Is Traditional IR Dead?
There’s no argument that an investor relations (IR) department is an essential component in a public company. As a whole, this team undertakes a number of important tasks. But as we progress in this new digital era, investors are learning about new opportunities from digital channels – including social groups, financial bulletin boards, chat rooms, and more.
When some people hear the term IR, they picture an employee struggling to dig through a Rolodex in the hopes of finding potential investors and arranging roadshows. That’s not always the case, but it does seem like traditional IR can feel a little out of touch nowadays.
According to Investopedia, investor relations “provide investors with an accurate account of company affairs. This helps private and institutional investors make informed decisions on whether to invest in the company. IR departments have to be aware of changing regulatory requirements and advise the company on what can and cannot be done from a PR perspective.”
Long story short: An IR professional’s key responsibility is to communicate with investors and contribute to a company’s investment opportunity achieving fair market valuation. It is also their job to manage an effective dialogue between a company, the financial community, and investors.
The IR role requires constant communication with shareholders and potential investors. That’s a lot! IR professionals face the challenge of being spread too thin on a daily basis. The work that they do is important and necessary, but how far can an IR representative’s reach really extend?
This is where the differences between traditional IR and modern investor marketing start to emerge.
Although investor marketers and IR professionals have a lot in common – like promoting a company’s stock story, creating investor decks, and communicating a company’s value – the similarities end there. The way that each camp achieves these goals (and the techniques and tactics they employ to do so) is vastly different.
Digital marketing has incredible reach, targeting the new retail investor audience! We communicate a company’s value by utilizing various channels, like email, social media, whitepapers, videos, newsletters, and various media outlets.
Investor marketing teams focus on generating digital awareness among investing and trading communities across the web. They’re an important asset to the communication and marketing strategy as their tactics often provide companies with a trackable ROI and keep a pulse on how retail investors are feeling about a company’s investment opportunity. Investor marketing teams execute programs that generate potential retail investor leads and expand a company’s digital footprint.
While IR professionals are the masters of financials and using those numbers to communicate a company’s stock opportunity, digital marketers develop an overall brand story, push that through digital channels, ultimately reaching a much broader audience of potential investors.
Another notable difference is that IR places a heavy focus on communicating with brokers, analysts and institutions, whereas digital marketers focus on reaching the “end-investor” – An often undervalued segment. These are individuals who do their research and invest on their own.
And that shouldn’t be the case! Today, over 50 million households in North America engage in some kind of investing activity — from dabbling in penny stocks to large investments in established companies.
According to a 2016 NIRI Social Media survey, while only 15-17% of analysts have an interest in using social media for investor relations, 47% of retail investors do.
Many retail investors are using everyday digital media solutions to seek out information on their investment opportunities. Facebook, Twitter, LinkedIn, Reddit, Instagram, Google, and a myriad of other digital solutions are in the average retail investor’s toolkit.
There are even programs available to share a company’s stock story with investing groups and financial influencers – Both of which have engaged followers in the hundreds of thousands! The Spectrum program does exactly this – distributing your company’s news and stock story to our growing network of over 300k engaged potential investors.
These digital solutions can save you time and money, compared to the traditional IR tactics, requiring phone calls, face-to-face meetings, and lots of expensive travel.
Digital is just the way investor behaviour is evolving. You can either get left in the past or adapt to the changes and thrive.
IR still plays a very important role within a company. I’m by no means saying it’s dead – But if you want to remain competitive in the market, you should be also be utilizing investor marketing in your investor communications strategy!