporatecounsel.net/blog/archive/001628.html)

Lack of engagement at these levels from large segments of the shareholder population could cost companies the loyalty of key allies and supporters who have voted in line with management recommendations historically.

Also, while online may have become mainstream as a reporting channel, a lot of web-based information delivery needs to be completely reconsidered and upgraded to align fully with the new reporting regime.

That’s because most company’s IR sites simply do not deliver what shareholders are looking for, and don’t appear to have been strategically planned as part of a total investor communications package. With the legislation change now turning the spotlight directly onto the quality of a company’s IR web delivery, companies that don’t lift their game will be found wanting by investors and judged accordingly.

“investor branding” >>

Particularly when markets are volatile, keeping investor faith is even more important than normal. Companies with large registries need to talk directly and clearly to their shareholders in ways that make sense to them.

Achieving that demands hybrid skills: the clarity of consumer communication; coupled with full understanding of regulatory and corporate requirements. And it is precisely that mix of skills across the full range of channels, that we refer to as Investor Branding.