Paul Blalock has his morning reading: the Wall Street Journal and the New York Times, of course. But, just as importantly, the senior vice president of IR at New York-based Sirius Satellite Radio goes online. ‘I log on to a couple of blogs in the morning – and I learn something almost every time,’ Blalock says. ‘Blogs can summarize in one spot what we can’t do on our own web site.’ He checks some blogs several times a day.
Blogs are no longer just this season’s investor chat room. They can offer in-depth coverage of a company or industry unmatched by virtually any other source. Take Satellite Standard Group – one of Blalock’s must-reads – for example. Founder Spencer Osborne is in construction management and is also an early investor in satellite radio. ‘When I start to invest in a company, I try to find out what I can,’ Osborne says. ‘I kept doing research and met a lot of people who were interested or invested in the sector. I decided to start a site about it and see how it goes.’
It’s gone well. A colleague regularly posts breaking news while Osborne writes his analysis pieces in the evenings. The blog gets about 2,000 unique users a day, including many retail investors but also readers at Merrill Lynch, Bank of America and Deutsche Bank. ‘Once or twice a week I get an e-mail from someone on the institutional investor or hedge fund side,’ Osborne says, adding that his blog ‘has a tunnel vision toward satellite radio’ that even an equity analyst couldn’t match.
Just more chat
Many IROs don’t read blogs. ‘They recall chat rooms and how much [fruitless] attention was paid to them,’ says Howard Zar, executive VP and head of financial communications at PR firm Porter Novelli. ‘With blogs, they feel, Been there, done that, don’t need to read these.’
Nevertheless, many blogs are serious watering holes for politicians, journalists, consumers, investors and competitors, all of whom can affect the company and influence stock price. Some firms do have people watching blogs, but ‘generally it’s the people in marketing or political relations,’ Zar says.
He speculates that, since Sarbanes-Oxley, more IROs come from a finance background and pay less attention to the PR side of financial news. Yet corporate reputation strongly influences stock price performance. ‘Money managers … are keenly aware that if a company is out there closely guarding its corporate reputation and making sure many threats can be prevented, they can sleep more easily,’ he says.
Even when companies monitor blogs, they rarely participate, according to Dominic Jones, president of IRWebReport.com, which reviews online IR practices. ‘There’s a sense that until blogs are influential, they’re not worth paying attention to,’ he says. ‘But by being hands-off with blogs, I think IROs are missing an opportunity to get a feel for what investors are thinking and how they make their decisions.’
Correcting mistakes
There are sometimes mistakes in blogs, which can be quick and easy to correct. ‘You could go in, leave a comment that the information is wrong, and provide a link to a place on your web site,’ Jones says. ‘That would indicate to readers that the company is listening.’ In case of a more serious mistake, Jones suggests forgoing a comment and instead asking the blogger to post a correction. ‘There’s a great difference between a comment and a post in terms of visibility and profile,’ he explains
However, IROs should be wary how they respond. ‘Comments made on a blog can have as much or more sway as comments made at an investor conference or industry event,’ says Noel Ryan, director of the IR practice at Lambert Edwards & Associates. Even if an IR department doesn’t directly respond to a blog entry, beware of employees commenting. ‘If they aren’t sure as to the materiality of the discussion on a blog, our advice is to refrain from joining in,’ Ryan says. ‘I think it’s important for firms to have an electronic communications policy.’ And that policy has to be in force whether employees are at work or at home.
So how do you identify blogs that need attention? There are ways to sort the heavy hitters from the welterweights (see Who’s who, above). Typically the more respected the blog, the more other places on the web link to it. And although audience size doesn’t tell all, it can help give a picture. Even so, not all IROs will end up checking a blog several times a day. But those who ignore the new medium might find themselves – and their companies – falling behind.
