Financial Communications and Social Media: No Love at First Sight

                              (Photo credit: Social Media Today)

                     By Antoine Denry, Director, MSL Hong Kong

Communications experts nowadays increasingly rely on social networks to create buzz around a campaign and build brand awareness in the long run. The fastest-growing micro-blogging website, Twitter, is a key lever to that development: it has around 140 million active users and generates 340 million tweets per day. To engage this vast audience which constitutes an important client base and has a considerable influence on public opinion, companies were quick to open an account, in an effort to increase consumer reach and raise their corporate profile. If social media have since become an indispensable element to any successful PR strategy, there are still doubts about their usefulness in financial communications.

Between financial communications and social media, love at first sight has not yet occurred.

At first, companies invested largely in social media with an aim to better promote consumer products. In a second step, they used them as a platform for corporate brand building. In that sense, financial communication is lagging behind, for it faces the challenge of reconciling two worlds seemingly at odds with one another: regulated information and unregulated information. In addition, financial communications usually involve sensitive issues that only the top management is in a position to address; its discreet and control-seeking aspect seems to be out of sync with social media’s immediate and open access nature.

However, more and more companies already use social networks as part of their financial information system.

A large majority of journalists now investigate via Facebook, Twitter or even Wikipedia. At the same time, a majority of institutional investors also read blogs to get informed about a company, especially in Asia. More and more of these investors give credence to the information found this way and most of them think social media will play an increasingly important role in their decision-making about investment choices. As a result, the trend of companies integrating social networks into their financial communications should accelerate in the coming years. A current example would be the rising development of  on-line financial communities, such as StockTwits or Seeking Alpha, which attract hundreds of thousands of followers and millions of visitors Information sharing on Slideshare, live tweeting during financial events, acceding to multimedia press releases and podcasts of investor conferences via iTunes are some of the communication tricks commonly used by companies.

Combining the advantages of mass media and relationship-based media, social networks indeed open up new prospects for financial communications.

Mass media has the ability to reach a vast audience from different backgrounds. Relationship-based media probe into consumers’ specific habits and carve out a tailor-made marketing plan with maximum efficiency. Integrating the strengths of both these forms of media, social media not only allows instant and ongoing communications between the company and the stakeholders, but also encourages possible conversations. To enter the age of conversation where corporate and financial communications can deploy their full potential, social media would have to overcome some of the old myths including a leaning to control everything, they would also have to respect current rules on financial information, which apply to social media as well as other forms of media.