Why investment in investors is not optional

The provision of an investors section is a constant of corporate web sites but there is less unanimity about how it should be used and for what, David Bowen says.

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The FT Bowen Craggs Index of corporate web effectiveness looks at giant corporations’ websites from the viewpoint of all sorts of users. But the corporations themselves do not necessarily do the same. Not all 75 in the Index use their sites to talk to customers or jobseekers; some do not bother with social responsibility; and several offer a cursory service for journalists.
But every one of them makes at least some attempt to provide information for investors.
This is not simply because they are all quoted companies. It is because soon after the web was invented, investor relations professionals realised it offered a simple way to placate increasingly determined regulators. Websites allowed announcements to be published simultaneously all around the world. Previously a nightmare; now so simple.
Even today, when you talk to investor relations people or web managers, they will have horror tales of documents that haven’t quite gone out on time. ‘I could go to prison if I didn’t publish on time,’ one distraught manager told me.

More or less provided for

The question now is how far companies have moved beyond that stage. Look at most Chinese sites in the Index and the answer is, not much. They are where most US and European groups were 15 years ago. They will develop, as fellow BRIC bloc companies from Brazil and Russia already have.
But look at Apple’s investor relations section – if you can find it – and you will find little there beyond earnings announcements and SEC filings. Apple makes it plain that this is a policy matter – it does not produce ‘glossy annual reports’, it proudly notes. Nor does it offer much more to help the enquiring analyst or investor.
Is it wrong? Apple’s refusenik attitude shows that there is little consensus on how the web should be used to serve investors. Is it failing to look after a constituency that could well turn against it if its rocket to the heavens ever misfires? Or is it showing an admirable sense of economy and refusal to follow the crowd? Conversely, are top investor scorers Shell, Eni and Sanofi-Aventis wasting resources? Or are they providing a service that institutions, analysts and private shareholders increasingly rely on?

Service developments

The FT Index methodology does not say ‘Thou shalt’ do this or that. But we do use a simple technique that has served marketing well and deserves a try-out in other areas: segmenting ‘customers’, seeing what each segment wants and how well its is served. For investor relations, we focus around analysts who know the company, analysts who are researching the company and individual shareholders.
So, what did we find from our latest study?
There are no radical changes from year to year. Investors and investor relations folk are by nature conservative – even over the five years the Index has been running, the great majority of changes have been of detail.
The most interesting developments have been in delivery devices. Mobile websites such as Siemens’ have been popular – they are not exclusively for investors, but give quick access to PDF documents and other data. In the past few months, Nestlé and Shell have launched apps, for iPhone, iPod and Android, with a heavy emphasis on the investor. It will be interesting to see how the mobile and app versions are used – Shell, for example, will have both so will be able to compare.
There have been subtle developments in social media. The investor relations community is cautious – in part because of the regulatory environment – but 16 of the 75 companies in the Index now have Twitter feeds aimed at least in part at investors.
YouTube is also playing a bigger part, often in the tandem with the website. Shell posts CFO ‘chats’ on YouTube, then embeds them on its site. Sanofi Aventis TV is a substantial web channel that has just migrated to YouTube.

Surprising audience preferences

On the site itself, we look at the three audience segments – and there are some surprises. Most investor relations professionals would surely say their core audience is the analysts that follow the company. This is broadly reflected in the scores, with only 16 companies scraping half marks or fewer. However, this group includes some unexpected names: Bank of America, Apple, E.ON, Procter & Gamble, Philip Morris International.
How can this be, especially as analysts say that corporate sites are one of their major information sources? I suspect the reason lies in the individuals who run the investor teams – they just don’t see the web as that important. In which case, I would say, they are not listening to their customers.
We know from talking to analysts that the corporate site is the first place they turn to for information they cannot easily find on their proprietary terminals: historical data, webcasts, anything that helps them understand the company better. Interesting that companies based away from financial centres often put most effort into keeping ‘their’ analysts happy: Vale of Brazil and Rosneft of Russia are examples.
The Russians and Brazilians also do a good job of helping analysts who do not know the company. Vale, Petrobras and Gazprom are high scorers here. The last two are also in energy, which is the other signifier: Shell and BP are right at the top. Why? Maybe because energy is a data-heavy industry, and the web is brilliant at handling data. Why does ExxonMobil not bother; or Apple; or Goldman Sachs? Don’t know. Maybe they don’t feel they need to explain themselves to the financial community.
Finally, small shareholders – the Cinderella group that is often all but ignored by investor relations teams. Unless they are French that is. Look at Sanofi-Aventis, GDF Suez and Total for models. But maybe the companies that really don’t seem to care – such as Vale, Telefonica, Toyota, General Electric, Google – should think again. Thanks to the internet and social media – with their insidious ability to stir up trouble – small shareholders can no longer be ignored 364 days of the year.
So, is Apple admirably economical or wrong? I’d go with the second. If you take a ‘user-centred’ view – something Apple is brilliant at with its products – it is difficult to see reason for ignoring investors online; all three groups of them, and maybe more.

First published 01 June, 2011
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