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Real IR: IR in the virtual world
25/09/2007
By Mick James
September 2007
Getting virtual meetings to match the quality of physical ones can be difficult. Webcasts, podcasts and online Q&As are just some of the tools available.
Investor relations made its first tentative steps into the “virtual” world in the late 1990s, when major companies such as BP began to use webcasts for important announcements. Since then the technology has steadily improved, to the extent that the online audience is increasingly the main target for IR.
“For large-cap companies the tipping point has already been reached,” says Stephen Watson, managing director at digital communications and online IR specialist CTN Communications. “The question is how to afford the online part of the audience the same courtesy with interaction and questions as those physically present.”
BP’s results webcasts are now followed by a Q&A in which executives field questions from the floor and over the phone. These remain on the site as a permanent record, backed by more traditional media.
“We put the transcripts up but we tend not to transcribe the Q&A,” says BP IR manager Nick Wayth. “There you need to hear what’s said in context, not just see it in black and white. The annual report is also very accessible via the web – it’s not just a 400-page PDF.”
Up to three-quarters of BP’s IR communications is now web-only, but this hasn’t taken hands-on IR out of the picture.
“At more difficult and changeable times, the role of IR is crucial,” says Wayth. “The first point is to have people at the end of the telephone to respond proactively.”
One thing BP has learnt is not to put the IR email address on the website. “It was too accessible – we used to get ten job applications a day,” he says. Instead, the IR site uses forms for enquiries, which makes routing easier. While open to new technologies, such as RSS feeds, BP remains cautious about developments such as blogs and chat rooms.
“We used to do a trading update at the end of the quarter but that became a more volatile event than the results, because any bad news got into the trading update,” says Wayth. “People were relieved when we dropped it because they were having to come to BP eight times a year instead of four – that experience is linked to our reluctance to adopt all these new things.”
Small-cap benefits
For smaller cap companies, the danger of a headlong rush to adopt new technologies is also a matter of costeffectiveness. “The back end of doing a webcast has become a bit of a commodity, the question is how do you leverage that?” says Nancy Christman, vice-president of marketing at Precision IR, which runs online investor forums.
Precision IR brings together a number of companies in the same sector and promotes the event to investors. “One of the great things about participating in the forum where a competitor might be speaking is that you get to present your story next,” says Christman.
The forums are based on slide presentations and pre-recorded audio. So far, Precision IR has ruled out video, because of the greater convenience of audio.
“People can pre-record it from their desk, or even on the way to the airport,” says Christman. The forums remain online for up to a year, and he estimates that the audience doubles in the week and a half after the initial webcast. Q&As are handled by email. This sort of approach dramatically lowers the barrier to entry for smaller cap firms and enables them to get online with ease.
Internal communication
At the other end of the spectrum, webcasts are beginning to take on some of the values and techniques of the entertainment industry. Technology firm Cisco, for example, has its own TV studio, from which the global IR team produces a weekly videocast to update IROs around the world on competitor intelligence and corporate messaging. The company has also developed an impressive new generation of videoconferencing, known as TelePresence. This has become the centrepiece of its internal and external IR work.
“Videoconferencing used to be very difficult,” says Andreas Goldau, Cisco’s head of international investor relations. “You needed a technical person to be present, there was always a time-delay and it was always crashing.”
As part of TelePresence, Cisco deploys huge plasma screens around a table to create the illusion that everyone is sitting in the same room. Little touches such as stereo speakers add to the effect.
It’s not cheap, but Goldau reckons it can quickly pay for itself just in terms of executive travel. “I used to travel quite a lot,” he says. “Just using it for internal meetings cuts down travel.”
Because Cisco has installed the suite in all its major offices – and many executives have their own, cut-down versions, it’s easy to invite analysts to come into a local office to attend global briefings, or even to “meet” lower level management.
“We had a request from one company that had some specific technical questions about our video technology,” says Goldau. “We invited the analyst to our London office and they were able to talk to a colleague in Atlanta.”
