Institutional investors globally remain skeptical but recognize growing importance of social media.
TORONTO and MONTREAL – A majority of institutional investors around the world said social media will grow in importance as an investor relations tool, a survey reveals.
According to data compiled by NATIONAL Public Relations and the AMO network of financial communications agencies, 56% of institutional investors surveyed said that they consider social media to be “not yet significant but growing in importance” as a professional tool.
Over a third (37%) said that social media – including investment forums and blogs – were a welcome innovation making news dissemination more direct and rapid. And 33% also said that they consider such sites to be a useful “heads up”, especially during exceptional times such as takeover bids or proxy fights.
Investment forums (39% said frequently or very frequently), followed by LinkedIn (34%) and investment and financial services blogs (32%) are the most visited sources of information for professional purposes. Only 22% said they consulted Twitter frequently or very frequently for professional purposes, compared with 10% for Facebook.
A clear majority of the investors surveyed (76%) said they considered the main newswires to still be their main source of investor information, consistently ranking the newswires as more reliable than other news sources such as newspapers, radio & TV or social media. Eighty-seven per cent said the newswires were always or usually reliable, compared with just 17% for social media sites.
But even if they do not consult the sites often or find them reliable, only a small number of the investors dismissed social media outright, with just 17% describing it as irrelevant to their work.
The new survey, which covered 105 institutional investors in 12 countries managing a total US$3.83 trillion, was carried out by the AMO network to help investor relations executives at listed companies determine how to adapt their IR strategies to the digital age.
“Social media need not be intimidating, excessively time consuming or a risk of violating securities rules. It should be viewed as an extension of an IR program, which already responds to inquiries and engages in discussions with its investors,” said Peter Block, practice lead of NATIONAL’s Financial Communications group in Toronto.
Social media can be particularly beneficial for small to mid-sized companies which traditionally have more difficulty getting the attention of analysts and mainstream media. A recent University of Michigan and Stanford University study found that dissemination of news via Twitter was associated with lower bid-ask spreads and enhanced liquidity.
“We know many IR professionals in Canada are already using a wide range of social media tools to reach investors. Those that are not should see the AMO results as a call to action,” said Block.