Are you ignoring your biggest investor audience?

THE biggest audience for any investor relations website is also the one that companies ignore most often.

This audience segment is made up of people who know little or nothing about your company and probably aren’t going to learn much more unless you make it extremely easy for them to do so.

They are, of course, prospective new investors who have heard about your company somewhere and are coming to your company’s website to learn more. Chances are they’re not even that interested. They’re just curious. But they’re on your site and this is an opportunity for you to tell your story.

Unfortunately, precisely two-thirds of the 535 large-cap companies in our global survey of IR websites squander these opportunities every day. They make no attempt to directly address prospective new investors immediately when they arrive on their websites.

That makes absolutely zero sense. One of an IR department’s primary objectives is to attract new investors. Current investors want to see companies actively courting new investors and stimulating interest because the resulting demand is what pushes up stock prices.

Even well-known companies need to explain themselves

Seven years after first seeing this phenomenon, I still have only a couple explanations for it. One is that IR departments are so focused on reacting to their current investors and analysts that they forget about prospective new investors.

The second possible explanation is that the companies we cover are large-caps that presume that most people already know something about them. This may be true in some cases, but even companies as well known as Coca Cola, General Electric or Nestle are poorly understood.

In fact, people often harbor deeply ingrained misconceptions about well-known brands that need to be dispelled before they can develop a fuller appreciation of the company’s true investment potential. Consequently, no company can legitimately claim that it does not need to explain itself to prospective new investors.

First impressions are lasting

Every company, no matter how big or small, should be using its investor relations website to explain its business and investment proposition to prospective investors. And the place to start is on the IR homepage.

Researching a company from scratch is a big job, so potential investors will be choosy about the companies they are prepared to investigate at any length. If they have to do too much thinking and digging, there’s a high likelihood you will lose them, possibly for good.

There is no right or wrong way to directly address prospective investors on your IR homepage. Different approaches will appeal to different companies, but below are some examples taken during our surveys. Some of these examples are no longer available because companies have changed their sites, and often not for the better unfortunately.

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Novell’s IR homepage features a prominent animated banner across to the top of the page that links to a backgrounder on the company. One possible problem with this approach is that some users will ignore the information because it looks a lot like an advertisement. Researchers are increasingly finding that web users ignore anything that looks like an ad and focus their attention first on text.

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BASF’s IR homepage is direct in its pitch to investors. Under the heading Reasons to Invest in BASF, it engages prospective new investors and reminds current stockholders why the company is a worthy investment. At the bottom of the listed reasons to invest is a link to more information. The potential problem here is the reverse of the Novell example. There is too much text.

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Reuters addresses discovery motivated users prominently. Unfortunately, when they click on the link to “View our Investor Introduction Presentation” users are surprised by a PDF document that contains 24 slides that are difficult to follow out of context. The company is more likely to put off than engage investors with this approach. It is best to steer new users to HTML pages that they can quickly navigate and skim for details during their short visits.

Of course, as you probably have noticed almost all of these examples are steering new investors to more detailed content on the companies’ sites. This is another important consideration. New investors are not going to spend a lot of time digging through archives and downloading big PDF files just to get a basic idea of what your company does and how it makes money.

You have to do the legwork for them. But that’s a topic of another day.

Related posts:

1. New influencers emerge on Web 2.0 investor communities
2. How new finance websites impact investor relations
3. Why almost no one is complying with Regulation FD
4. Mindlessness in investor relations
5. Evaluating NIRI’s IR website guidelines 2

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