The potential effect a crisis can have on your stock price

This is our second post on how professional communicators can benefit from sentiment analysis. Last week we looked at public relations and today we’ll dig in to IR.

A key challenge for investor relations teams is gaining insight into the sentiment of the investment community. Fortunately with social media and social networks, understanding how your investors and potential investors are feeling on any given day is now possible.

Consider this. You’re in IR and looking to release your quarterly earnings statement. Prior to online monitoring and analysis tools, you would be more or less putting your release on the wire with a less than comprehensive understanding of what frame of mind your audience was in, let alone how your message will be received. Scary thought when your bottom line is showing.

Online media monitoring gives IR professionals the ability to explore and develop a greater understanding of the general attitudes of their investors, gaining insight into the tone of online and social media coverage.

Using an aggregator with automated sentiment analysis like MediaVantage, IR teams can track financial blogs, investor forums, websites and their investor community on Twitter, giving the department the advantage of identifying (and riding) the sentiment of investors. Automated platforms can significantly assist in filtering out the noise via tonality filters (among others) that investor relations pros can leverage directly on their media coverage dashboard.

Financial blogs, and investor bloggers are often the source of lengthy candid reviews, possibly more representative of the general market as they are often written by active investors. Investor relations practitioners can use this information to get a better handle on the sentiment or attitudes of investors and influencers within the stock trade industry.

As an investor relations professional, how do you use sentiment analysis to be more effective in your role? Please comment!

Next week I’ll look at how Analyst Relations can benefit from sentiment analysis.

In the past, it was the sole responsibility of the corporate communications team to preserve a company’s reputation. However, with the advent of social media, all corporate departments – including investor relations – need to play a role in monitoring and upholding corporate reputation.

For IR, that role is about being aware of where investors are gathering information and helping to shape that. The IR team has a unique perspective on what topics could be of interest or detriment to the organization, and also has its own set of stakeholders and influences to watch.

Incorporating social media into your investor relations program is easier than many think and it needn’t be fraught with worry. The benefits of engaging in social media can be immediate and scalable to the time and effort you can devote to it.

Our latest white paper, titled Investor Relations: Taking on Social Media, is filled with tips to help your IR team develop a social media strategy that works for your company.

Download the white paper now.

Long the domain of the public relations team, reputation management and social media monitoring is becoming an essential part of the investor relations officer’s daily routine. With reputation capital making up to an estimated 63% of the average company’s market value, it’s safe to say your bottom line is showing online.

Check out CNW President and CEO Carolyn McGill-Davidson’s presentation from the 2010 CIRI Investor Relations Conference: Your Bottom Line is Showing – Why Reputation Management Matters to Investor Relations.

What’s the difference between PR and IR?

Public relations pros gravitate toward Scrabble while investor relations officers treasure a nice solo game of Sudoku.

I’ll admit to being oriented a tad more to the word game Jumble and other left brain activities. For that reason, it was no surprise that I fell in love with an ad campaign pitched a few years back by Caryn Englander.

The premise was simple: One word would be presented – in a very large font — in print and Web ads. Within that word, we’d draw a box around an embedded word. For people who write for a living, the campaign was a clever conversation starter. (As an added benefit, we didn’t have to spend money on stock photos!)

Long retired, that campaign is still as relevant as ever in a world where thoughts need to be synthesized to no more than 140 characters to achieve social media penetration.

As I was thinking about the problems that dna13 solves for communications professionals, I realized that the verb Listening was only the most obvious advantage a brand achieves when subscribing to a platform that monitors TV, print, online and social media.

The embedded word – and benefit — that jumped out was List. Brands that install the tools to catch chatter about their brands, people and issues also gain insight into those who are initiating and fueling important conversations. These influencers form the basis of the Web 2.0 equivalent of a VIP list.

