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IR Web Report: What's ahead for online IR in 2002?
07/01/2002
We asked four people whose business it is to know all about online IR to dust off their crystal balls and provide us with their predictions for what will happen in online investor relations in the year ahead. They had some interesting answers.
View from Europe: Three key trends will dominate online IR in
Europe in 2002. By Justin Walters, CEO, Investis Ltd
1. Large companies across Europe will work hard to reach the
standards currently being set in Germany. Investis' recent research
has shown that German companies lead Europe in the quality of their
online IR. In 2002 we expect large companies in the UK, France,
Italy and elsewhere to reach the levels currently achieved in
Germany.
2. European IROs will spend 2002 focused on getting the best possible value for the money they spend. In the current economic environment, this is the number one business imperative for the IRO, just as it is for the CEO.
Increasingly, IROs realise that:
- Using online IR will help them save money elsewhere. For
example, from the annual report budget and the roadshow
budget.
- Using an online IR specialist offers huge savings as an
alternative to a web agency.
- Many online IR specialists can offer customized solutions, and there is no need to accept inferior templated websites.
3. IROs will get more confident in dealing with online technology. They will no longer tolerate techno-speak, and will not be impressed by claims about new technologies. IROs will start to judge online IR suppliers in terms of customer service and a proven track record. In short, the role of online IR in Europe will become fully established.
North American view: Five factors that drive the industry. By
Ron Gruner, President, Shareholder.com
Our industry is driven by five primary factors: regulatory,
technological, economic, industry and geo-political.
Regulatory issues, namely Regulation FD, were the primary driving factors in 2001. Relative to other factors, regulatory factors will decline in importance in 2002. However, they may return to the forefront if new real-time disclosure rules proposed by new SEC Chairman Harvey Pitt become law. Although unlikely to happen in 2002, these proposed regulations would be even more sweeping than Regulation FD in their impact on investor relations.
Technology in particular audio webcasting, was also a major driver in 2001. Its impact relative to other factors will also decline in 2002. The two most important new technologies emerging next year will be XML-based industry standards and video webcasting allowing Internet-based "virtual meetings" to replace travel in many cases.
Economic factors will drive many decisions in 2002. Some economists are forecasting the "steepest and deepest" recession since World War II. Hopefully this is overly pessimistic, but budgets are being reviewed more closely than they have been in a decade.
Geo-political factors for the first time in a generation will also be key factors for many companies in 2002. Are our computers secure? What happens if our facility goes down? How do we plan for disaster? These are all questions many companies are considering much more carefully.
Industry issues will also be important in 2002 as consolidation progresses, smaller firms continue to be acquired and new players like Thomson Financial enter markets pioneered by start-ups in the last few years.
Investor relations is a marketing function that becomes more important in difficult times. Smart companies will continue to assure they communicate regularly and proactively with the investment community.
View from the UK: Four influences and a four-letter word. By
Mark Hill, Managing Director, IR Group Ltd
You will be pleased to know I resisted the urge to write a poem
summarizing my findings. First of all, some caveats. Our view of
the future for online IR is mainly driven by the events taking
place in the UK and mainland-Europe, but with a careful eye on the
SEC. Europe is where our, mainly large, listed company clients are
competing for capital, corporate reputation and brand
awareness.
So, what will be the drivers of change in 2002?
1. Regulatory events will focus IRO attention on legal issues, website content and services for shareholders:
- The SEC and / or the FSA will prosecute an
international company for misleading investors on its
website;
- Electronic communications for shareholders, recently made legal in the UK, will be seen as a huge opportunity to save money and build relationships with shareholders.
2. Online communication will begin to migrate from its current passive, historical reporting role to a more aggressive, educational medium capable of influencing the way people think and act.
- Online annual reports will become deeper, more
compelling and true online communications tools rather than
facsimiles of the printed document. See 1(b) above.
- IROs will use their websites to really deliver the investment case and educate their users about why they should buy the stock.
3. UK capital flows, at the margin, will move towards index funds, bonds and companies that report to meet new social responsibility investment criteria.
- The Association of British Insurers recently
released guidelines on Social Responsibility Investment (SRI) and
its members now expect companies to report on the quality of their
relationships with customers, communities, the environment, and so
on. SRI is now really on the investor's radar.
- Equity markets will begin to trend upwards again in 2002 and as capital gets attracted to index funds FRS17 (a new UK accounting regulation) will drive pensions into bonds. IRO's will use online IR as the channel to communicate their investment case to active and international investors and shareholders.
4. Technology will drive change.
- IROs will discover the mobile user and have to
deliver online content and services.
- Interactive TV will announce its presence (in the
front room). Another new medium is here.
- A four-letter word will appear at a PC near you. XBRL reporting for duty.
View from the USA: Video, Analyst Days, Chairman Pitt and
Intangible Assets. By Rob Adler, President and Director,
CCBN
Driven by new technologies and the introduction of Regulation FD,
public companies are rethinking their communication strategies and
using the Internet more than ever to deliver information to
investors.
It is a trend that will surely continue.
NIRI's August 2001 survey indicated 92% of companies conducting conference calls webcast them for full access to the media and interested investors, and webcasted guidance calls and mid-quarter updates continue to increase in number.
In 2002, we can expect the volume of available information to grow even further given SEC Chairman Pitt's recent remarks on moving to more immediate disclosure and using the Internet to deliver more information to investors.
Further fueling the drive for online communications is the recent emphasis on the value of intangible assets and their impact upon a company's market valuation. In Measures that Matter, a recent study on the importance of non-financial corporate information, Ernst & Young reported that financial analysts rely heavily on non-financial factors:
"When non-financial factors were taken into account, earnings forecasts were more accurate, thus reducing the risk to investors."
Communicating the non-financial, intangible facts about a company and its management is where effective investor relations can add significant value. It is also the area where the line between IR and other corporate communications functions like PR and HR will continue to blur.
With technology making getting personal with management easier, a company's Web site will continue to be one of the most valuable tools for building relationships with investors and for effectively communicating subjective facts about corporate intellectual capital, culture and values.
In the coming year, we can expect to see more companies conducting virtual analysts days on their sites, adding slide shows to their conference call webcasts, as well as increasing the interactivity of their communications with newer technologies like video webcasting and interactive financial and annual reports.
With continuous virtual disclosure on the horizon, and non-financial reporting becoming more important, now is the time for IR professionals to embrace new technology, and take full advantage of the Web's ability to reach millions of investors with the click of a mouse.
© IR Web Report 2002.
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