Where investment delivers mixed performance

The current state of investor relations content online suggests a lack of consensus on how best to use the web – and who for.

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It is a sign that people don’t quite know what they are doing when, in a mature market, there is still huge variation between products. A good example of this on the web is the corporate investor relations section. Surely, after almost 10 years of playing around, a model that works would have been found? Actually, no, it hasn’t.
I have been writing commentaries around the Webranking in the Financial Times’ Digital Business (formerly FT-IT) for the past four years. This is a listing of the top 150 European corporates ranked by several factors, but with a strong bias towards investor information. The studies, by the Swedish consultancy Halvarsson & Halvarsson, are carefully done, first surveying analysts and financial journalists to find out what they want to see, then testing the sites against the findings.

Top scorers and low rankers


Looking at the top of the list (from www.ft.com/digitalbusiness), there is a clear story to tell. Companies that have invested heavily in their sites and have lots of added ‘bells and whistles’ features and functionality score well in the ranking. Further burrowing suggests they are indeed excellent sites. Until recently, the list was dominated by Scandinavians, who are strong on sophisticated stock charts and such like, though now their lead is being eroded by upstarts from Spain (Repsol YPS) and Italy (RAS).
At the other end of the table are sites with neither bells nor whistles. Look at the share chart on Lloyds TSB, which ranks 133, and you will see something profoundly basic. Look at Maersk, five off the bottom slot, and will you find little more than reports, stock exchange announcements and some material on corporate governance.
Does this mean that Lloyds TSB and Maersk (and other laggards such as Danone and BSkyB) are simply behind? Or have they made deliberate decisions not to invest in the way the leaders have?

Three grades of investor site


Having talked to a good few investor relations people, analysts and other types, I think I can group poor scoring companies into three categories.
The first group consists of those who are indeed behind. Look at bottom-ranking Surgutneftegas and you will see a west European site circa 1996. The same is true of the other Russians and some of the south Europeans. We can expect to see them make, and possibly leap, their way up the ranking.
The second group includes Lloyds TSB. It takes an act of will to have a share price chart as basic as it has – there are so many ‘vendors’ out there trying to sell you bell after bell, and whistle after whistle, that if you are a major corporate you have to make a positive effort to resist them. Why might the company have done this? Perhaps because it asked analysts, and discovered they had no interest in stock charts that allowed them to change the Moving Average Period or Relative Strength Index Period (I’m looking at Webranking leader, TNT)? Or, indeed, any other stock chart. Analysts have their own proprietary terminals with far more powerful abilities. Would an individual investor use sophisticated share chart tools? I haven’t seen any evidence either way, but I have my doubts. In other words, LloydsTSB is being rational – why provide something your target audience does not need?
Individual investors are the key to the third group: companies that serve analysts well, but have absolutely no interest in helping Aunt Jane with her 32 shares. I will leave the Webranking and cross the Atlantic, to the land where the individual is supposed to reign. DuPont’s site has an investor section that looks smart and has the data analysts would expect, but has no interest at all in serving private stockholders. A sure indicator of this is the lack of any mention of the stock transfer agent (share registrar in the UK). Contrast DuPont with General Electric (GE), where the Stockholder Services link takes shareholders straight into a GE-branded page that is actually on The Bank of New York site. Here they can sell shares, change address, ask for various certificates – all sorts of handy things.

Why the missing links


I was going to suggest a fourth category consisting of companies (or rather IR directors) who just don’t care about the web – but I think they are likely to be the same as the third lot. Unless you have no individual investors at all, it is difficult to think of a reason why you would not offer them a reasonable service on your website. While you want to bow to every whim of the analyst, your main aim for the individual is to stop him or her from bothering you. There is no better way to do this than providing self-service tools and answers to questions on your website.
So why does DuPont fail to do this? Because its investor relations director does not have any regard for the web, and probably doesn’t understand it. There is a clue to this when you go to the investor section. It appears in a new window, and the web address starts ‘www.corporate-ir.net’. In other words, the entire investor site has been outsourced to an agency, in this case Thomson Financial. I cannot blame Thomson for the poor site (at least, not much) – responsibility, or rather lack of it, lies within DuPont itself.
Will the bells and whistles model triumph or will the minimalist ‘rational’ model win out? I have no idea. One thing I do hope is that investor relations managers take time to understand what the web is all about. Ignorance is one thing, wilful ignorance quite another.
First published on ft.com 13.01.06

First published 18 January, 2006
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