Lists are at the epicenter of business. Sales reps guard their Rolodexes in the same way publicists don’t let anyone near their iPhone address books. But the lines of who qualifies to be on a list are blurrier more than ever before. Bloggers and Twitter users may have as much impact on a brand’s reputation as the reporter of yesteryear. Likewise, the decision maker behind a brand’s largest deal ever might be that “fan” who just wrote on your Facebook wall.

Gone are the days when static target lists are created and used to spam analysts, media and business prospects. The word “target” itself has fallen out of favor (the word in the word there is “tar”). No one wants to feel like they are in a hunter’s sights.

The solution to making your prospective customers and fans feel less stalked and more appreciated is listening.

In coming posts, I look forward to becoming part of the discussion about how best to structure and manage corporate communications — and even sales and customer services functions — around the ongoing flow of real-time conversations affecting every brands’ reputation.  Please join me.

Photo credit: http://www.flickr.com/photos/clearlyambiguous/ / CC BY 2.0

Investor Relations is a complex department with multiple goals, but what it really boils down to are three interrelated objectives that work together in balance; communications, building relationships, and using feedback to guide management’s decisions.

1. Communications – IR works hard to achieve an effective, two-way flow of information between its public company and the investment community. Within this, there are two key needs that must be met:

1. To meet the investment community’s demands by delivering information in a timely and accurate manner, and
2. Condition investors to being open to hearing and accepting of new information from the company on future strategic decisions.

Doing a good job on the first point helps achieve the second – companies benefit from a program of sustained communications, which builds market confidence in the company’s fundamental strengths.

2. Building Relationships - Building mutually beneficial relationships with the Street is incredibly valuable to IR. The key for success in investor relations is in the second word – relations. In IR, relationships must be built on accessibility, timeliness, knowledge, reliability, and most importantly, credibility.

Credibility is a precious and fragile asset. Its loss can cause long-term, possibly irreparable damage to investor perceptions of a company and its leaders. Anything that affects the brand and reputation of a company and its management can (and will) affect the marketability and valuation of the company’s securities.

Unquestionably, the best way to gain credibility within IR is consistency. Be consistent in the management’s track record in delivering on commitments – walking the talk. Be consistent in your communications efforts with the Street – who are you talking to, what are you saying, and how? Lack of consistency in either operational performance or IR communications processes nearly always translates into loss of credibility, with the ensuing damage to corporate brand, management and corporate reputation, and market value.

3. Guide management decisions – As a final objective, investor relations works to help guide management decisions based on the feedback it receives from the Street. How does the Street view the company, and its strategies and initiatives to create and sustain shareholder value? Working with the first two objectives, the insight that IR has into the company’s brand and reputation is invaluable in making future strategic decisions.

Nowhere is competition more intense today than in the global securities investment market – particularly for equities, where institutional and retail investors have thousands of public companies to choose from in making investment decisions. Public companies must compete for these investment dollars. They must stand out in a crowded market – they must raise their brand and reputation above the competitive noise.

Harnessing intelligence gathered through social media and sharing it across the organization is no longer a figment of our imagination. In “Strategy and Social Media: Everything’s Social (Now)” CRM magazine Associate Editor Lauren McKay notes that the future of CRM integration with social media is inevitable, if organizations are going to be successful in an era where “peer-to-peer conversations about products and services outweigh marketing efforts.”

Companies worried about the state of their reputation are definitely getting smarter. The majority have some sort of media monitoring, or ‘Listening Platform‘ (a term authored by the Customer Experience Group at Forrester Research) in place to monitor for conversations about their brand.

Unfortunately, the actual management of this data remains one of the top challenges for marketing and PR professionals charged with this responsibility (note however, that reputation management and conversation ‘listening’ is no longer just limited to these departments). Monitoring social and traditional media now has relevancy for many departments, including:

• Marketing – Market research, competitor and industry (issue) analysis, crisis management and campaign analysis
• Customer service – Customer insight, feedback and service requests
• Sales – Prospecting
• Investor relations – Market sentiment, crisis and issue management
• Internal communications – Aligned messaging

So, further to Lauren’s point, organizations have the opportunity to turn this intelligence into a significant competitive advantage. This is where the necessity for a socialized CRM application has become quite apparent.

