IR and Social Media: A Trend Waiting to Happen?

On September 28 and 29, 2011, Federated Press will host an investor relations symposium in Toronto, bringing together practitioners from a variety of public companies and consulting agencies. I have been asked to speak on financial communications trends.

Not to pre-empt my presentation, but one of the topics I intend to address is social media (“SM”) and its future as an investor communications tool.

With a few notable exceptions, Canadian public companies have remained largely on the sidelines of social SM trends over the past two years when it comes to communicating with the investment community.  I believe this is about to change due to several factors.

  1. Major companies in both the US and Canada (think Dell, Barrick Gold to name two) are blazing the trail and finding good results from SM engagement.
  2. Organizations such as the Canadian Investor Relations Institute (www.ciri.org) is now providing additional education and educational resources on the topic ( the British Columbia chapter of CIRI is hosting a seminar entitled Social Media 2.0 on September 29 2011 to help investor relations officers to learn how to set up and maintain SM);
  3. The legal community is coming to terms with SM and is beginning to provide advice to issuers in its usage (for example, in a bulletin published by Fasken Martineau in December 2010, Caroline E. Clapham offered several helpful tips for those considering SM).
  4. Equity issuers are beginning to recognize that today’s generation of SM users will become tomorrow’s equity market participants.

While there is risk associated with SM (including tipping, insider trading, rumour mongering, breaches of confidentiality), the reality is that these risks existed for public companies long before the advent of electronic information exchange. With proper safeguards (likely including the appointment of official SM communicators on corporate IR/PR teams), I believe SM risk can be managed to a degree acceptable to all public companies.

In short, I believe SM is a trend about to happen.