The emerging engagement expectation

By Dominic Jones

AS INTERNET users, particularly younger generations, spend more time online, the Web has become a vital means for them to interact with one another. This has led to a surge in the popularity of so-called social media or engagement media –- websites and Internet-based technologies that enable users to converse, contribute, create and share online content easily and at low cost.

Social media encompasses a wide range of online activities, including publishing personal websites or blogs, sharing photographs and video, compiling podcasts, publicly bookmarking articles and even picking stocks. However, the tools are not as important as the concept. The common denominator with all social media tools is personal interaction or engagement amongst individuals.

Several corporations, particularly in the technology industry, have embraced social media in their corporate communications both internally and externally. A key benefit of many social media technologies is the opportunity to distribute content at low-cost and with greater perceived credibility due to the word-of-mouth or unfiltered way in which it is distributed.

Social media is more informal and personal than traditional corporate communications. This makes it difficult to execute effectively if there are heavy compliance constraints on the producer, such as in investor relations communications. If the constraints on the content limit its authenticity then a company may need to rely more on its audiences to provide authenticity via their own contributions or comments. In any event, companies must be prepared to cede some control over the discourse to the audience.

While many have dismissed social media as a fad, we believe the social media phenomenon is a deeply-rooted and unstoppable development on the Internet. It will continue to influence users’ expectations for how credible and relevant organizations behave online.

People are likely to view organizations that aren’t accessible via the Web as disinterested or irrelevant. This could influence their willingness to invest in, work for, or otherwise support such organizations.

If it’s good enough for Chairman Cox, it’s good enough for your shareholders

Mainstream media websites and news organizations are increasingly including social media and user-generated content into their online offerings. Many media outlets host blogs for their writers while companies like Reuters, Associated Press and Yahoo are increasingly incorporating content from the general public into their information mix.

It is only a matter of time before social media practices spread to the broader Internet, including to corporate websites. If web users are able to add their comments to an article on BusinessWeek’s website or upload photographs to the Reuters website, why shouldn’t they be able to do the same thing on a company’s website?

Indeed, if the Chairman of the U.S. SEC can post a comment on the blog of Sun Microsystems’ CEO, as he did in November 2006, why should a major institutional shareholder not be able to do the same thing on a blog set up by a company’s board of directors?

These are questions that companies must begin to seriously consider. It will take time for people to become comfortable with this type of open online communication. However, the greater risk is not being ready to engage an audience that expects and increasingly demands it.

Going forward, companies should look for opportunities to engage institutional and retail investors. This need not include using social media techniques like discussions, commenting mechanisms and blogs, but companies must provide opportunities for legitimate stakeholders to have input on issues of mutual interest. Start now.

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2. The best corporate bloggers you’ve never heard of
3. How new finance websites impact investor relations
4. CFA Institute backs IR Web Report on Regulation FD
5. New technologies make audio and video searchable

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