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Online communication failure

November 22, 2010 Leave a comment

One of the biggest mergers of this year, closed on October 1st: United and Continental airlines. Since they’d announced the merge here at the company we have heard about the process but until yesterday I heard about the communication failure. One of my closest friends at the company was in charge of building the new Investor Relation (IR) site that would integrate both companies. Yesterday she was telling me that her experience with the PR firm that handles Continental’s communications was not pleasant at all and this would impacted her future decisions about traveling again on either of these airlines. Consequently, they didn’t just lost one customer but also a few more that were involved with this project. Also, they could lose a few more as word of mouth spreads out.

Two weeks before the formal closing of the merge my friend got the project and start working with United on the HTML templates but a week later she was informed that now Continental’s PR firm would handle everything.  This meant that the whole project would need to be rebuilt from scratch but surprisely the firm didn’t have a template or any content ready. My friend made several attempts at reaching out to the PR firm with questions but they didn’t respond. On September 28 she got a new HTML template and started developing the IR site but on September 29 (2 days before the launch) she received a new template. When I heard all about this story I was shocked that a PR firm that is handling such a huge merge decides to launch a website without having the minimum required preparations and most importantly having a total lack of communication. They didn’t even know the process for building or integrating two websites was and it seems that didn’t know how to treat, respond and give instructions to people. I was told that the PR firm was screaming and yelling all the time. Probably this firm was under a lot of pression but it looks like they forgot how important it was having ready an online communication tool such as an IR site when all the eyes would be looking at the company.

Obviously, the launching didn’t go as smoothly as it should have because of the last minute fixes that the site needed and in this case the mess was worse as the IR site was already live and getting traffic and the investors and institutional community were already noticing the chaos. Therefore, from my perspective during this important financial move the e-communication strategy and planning didn’t work well. If this happened with the IR site I can’t picture how the process was for the integration of their corporate websites.

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Two options for public companies: pay to distribute press releases or pay for an investor relations website

October 12, 2010 Leave a comment

I want to share another side of what public companies are facing with the new web disclosure guidance that the U.S. Securities and Exchange Commission (SEC) issued in 2008. With this announcement, finally companies won a battle with the SEC to allow them to recognize their websites as main point or disclosure.  Most of these companies (the ones that are not part of the S&P 500) do not have the cutting edge technology and connections to publish their press releases, not just to their own websites but also to other channels simultaneously. Posting a press release to a company’s website is a very straight forward process that even small companies could accomplish but the challenge emerges when they want  the same release published with news bureaus, media and financial sites (Yahoo Finance, Google Finance, etc) at the same time.

For companies that have this obstacle a service solution has been offered by big corporations such as Thomson Reuters and NASDAQ OMX Group, Inc.  These two companies have developed tools where companies can self-publish simultaneously their press releases to their own websites as well as to different channels that were unreachable before without a wire providers intervention.

Both Thomson Reuters and NASDAQ offer different products but the end goal is the same: help clients to use their own websites as a primary point of disclosure. But how does this work? If a company wants to fully use their website as main point of disclosure Thomson Reuters or NASDAQ should manage their investor relations sites (IR) and obviously this has a cost.

Thomson Reuters offers to its clients a product where they can utilizing an online intuitive publishing tool that allows them to create and upload releases at any time. Once they are ready they can simultaneously distribute their regulatory releases directly to their own IR website, as well as exchanges, required disclosure points, online applications , financial and media outlets. The tool creates a secure workflow process for handling material information and allows the company to control the timing of the distribution, eliminating the need to submit the release to a third party hours before it’s issued. It also provides the peace of mind, knowing that when they click ‘send’ the release will hit all required disclosure channels at the same time.

Thomson’s Reuters offering also integrates multimedia content and social media sharing to increase viral nature and visibility of companies’ messages. In addition, they offer real-time analytics that measure the impact of releases across institutional investment, monitor the sentiment in traditional and social media communities as well as identifies the most influential social media analysts in the company’s industry.

NASDAQ offers a service called “do-it-yourself” (DIY), I am not too familiar with their offering because it has not been widely advertised but basically they want to provide its IR website clients the option of distributing press releases themselves with a flat-rate pricing regardless of word count. Like Thomson Reuters tool, DIY works through a platform where user can publish press release to social media, online media outlets, traditional media, and regulatory portals.

Now the decision for companies is whether or not stay with the old model where they need wire providers to reach audiences, adding the expensive budget this implicates because wires charge per word so the simple act of issuing a release could cost over $1,000. The other option is paying to Thomson Reuters or NASDAQ for an IR website and be able to start self-publishing releases without additional cost.

From my perspective, for companies it would be much cheaper for them to pay for a website than pay for a single press release. This demonstrates an important point about the money saved using the website as primary point of disclosure. In average companies spend over $20,000 a year to distribute press releases and a basic IR website could cost around $10,000 so the money used for press releases dissemination could be reinvested back into the IR departments to grow investor relations outreach, attend more conferences, upgrade investor communications, have additional webcasts, etc.

Now we have to wait to see what other offerings appear in the market place and what companies will do: pay for a traditional wire service or pay for an investor relation website that includes the rights and tools for self-publishing press releases.

Categories: Uncategorized

Websites Finally are Recognized as Primary Point of Disclosure for Public Trade Companies

October 12, 2010 Leave a comment

Did you know that the investor relations websites were only recognized as main point or disclosure after 2008? That’s right, the U.S. Securities and Exchange Commission (SEC), the government regulator for publicly traded companies, released a guidance on August 7, 2008 informing corporations that they could use their websites as main distribution channel (click here to see press release). One of their studies showed that approximately 80% of retail investors now have access to the internet in their homes and accordingly to Thomson Reuters, 75% of institutional investors access investor relations (IR) websites weekly or more often. So after many years the SEC finally accepted that the web has transformed how business communicates and how audiences’ access information.

 Previous to 2008, companies had to disseminate their regulatory press releases though a wire provider (PR Newswire, Business Wire, Market Wire, etc) in order to be in compliance with all regulations. Under this old model, companies had to send press releases to a wire provider, SEC and regulatory agencies, then the wire provider formatted and distributed the final release to news bureaus, media and financial sites and aggregators, who then distributed it to the IR websites. Finally the last place where press releases were available was on the company’s own website. With this, we can see that corporations didn’t have control over the dissemination process and was a very time-consuming process.

Now with the new guidance, companies can have more control over the creation and distribution of their releases and how and when to communicate.  Thus, they can eliminate the need to coordinate last minute changes with third parties (wire providers).

NYSE Euronext states “We think the Web disclosure model provides an efficient way for issuers to enhance the disclosure process. This new model shifts the value to issuers from the dissemination of the information to the message analytics around the response to that information.”

Do you think that after all these changes public companies have been really using their websites as primary point of disclosure? Well, unfortunately they have not. Despite the SEC guidance and the support of NYSE and Nasdaq they’ve under utilize the web up till now with just a few companies taking advantage of this new way to reach audiences. It seems that investor relations, public relations and communications departments of companies have not adopted these tools as quickly as we think. Only a few companies such as Google, BGC Partners, Expedia, Marathon Oil, Reis, Tellabs,  to mention some of them, have taken the initiative. Obviously these numbers have been growing gradually but we have seen a substantial increase during 2010 and we are hoping to see that for the last trimester of this year finally this number will rise faster.

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