The Modern Era of Investor Relations
How New Media has Ushered In a Better Experience For Investors
“Modern Era of Investor Relations” infographic presented by: Dajin Resources
The internet’s explosion in popularity is attributed mainly to the invention of the first graphical web browser in 1993. Since then, the way investors have gotten information on companies and financials has changed dramatically.
Let’s take a look at how modern company websites and social media create a better experience for investors today.
How Investors Get Company News Releases
Then: Companies used to issue press releases to get information to shareholders and potential investors through snail mail and thermal fax paper. Companies would also cold call potential investors to let them know the gist of the news.
Now: Information is automatically distributed in real-time when it becomes available. Websites, social media, email blasts, newswires, and third-party websites get the information out seconds within it being public.
How Investors Do Due Diligence
Then: Investors could not seek out information easily. They relied on new tips from their stock broker, or were contacted by companies directly. It was difficult to fact check information, and investors relied heavily on newsletter writers to supply due diligence and tips.
Now: Today, information is so abundant through the internet that verifying its validity is the most important concern for investors. Reputation is key. Investors can get and fact check information from company websites, government securities websites, social media, blogs, analysts, chats, email blasts, phone calls, professional investor services, newsletter writers, and local conferences.
How Investors Check Stock Prices
Then: Investors could check the price in a newspaper or find it scrolling on a stock ticker on TV. For smallcap stocks, they relied on their brokers. In the early internet days, delayed stock quotes could be found.
Now: Investors can get stock quotes in real-time for free or for cheap. These provide the full depth, showing bids and asks in the primary market to give an accurate picture of the stock’s activity.
How Important is it to Provide Investors With What They Need?
Today there are more tools in each company’s communications toolkit than ever before. A Thomson Reuters Extel whitepaper in 2012 found that the Top 10 European companies with Best Shareholder Communications outperformed the market by 28.8% since 2007.
Keys to Modern Media
Here’s how companies can take steps to help ensure the best experience for investors.
Today’s company websites are a step above the websites of even 5-10 years ago. Not every company has adopted these new possibilities – but for those that have, the investor experience is much better.
Anatomy of a modern website:
- Dynamic homepage: Populated by up-to-date content that is always changing
- Different perspectives: Company news is accompanied by different perspectives on the sector and industry
- Up-to-date media: Presentations, maps, fact sheets, photos, infographics, and other rich media are current
- Easy to read and navigate: The website is simple and intuitive, which allows investors to find what they need.
Other considerations to make a website top-notch include: having accessible stock quote on the company, easy email newsletter signup option, objective feel that is not too self-promotional, and real photos of company instead of stock images.
Website quality and accuracy is paramount, as a recent investor survey by SNL IR Services found that 60% of investors visit company websites either daily or weekly. This is why the teams behind modern websites monitor analytics very closely, such as bounce rates, open rates, the reach of posts, and keywords. It’s important to make the website as useful as possible, otherwise it can be detrimental to the company’s success.
Social media has come a long way in the last five years. Today, almost 80% of institutional investors use social media as a regular part of their workflow.
Good social media content allows investors to:
- Get breaking news on stocks they follow
- Gain perspectives on different topics
- Interact with other investors or industry people
- Become thought leaders on topics
To help investors accomplish these goals, its important for companies to curate their content to cover other topics and perspectives outside of their company and sector.
Media websites provide a means for coverage and eyeballs for all stocks, regardless of size.
Strong media from reputable networks can increase awareness of a stock and liquidity. However, like social media, such coverage can be a double-edged sword. If companies are represented unprofessionally by third-party media, it can backfire.
Therefore, it is important companies do their best to ensure that coverage of their stock is reputable, professional, fair, and accurate.
How Much Do Americans Trust the Media?
Media trust among Americans has reached its lowest point since Trump won the 2016 presidential election.
How Much Do Americans Trust the Media?
Media trust among Americans has reached its lowest point in six years.
Gallup began its survey on media trust in 1972, repeating it in 1974 and 1976. After a long period, the public opinion firm restarted the polls in 1997 and has asked Americans about their confidence level in the mass media—newspapers, TV, and radio—almost every year since then.
The above graphic illustrates Gallup’s latest poll results, conducted in September 2023.
Americans’ Trust in Mass Media, 1972-2023
Americans’ confidence in the mass media has sharply declined over the last few decades.
|Trust in the mass media||% Great deal/Fair amount||% Not very much||% None at all|
In 2016, the number of respondents trusting media outlets fell below the tally of those who didn’t trust the media at all. This is the first time that has happened in the poll’s history.
That year was marked by sharp criticism of the media from then-presidential candidate Donald Trump.
In 2017, the use of the term ‘fake news’ rose by 365% on social media, and the term was named the word of the year by dictionary publisher Collins.
The Lack of Faith in Institutions and Social Media
Although there’s no single reason to explain the decline of trust in the traditional media, some studies point to potential drivers.
According to Michael Schudson, a sociologist and historian of the news media and a professor at the Columbia Journalism School, in the 1970s, faith in institutions like the White House or Congress began to decline, consequently impacting confidence in the media.
“That may have been a necessary corrective to a sense of complacency that had been creeping in—among the public and the news media—that allowed perhaps too much trust: we accepted President Eisenhower’s lies about the U-2 spy plane, President Kennedy’s lies about the ‘missile gap,’ President Johnson’s lies about the war in Vietnam, President Nixon’s lies about Watergate,”
Michael Schudson – Columbia Journalism School
More recently, the internet and social media have significantly changed how people consume media. The rise of platforms such as X/Twitter and Facebook have also disrupted the traditional media status quo.
Partisans’ Trust in Mass Media
Historically, Democrats have expressed more confidence in the media than Republicans.
Democrats’ trust, however, has fallen 12 points over the past year to 58%, compared with 11% among Republicans and 29% among independents.
According to Gallup, Republicans’ low confidence in the media has little room to worsen, but Democrat confidence could still deteriorate and bring the overall national reading down further.
The poll also shows that young Democrats have less confidence in the media than older Democrats, while Republicans are less varied in their views by age group.
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