We were recently fortunate to have briefed Suresh Vittal, Forrester analyst and author of “The Forrester Wave: Listening Platforms Q1 2009” on dna13′s capabilities. One of the biggest challenges we discussed was this need for the management of monitoring data. Companies are desperate for regulation and further understanding of how to more effectively manage and share the tweets, pokes, rates and votes on their brand.

CRM vendors are certainly not new. But what is new is the business application that helps an organization manage its end-to-end workflow for these types of communications. According to Jeff Zabin, analyst with Aberdeen Group, “companies must lay the groundwork with brand monitoring“.

The next step is to activate that intelligence across the enterprise with a business application. Think CRM for PR.

Imagine the future?

• Sales teams having real-time insight into conversations their prospects are having about competitive offerings;
• IR singing the same messages as Corp Comms and (gasp) legal teams on an emerging corporate issue – and having the ability to respond within less than 12 hours;
• Marketing having insight into market sentiment across all emerging channels and effectively funneling their message through those best suited to their business.

The future looks bright; and judging from the premise of McKay’s article – we’re staring straight at the light.

Business today is increasingly global and intensely competitive. A large factor in this is today’s new, more dynamic and aggressive communications environment that continues to grow and change under this social media avalanche. All media are now global, and information travels around the world instantaneously. Situations change with remarkable speed, and if not monitored closely, can quickly become out of control.

Due to the speed of media and communications technologies, an organization’s shareholders have never before been better informed. With instant access to thousands of opinions, facts and figures, they are becoming increasingly demanding in their expectations of public companies and their leaders. To quote List from MediaShop Public Relations ““Keeping investors informed, even when the news is bad, is vital to maintaining trust.”

Abraham Lincoln once said, “Public sentiment is everything. With public sentiment, nothing can fail; without it, nothing can succeed.” Consider how true this is today. Web 2.0 technologies allow opinions to be expressed freely, and distributed and replicated instantly. The voice of public sentiment is louder than ever, and cannot be ignored.

Success in public relations and investor relations can no longer be measured simply by “column inches,” or the number of sell-side analyst “buy” recommendations – if it ever could. Public relations and investor relations teams are often doing their best work when they keep a company’s name out of the media or securities analyst’s research note.

It was Mark Twain who once said, “Never pick a fight with a man who buys his ink by the barrel.” This advice – updated for today’s media environment – is more applicable than ever:

“Never pick a fight with a person who has no need of ink.”

Online technologies, like the dna13 PR software application, help to level the playing field in media, and cannot be overlooked when the opinion of the public and key stakeholders are worth so much.

The rise of global equity markets, the demand for corporate transparency, strong corporate governance, accountability, and full and fair disclosure, in combination with the constant pressure to enhance shareholder value, the increase in shareholder activism, and a more rigorous regulatory involvement, all result in much greater pressures being placed on investor relations departments.

Communications is a demanding environment for investor relations, but if managed properly, can be the key to great success.

I spent this past Wednesday at the PR News Measurement Conference in Washington DC. The event was held at the National Press Club, an historical building where many US Presidents have frequented and discussed politics with journalists and stakeholders over the years.

What was discussed in great deal was both social media (surprise, surprise) and to my great pleasure alignment. Finally – a common theme is starting to emerge. One that touches on aligning PR with other organizational stakeholders. Today, new media is forcing today’s corporations to re-think the way they manage PR and Corporate Affairs.

So how do we align the organization to be more effective and accountable? We do this by integrating PR and Corporate affairs with the extended organization. Give those outside PR the ability to monitor traditional and social media – in particular what they care about! For example, provide HR with the ability to monitor employee blogs and general HR related media. In addition to media, provide HR with the ability to view and collaborate (with PR) on the issues and projects that affect them. Give the extended organization the ability to listen and engage with media on issues that they are PASSIONATE about.