Serving your audience
“One of the areas of great interest is to use web technology to provide access to the next level of the management team,” says CTN’s Watson. “It’s harder and harder to get analysts to come on investor trips, but you can create a virtual trip, or sweat an existing asset if you’ve already gone to the effort of organising a local event.”
However, it’s important that IR teams don’t get carried away by new technology and overlook the basics. “People are getting it wrong in terms of content,” says Ian Anderson, corporate director of Intershare, an online IR consultancy. “The mistakes I see are basic stuff: people put the strategy presentation on the website but forget to put up a transcript, or they forget to break the presentation into multiple elements.”
The problem, says Anderson, is that in the wider corporate context IR is still seen as a low-level activity. “There isn’t an investment approach to IR,” he says, which leads to a lack of creativity and missed opportunities in IR on the web. “IR teams complain that the phone is ringing every five minutes: they could have a Q&A on the web, but when we ask them if they have written down the issues that people are raising, they say they haven’t got time.” As a result, online investments can be misdirected. Anderson cites the example of one company that spent a small fortune on a webcast that was watched by only eight people.
“They’d have been better off taking the investors out to lunch,” he says. “You need to work out what’s going to work for you. If you just say ‘we’re thinking of building an IR website’, with no business logic, you’ll get a standard off-the-shelf solution.”
The use of web technology should take into account the needs of the audience, not just the possibilities of the medium, allowing analysts and journalists to quickly access data without having to sit through a web or podcast. There are also wider issues of accessibility. Over-reliance on the web can enhance shareholder democracy, but it can also disenfranchise. Anderson believes that at some stage a charity may take out a test case against a FTSE 100 company.
“The blind and the elderly are investors too,” says Anderson. “Some company sites are fully compliant with the annual report and accounts in HTML, but the rest use an image-based presentation or a PDF, which is theoretically breaking the guidelines on accessibility. It’s still a bit woolly – am I breaking the guidelines if I do the whole presentation as a webcast?”
Use of the web is transforming IR, while inspiring a renewed focus on the basic disciplines of investor relations. “The fact that there is more information on the internet is not an excuse for the leadership to duck their engagement,” says Watson. “The one thing that will not change is the need for the CEO and leadership team to be proactive and able communicators who can articulate their vision and engage people in real dialogue.”
Webcasting: The role of the corporate website
More than two-thirds of 33 fund managers interviewed as part of The Role of the Corporate Website survey highly valued webcasts because of their convenience and the ability to see “the whites of the eyes”. The survey, by Investis and Makinson Cowell, also found that broadband penetration was an issue and firewall restrictions at a few institutions prevented some fund managers from viewing webcasts.
Some comments:
“Webcasts allow me to go in and view when I choose to, rather than having to be at a meeting at 9am on a set day when you may have five other sets of results that are more important than that company. It just allows me that flexibility.”
“Our internal security firewalls do not allow us to see webcasts,so I am unable to listen to any. It is annoying. A good evolution, which is more a US practice and not so much seen in Europe, is to have a transcript of the conference call. That would be great. You would avoid misunderstandings or taking the information down incorrectly.”
“I think webcasts have become increasingly important and, for me, it is not enough to just see the presentation, I like to be able to replay the presentation itself and see the tone, the attitude – everything.”
“When you get to know a company, you are just doing it in a vacuum looking at the statements. You do not know really how to characterise them, or what the next conference call is going to sound like, so it is very useful to have something to go back to.”
“I use online investor day presentations; interviews with senior management could also be helpful.”
“A historic webcast which is posted without the Q&A session, is quite frustrating. Presentations are well rehearsed so it is more about listening to their reaction to hear how eloquent they are in answering questions.”
“I might look at a video if I thought it would give me some information I couldn’t get elsewhere. Maybe an in-depth look at a division or a new product during a broadcast of an investor day.”
“I think it would be great if companies would produce MP3 files of presentations and conference calls that I could download and save to my computer.”
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.
Mick James is a freelance business journalist.
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