Every quarter, investor relations professionals spend hours preparing press releases and conference call scripts to provide updates on their company’s recent milestones and financial status. Sometimes even that is usually not enough to tell the whole story, with most public companies also conducting a Q&A session during their quarterly calls. With all of that work going into fine tuning your messages and providing a comprehensive vision, how can you possibly be expected to condense that story into a 140 character tweet?
The short answer is, you can’t. As an upcoming SXSW panel (140 Characters, Zero Context) will discuss, the character limitations on Twitter can make providing context to your story difficult, to say the least. But since you can’t just ignore a channel that is rapidly being adopted by the media and investors alike, you need to find a way to work within those limitations to make sure that more than just your stock price gets shared.
In starting this conversation, the first question I typically get from CFOs is, do investors really care about social media? The answer to that has been shown to be unequivocally yes. You could easily look at the number of followers of major financial media (Jim Cramer from MadMoney has nearly 1 million followers) for an answer but recently there have also been some studies showing how investors use social media and the impact that it can have on their behavior and opinions.
Greenwich Associates conducted a survey of 256 investors from the US, Europe and Asia and 80 percent say they use social media as part of their workflow. Nearly a third of these investors stated the information obtained through social media directly influences investment decisions. The other interesting tidbit from this study is that while investors use Twitter to track breaking news and company updates, LinkedIn is the most popular platform for work-related purposes.
This may lead to the question then of why even bother with Twitter, why not just move to other platforms that are less restrictive. There are several reasons why Twitter should not be ignored. First, it generates a significant volume of conversation. So far this year, Gilead ($GILD) has been mentioned in nearly 50,000 tweets. Even smaller companies can see a lot of traction on Twitter. In a nod to SXSW, let’s look at an Austin-based company – Luminex ($LMNX), a small-cap company that develops and markets biological tests has been mentioned on Twitter over 1,100 times so far this year.
The second reason not to ignore Twitter is that even with the character restrictions, Twitter is one of the best ways to engage directly with your audiences. You can convey a sense to trust and transparency and truly build a relationship with people in 140 characters. This is supported by a study from the University of Illinois that showed that when a tweeting CEO shared negative news from their personal handle, 46 percent of investors perceived the poor financial results to be a one-time event, compared to those who learned of the information from a CEO letter on the company website (eight percent), from the IR portal on the company website (nine percent) or through an IR or corporate twitter handle (12 percent). Having the CEO engage in what felt like a personal level on Twitter was shown to actually help buoy the company’s stock price during difficult times.
This leads us to the foundational reason why having a comprehensive social media strategy is so important: the channels are used differently. Even when you cannot tell the full story, Twitter can be an extremely effective channel to provide quick updates and teasers to where to find more information, to guide people to blogs, webcasts or LinkedIn posts where you do have the real estate to provide context beyond 140 characters. Think of Twitter as the guy on the airport tarmac directing planes where to go. You are guiding your audience to another platform where they can read about your whole story rather than just see the most recent update on your stock price. But Twitter is also an excellent opportunity to humanize your news, to build trust with your investors. By showing that your management team is invested in building the best company possible, you are providing that intangible context that doesn’t always shine through in a press release or investor presentation. That context can be just as valuable as anything beyond 140 characters.