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Real IR: Where next for IR websites?
25/09/2007
By Scott Payton
September 2007
Websites are key to any company’s IR offering. The information made available on them can even affect investment decisions.
The web arrived as a communications tool very quickly. But corporate websites have been evolving deceptively slowly. Now, however, the internet is at the centre of every large company’s communications strategy – and new website applications are making it easier to attract, inform and retain investors than ever before.
Al Loehnis, a founding director of IR website consultancy Investis, sums up the short history of online investor relations like this:
2000-2002: many companies still had to be persuaded to take online IR seriously.
2002-2005: most companies recognised the importance of online IR, and began to improve their websites accordingly, offering comprehensive databases of past financial reports and announcements.
2005-present: most large companies have competent IR websites. The best IR sites are run by companies that recognise that the internet has become a primary source of information for many investors – not just a repository for archived IR material. These cutting edge sites offer up-to-date material specifically designed for online consumption, rather than electronic duplicates of printed material.
“People are realising that the impression an IR website
leaves on visitors can have a profound impact on their investment
decisions,” Loehnis says. Indeed, according to The Role of
the Corporate Website in the Investment Process, a recent survey by
Investis and IR consultancy Makinson Cowell, nearly two-thirds of
US, UK and continental European fund managers believe that the
quality of a corporate website influences their attitude towards a
company as an investment (see box page 7). “Nowadays, people
think of the
website as a reflection of a company’s attitude towards
investors and as an expression of its brand values and the level of
transparency with which it treats its communications,”
Loehnis adds.
Now that the corporate website is used as a crucial window into a company, online IR material should no longer be confined to a narrow “silo”. “There has been a convergence across public relations, corporate social responsibility and investor relations communications,” says Loehnis. “Information that is relevant to investors can be found all over a website.”
David Bowen is co-creator of the FT Bowen Craggs Index of corporate website effectiveness (www.bowencraggs.com/ftindex). He agrees that the lines between the IR section and the rest of the website are blurring, but adds that most companies still have a long way to go in terms of presenting online IR information in a way that is relevant and easy to find for users.
“At the moment, you tend to get a mass of mixed up information,” he says. “Some of it might be suitable for private investors, some of it might be suitable for analysts, but there is no real attempt to signpost it properly.”
Some French companies, he adds, such as PSA Peugeot Citroën (www.psa-peugeotcitroen.com), are exceptions to this, offering dedicated sites for private investors and analysts. “These different sites often have the same material in them but packaged in different ways.”
So how will IR content on websites evolve? One of the most advanced IR sites is run by investment bank UBS. “UBS has given its online visitors the ability to take data and manipulate it however they like,” says Bowen. Visitors can, for example, create their own quarterly report, specifying which elements they want included and which they want left out. As more sophisticated online data standards, such as XBRL, develop (see page 20), this kind of personalisation is likely to become more widespread on IR sites.
Print to online
But will the web ever replace printed IR material? UK telecommunications group BT has been a pioneer in this area, offering incentives for investors who opt to receive information electronically. This makes financial and environmental sense, says Bowen – particularly for companies that have thousands of private investors to keep up-to-date.
As more IR information migrates from print to online, the structure and format of corporate reporting is likely to change, says Loehnis. “In the three- to five-year term, I think companies will do annual reporting quite differently, because the web affords for a quite different type of communication than paper,” he says. “You are already seeing a bit of that – for example, the chairman delivering his letter to shareholders via online video, which means investors don’t have to scroll down the web page to read it.”
In the longer term, predicts Loehnis, companies may begin to communicate other IR information, such as their past year’s performance, in audio-visual rather than text form (see our article on the future of online video on page 29 for more on this technology). “The web is a great medium for ‘showing’ rather than ‘telling’,” he says.
However, some argue that the regulatory environment is holding
back the
development of imaginative, integrated new online IR material. The
Institute of Chartered Secretaries and Administrators, for example,
recommends that companies keep their online annual report separate
from other online content, to minimise the risk of users confusing
audited and unaudited information. For example, the institute
suggests that online annual reports should not contain hyperlinks
to anywhere else on the corporate website.
The future
But what of new online technologies, such as blogging, podcasting and RSS? Most experts agree that they are having an evolutionary rather than a transformative impact on IR. “They’re merely giving investors new ways of receiving information,” says Dominic Jones, founder of Toronto-based online IR consultancy IR Web Report.
Jones has some specific advice for IR teams looking to use RSS
– personalisable news feeds that investors can subscribe to
– don’t force investors to register for them.
Obligatory registration for RSS feeds “is a recipe for
ensuring that few if any people
will use them”, he says.
Meanwhile, Bowen and Loehnis argue that podcasting – the provision of audio or video files as automatically updated downloads – is a useful addition to the online IR tool kit. “Podcasting seems to me like a no-brainer. It doesn’t cost very much to make a live event available as a download on your website, so why wouldn’t you?,” says Loehnis.
“I could certainly see a busy analyst listening to the podcast of a conference call while he was on his exercise bike or on the train home,” adds Bowen.
However, blogs – in essence, interactive online diaries
– will take longer to make a mark on most companies’
online IR communications. “You can’t fake it,”
says Loehnis. “You’ve either got a senior
executive who’s comfortable with blogging, or you
haven’t.” He highlights Sun Microsystems CEO Jonathan
Schwartz – a long-time and prolific blogger.
“He’s been using his blog as a platform to agitate for
change in US disclosure rules, which is very interesting,”
says Loehnis. As the next generation of internet-savvy
executives come through, blogging may become a more widespread tool
for communicating with investors.
Blogs or no blogs, the website’s role as a primary medium
for IR information can only grow. With this in mind, Jones
has a final, crucial piece of advice for IR teams: “I
think every IR department now needs a web
disclosure/communication expert on the team who knows what is going
on in the technology world and can help the company take
a
advantage of these tools.”
Survey Findings: The role of the corporate website
Influence on investment decisions: nearly two-thirds of 33 fund managers interviewed said that a company’s website can influence their investment decisions.
Some comments:
“The best run companies have the best websites. It is the pervasive culture of a firm.”
“A good, helpful website makes it easier for me to do my job. It also indicates that these people are serious about providing information. It is not going to make or break an investment, but it taints your view of the company.”
Modelling: investors appreciate any additional guidance and statistical information that is provided with the financials, as well as downloadable data.
Some comments:
“I would add a button that takes you to company guidance on earnings, margins, capital expenditure and how they expect the tax rate to evolve.”
“It would be good if I could download figures into an Excel spreadsheet because then you could use their own data.”
Archiving: let your audience decide what is relevant.
Some comments:
“Like all fund managers, we always say ‘more is good’, then at least we can filter it.”
“Some companies divide things up into City releases, PR releases, other sorts of releases, and you have to go to different parts of the website to find out what each is. A central database is probably the most important thing – I need to go in, I need to know the newsflow for this company over the past six months from top to bottom on a daily basis. I can ignore the ones I don’t want.”
Context: it is good to provide information about the company’s operations and markets, and industry context.
Some comments:
“Having a world map and being able to quickly understand what the company makes and where its markets are is useful.”
“It would be useful to have some collection of market data and reports that would help me understand the context in which these companies operate.”
Source: The Role of the Corporate Website, based on a survey of 33 fund managers and analysts from around the globe by Investis and Makinson Cowell.
Scott Payton is former editor of Real IR and a freelance
writer and editor.
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