According to a recent survey done by the National Investor Relations Institute (NIRI) and Corbin Perception Group, a staggering 72% of Investor Relations professionals do not use social media as part of their IR-related work. Of those surveyed however, half said they would be re-evaluating their social media usage in the next 12 months.
In the wake of the SEC ruling that allows for social media to be used as a platform for releasing material information, IR professionals have been slow to embrace social media. The survey asked Investor Relations professionals for their top reasons for not using social media in their IR-related work. Their reasons were:
1. Lack of consumer demand = 54%
2. Management does not see the value = 42%
3. Insufficient resources = 34%
4. IRO does not see the value = 33%
5. Inabilitiy to control messaging = 21%
6. Lack of understanding = 15%
7. Company policy = 14%
These reasons relate back to a lack of exposure to, and to a lack of understanding of the value of social media. Management and IROs do not see the value in social media because oftentimes they have not seen the content that exists in social media. This inaction creates a risk management gap for public companies. Chief Executive Jeff Richardson of Online Circle, a digital media agency, states it bluntly:
"It is common knowledge that social media can influence share prices…And apart from early detection of posts that lead to misinformation and the manipulation of markets, social media monitoring and analysis can further provide insights to the market landscape"
Social media has not yet replaced other more traditional forms of market research, but its simplicity, speed, and sheer volume of information are increasing social media’s importance for retail and institutional investors. Companies need to start paying attention.