What do investors really want from online communications?

Corporate investor relations teams must adapt to the actual online needs of fund managers, analysts and private investors, not what the company thinks they want, Scott Payton says.

The investor relations section is the Great Rift Valley of corporate websites. The evolution of the latter began when, two decades ago, investor relations teams were among the first in their companies to grasp the huge potential of the web to disseminate results information instantly, cheaply and globally. It at a stroke solved the regulatory problem of how to distribute announcements simultaneously and everywhere.

The way that companies communicate online has, of course, evolved a great deal since the mid-1990s. But has online investor relations adapted in response to what fund managers, analysts and private investors really want – or what IR departments and senior management think they want? Recent research by Bowen Craggs and others provides some interesting answers.

Annual reports: which format is best?

Twenty years of web evolution has led to a particularly high diversity in breeds of annual report. Options available to IR teams now include:

  • Static PDFs – a simple electronic copy of the printed version.

  • ‘Enhanced’ PDFs – featuring hyperlinked chapter headings and contents pages, for example.

  • ‘Page turners’ – an online format that mimics printed reports when users move between pages.

  • Hybrid reports – a mixture of HTML (often used for presenting narrative material) and PDF or Excel (usually for displaying financial results tables and other data).

  • Full HTML versions – either integrated into the main corporate site or housed in a separate microsite.

  • Tablet apps – for iPads and/or Android devices.

The popularity of each of these formats among IR teams has ebbed and flowed over the years – but what do institutional investors, analysts and individual shareholders actually prefer?

Our own research indicates that fund managers and analysts have a strong preference for PDF over online (HTML) versions of annual reports. As one analyst put it, ‘I can’t see any reason to look at the online version [apart from] when I can’t find the PDF.’

A poll of buy-side and sell-side representatives at a Nestlé investor day earlier this year pointed to the same conclusion: PDF was a significantly more popular format for IR documents than HTML among both groups.

Web managers at other companies have discovered the same thing by measuring the popularity of their own annual reporting output. ‘We have produced an HTML site but this year – given the low levels of unique users and page views – we will only have a landing page with a PDF and signposts to other content elsewhere on the site,’ one told us. ‘The number of views to the online versions has been rather small compared to the cost and time it takes to make. Also, nobody is complaining – as long as they can find the PDF online,’ said another.

It is possible that if the HTML version provides real benefits over print or PDF – for example with downloads or interactive tools – financial professionals may see the benefit. But they are a conservative bunch: they would have to be educated more vigorously than they are at the moment.

What about private investors – a crucial audience for many companies’ annual reports? Perhaps surprisingly, PDF again trumps HTML, according to a Bowen Craggs survey. In order of preference, our survey sample ranked PDF first, followed by print, HTML and app version respectively.

Importantly, we also found that private investors overwhelmingly prefer to read PDF annual reports online rather than print them. Perhaps because of this, they favour PDF reports that include hyperlinks – on contents pages, for example – because it makes them easier to browse.

For examples of how such links can work well in practice, see the bookmarked chapters and hyperlinked Financial Report contents page in Siemens’ 2013 Annual Report PDF, and the main contents page in Novo Nordisk’s 2013 Annual Report PDF.  

Other lessons from our research

  • Don’t bother with an annual report app: few investors or analysts want one. The same is true for other types of IR and news apps. A number of companies who were early adopters of IR apps are now switching them off.

  • Avoid ‘page turner’ PDFs: they tend to be less easy to use than a ‘standard’ PDF featuring hyperlinks and bookmarks, and while they seem slick on tablets, they are often close to unreadable on desktop or laptop screens.

  • Put video interviews, magazine-style articles about company performance and other narrative material often found in online versions of annual reports in the corporate website itself – where it is likely to have higher visibility, a longer shelf-life and wider exposure to multiple audience groups. A good example is L’Oréal, which has plenty of lively material (mainly aimed at individual shareholders), but it is on the site, not in the annual report. (See this week’s BC Tip)

  • If you do create an HTML version of your annual report:

o   Integrate it with your main website: none of our survey respondents preferred separate annual report microsites.

o   Make it easy for users to compare data with the previous year: this was top of our survey respondents’ list of additional features that they would value in an online report.

Beyond the report

If investors and analysts prefer their reports in PDF rather than HTML, what do they want from the IR section itself?

Better archive information and web conferences/presentations top priority lists of both the buy-side and sell-side in Europe and the US, according to surveys conducted by IR Magazine over the last 12 months. More and/or clearer information about upcoming IR events is their next priority.

This chimes with the fact that a key role of a corporate site’s IR section is to provide investment professionals with material that they can’t get quickly and easily from their Bloomberg terminals or elsewhere.

The top performers for serving investors in the latest Financial Times Bowen Craggs Index of Online Effectiveness give some good examples how buy-side and sell-side priorities get be met:

  • Barclays’ new site has exceptionally well integrated webcasts. Users can listen to earnings calls and view synchronised slides within the main site, without being transferred to a third party site – a rare and welcome feature. Registration is not required; another plus point.

  • Citigroup’s site has a rich, deep and easy to navigate archive of result materials – presented in a simple aggregated table.

  • Nestlé’s IR section has a well-presented IR events calendar, which allows users to add relevant details to their digital calendar in one click.

Like all companies that serve investors and analysts well online, these firms succeed because they understand that while web technology continues to evolve rapidly, their audiences’ core needs remain largely unchanged.

First published 12 November, 2014
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