Investor relations dos and don'ts

Scott Payton answers IR managers' questions about their online communications.

My colleague Dan Drury went to Florida last month to give a presentation at the National Investor Relations Institute’s annual conference. The topic was best practice in online investor communications.

Delegates – IR managers from across the Americas and beyond – asked Dan a lot of good questions, so we thought it would be useful to repeat some here, along with our answers:

‘When it comes to building an IR section, is it wise to hire a vendor offering fancy website services, or are you better off doing it in house?’

Whether you decide to build your IR section in house or via an agency, what’s most important is to keep the management of it tightly under your control. This includes making all the big decisions on how the section is structured; how it looks; and what information and tools it should contain.

Moreover, many investors and analysts are likely to want to venture beyond the IR section to other parts of your corporate site – the About Us and News sections, for example. So it’s important that your IR section is built and managed as a coherent and integral part of your entire online corporate presence – not on its own.

Though it may be hard to avoid if your budget is small, outsourcing your entire online IR presence to a third party without tightly tailoring it to be consistent with the rest of your corporate web estate risks causing problems and frustrations for your IR team, and for the investors and analysts who use it.

‘I’m told that HTML annual reports are very popular among private investors. Is this true?’

Our surveys and interviews strongly suggest that most private investors prefer PDF annual reports to HTML versions. Many private investors tend to read these PDFs on screen rather than printing them out, so adding hyperlinks in the contents page and elsewhere can make PDF reports quicker and easier to use.

HTML reports can make sense if they provide information and tools above and beyond what’s possible to provide in a PDF. This could include video interviews with the CEO, or interactive charting tools. But many companies have concluded that the costs involved in producing this kind of whizzy HTML annual report outweigh the benefits. Indeed, interactive charting tools and video interviews are likely to have a longer shelf life, and reach a wider audience, if they’re put in the IR section itself rather than in an online annual report.

‘Is it a good idea to include financial results call transcripts on the website?’

Yes. Analysts have told us that they appreciate it when companies’ results archives include transcripts of results presentations or calls – because they can quickly scan through them to find what they need without the bother of listening to or watching the webcast.

‘What do you think about offering interactive historical financial data on the website? Is it necessary when this information can be obtained elsewhere?’

Providing interactive data tables and tools in your corporate website’s IR section is indeed likely to be appreciated by sophisticated private investors, who have the expertise to interrogate and interpret such information but lack the access to professional data sources (such as Bloomberg) used by professional investment analysts. Most private investors are unlikely to have the know-how to benefit from such tools, however. So they’re a ‘nice to have’ rather than a ‘must have’ feature.

 ‘We’re planning to redesign our IR website. The main company site will not change – but it looks dated. How critical is consistency of look and feel between our new IR site and the existing company site if content is consistent?’

First, having a separate IR website rather than an integrated IR section in the main corporate site is not a good idea. It makes journeys between IR material and other types of corporate information in which investors and analysts may be interested intrinsically more fragmented than they could be. Indeed, Bowen Craggs’ extensive website visitor survey data shows that 26% of investors and analysts visiting a corporate site do so to find out about the company, rather than to get financial information (see more on these survey findings in the report mentioned at the end of this article). In light of this, consistency of look, feel and, crucially, navigation as well as content between IR pages and the rest of the corporate web presence is indeed very important.

That said, some companies have built separate IR sites for internal political reasons that are not easily overcome. In these cases, it is particularly important to maintain prominent cross links between the IR site and investor-relevant information on the main site (such as executive biographies and non-financial performance data), so investors and analysts can find and reach everything they need as easily as possible.

‘What is the benefit of embedding investor presentations in SlideShare format compared to merely uploading the slides to the website?’

SlideShare does for slide decks what YouTube does for video. Embedding SlideShare versions of your presentations in your IR section allows investors and analysts to flick through the slide deck directly on the web page, rather than having to download a PDF first. Convenient.

‘Is it worth creating a mobile and tablet investor relations app?’

No. Many companies that have tried this soon discovered that the cost and time involved in maintaining the app far outweighed the benefits the app brings to investors and analysts – especially in cases where the IR section of the website is mobile-friendly anyway.

‘How long do you expect an IR section to last before it needs to be rebuilt?’

The fundamental ingredients of an effective IR section have changed little over the past decade – an aggregated table of results materials; well-signposted IR contact information; jargon-free information for private investors; rich background material for researching analysts; and so on.

But companies have felt the need to rebuild their sites for other, legitimate reasons. For example, the desire to make IR pages, and the rest of a corporate site, mobile friendly has been a big driver for site rebuilds in recent years (much to the delight of web design agencies). Wanting to make a site look visually contemporary, and able to handle embedded video and other multimedia material, has been another motivator.

With all this in mind, an IR section will last for as long as it continues to do a good job of meeting the needs of the fund managers, analysts and private investors you want to communicate with, on the devices they want to use – and continues to allow you transmit the messages about your company that you want to convey to these audiences.

Perhaps the most important thing of all is not how often you rebuild your IR section, but how carefully you maintain what you’ve already got.

Click here to visit the download page for our freshly revised and updated report, ‘Best practice in online investor relations: Lessons from the top companies in the world’.

 - Scott Payton