So who else in the organizations should “get aligned”? IR and Finance, Legal and Lines of Business (Think Brand Managers) to name a few. The botton line here is that PR can’t monitor and manage the corporate brand anymore — at least not alone. PR needs to share the load across departments, disciplines and geographies. Also, the old days of managing a brand from within corporate walls are over. Your brand and reputation now “lives” in the hands of millions of bloggers, Twitter, Facebook and YouTube users – and of course whatever new media application comes out next.

How do you align the organization? Do your research – the world has changed; invest in the time to find out how you can be a catalyst for change in your organization. Your brand is out their being talked about right now – think long (but not too long) and hard about how you’re going to address this challenge.

Let me begin by introducing myself. My name is John Lawlor, and after having recently retired as Vice President, Investor Relations at Cognos Inc, now IBM. I am proud to now be the new VP Corporate Communications here at dna13.

So, after a 30-year career in Investor Relations and Corporate Communications, what brings me to dna13?

Well, it was a recent “aha!” moment that I had, upon first seeing the dna13 product in action. It was then that I realized the potential for reputation management software solutions within the field of Investor Relations. My exact reaction was “this is exactly what I’ve been looking for in my career as a communications professional for the past 30 years!”

Collaborative teamwork contributes to enhanced performance at all times, and it is particularly important in issue and crisis management situations, when communications professionals are working under severe stress and time pressures. This is exactly what IR departments are looking for: a way to align team members and messaging, to protect shareholder value.

Investor Relations departments need a way to manage crisis before it begins. How many times have you or your CEO taken that telephone call from a reporter, analyst, or shareholder, surprising you with sensitive and difficult questions about a lurking issue or crisis? It is time for Investor Relations departments to adopt the appropriate technologies to protect themselves from attack; a type of “anti-ambush” protection if you will.

IR professionals innately understand the value of a company’s global brand and reputation. Your yardstick is market capitalization and the Street’s measurement is breathtakingly immediate. IR professionals have experienced first-hand the challenge and stress of managing sensitive issues to prevent them from boiling over into a crisis, imperiling your company’s brand, reputation, and market value.

I am excited for the future here at dna13, and look forward to seeing reputation management software in action, to help align and engage Investor Relations departments with the rest of the corporate communications team.

Cari Tuna of the Wall Street Journal addressed some intriguing points in her Wall Street Journal article April 26, “Corporate Blogs and ‘Tweets’ Must Keep SEC in Mind”, where she discusses recent cases where the SEC has required corporate thought leaders temper their social media outreach with regulatory disclaimers.

Clearly, the most attractive quality to a corporate blog or Twitter account is the human voice behind it. As Tuna notes: “Blogs and tweets can run afoul of Securities and Exchange Commission regulations on corporate communications. But sanitizing such posts risks hurting credibility with online audiences.”

Social media is immediate and responsive – that’s what makes it an effective messaging tool. The best social media teams will work using the same messaging documents, but cannot afford to lose time waiting for content approval. Inevitably, this requires a greater trust in social media facilitators and corporate thought leaders.

CEO’s and other industry leaders who use social media to create authentic relationships with consumers or followers should follow the same rules that they would with any microphone or bullhorn:

• Is this point interesting to other people?
• Is this a comment I wouldn’t want my CFO/the Wall Street Journal/my mother to overhear?
• Are there any bridges I could be burning with this comment? And, unfortunately…
• Could I get sued for what I say here today?

Truly, the philosophies, predictions, and insights of eBay‘s official blogger Richard Brewer-Hay are more interesting than Ebay’s quarterly earnings anyway. Meeting him onsite yesterday at the Inbound Marketing Summit was an added bonus. Social media is a place for conversations, and it is possible to take the risk and remove content approval from the social media space without simultaneously asking for a lawsuit or a call from the SEC.