Time for IR to invest in social media

While the financial community has yet to place its trust in social media, that doesn't mean it should neglect these outlets in their IR efforts.

While the financial community has yet to place its trust in social media, that doesn't mean it should neglect these outlets in their IR efforts.

This week, Brunswick Group released a study that found a mere 4% of institutional investors and sell-side analysts see blogs and social networking sites as their top influence in investment decisions and recommendations, and 67% of them think social media is an unreliable. Instead, these investors are turning to company-issued materials as their main sources of data to inform investments.

A similar survey most likely would have resulted if the poll had taken place last year in the pharmaceutical industry. Another heavily regulated sector, pharma was initially slow to adopt social media. However, in the past year it has embraced the digital discipline, making it difficult to find one without a Twitter feed or corporate blog.

As the pharma industry navigates its way, regulators are becoming involved. The FDA announced this week that it will hold a hearing in November on the use of social media and the Web. But because pharma has been out there, experimenting, it will be well-versed in what its goals and needs are for social media and able to intelligently present its case, along with precedent. Similarly, as regulators overhaul the financial services industry, social media is sure to eventually find its way to the agenda.

The fact that today's investors overwhelmingly rely on the companies themselves for information offers a tremendous opportunity to build upon that trust while introducing social media channels. As growing numbers of the general public, and advertising, swarm to social networking sites and mobile apps, it will become imperative for corporations to monitor and engage here as well.

Investors clearly realize this. Nearly 60% of the investors and analysts in the Brunswick survey said social media will become increasingly important in their decisions, while about 50% say they investigate an issue after seeing it on a blog. Clearly these outlets, though not the leading channels of influence, are impacting opinion nonetheless.

Those in the IR community need to dip their toes into social media before someone else does it for them.

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