PDF Blobs must die
By Dominic Jones, IR Web Report
PDF blobs are a big problem
on investor relations websites. Many companies
are dumping important disclosures in these burdensome
documents through shortsightedness, poor planning
and sometimes as a tactic to bury sensitive information.
A PDF blob is a large, unstructured reproduction
of a document originally designed for another
medium, such as a printed annual report, a PowerPoint
presentation handout or a regulatory filing.
While there are many ways to make
PDF documents more usable on the Web, very
few companies take advantage of them. The result
is PDF blobs - big files which cause many usability
problems and obstruct effective disclosure.
Currently about 20% of the large-cap companies
in our IR Web Report Global Rankings™
provide their annual reports in PDF blobs only.
This is a high percentage considering
that these are the world's largest, most resourceful
companies.
As we come up to annual report season, it would
be good for companies to pay a little more attention
to how they will be publishing their reports
on the Web this year. Companies which dump their
annual reports in PDF blobs should know that
they are undermining effective disclosure and
probably costing their companies more money
in the long run.
 |
| This
is a common sight on IR websites today.
With the average annual report now over
70-pages-long, asking people to download
your report in a single PDF is the same
as telling them to get lost. In addition
to being in a PDF blob, there are six other
things wrong here. Can you list them?
|
Why PDF blobs are a problem
The usability problems with PDF documents have
been widely chronicled in usability and accessibility
tests. In a 2003
essay, usability guru Dr. Jakob Nielsen
declared PDFs "unfit for human consumption"
before going on to list the many problems highlighted
in his research with Web users, including users
of investor relations websites.
I wouldn't go so far as to say all PDF
documents are unfit for human use, although
most of them are. There are reasonably
effective techniques companies can use to improve
the usability of PDF documents. Problem is,
very few companies either know about PDF optimization
techniques or they simply don't care.
PDF blobs have many inherent usability problems
and make access to corporate disclosures so
burdensome as to render them useless. The issues
range from slow downloading and inaccessibility
to blind users, to the fact that PDFs inherit
print design conventions that create usability
problems for Web users.
|
|
| This
file will take 61 minutes to download on
a dial up modem. Many retail shareholders
are still on dial up. |
These issues are exacerbated by the fact that
most people don't know how to use the Acrobat
Reader properly. They use it so infrequently
that they don't know how to search PDF documents
or perform other basic tasks like copying
information from a PDF for reuse in research
reports, news articles or shareholder correspondence.
The usability challenges of big PDF files have
been made worse in recent years as regulators
have demanded increasing amounts of disclosure.
Not only are companies providing more documents
in PDF, but existing disclosure documents are
getting longer.
Take annual reports as an example. The National
Investor Relations Institute (NIRI) in
the United States reports in its 2004 annual
report survey
(PDF 31 KB) that the average
annual report swelled to 73 pages from 48 in
2002 and 1999.
That roughly means that annual report PDF
blobs are now 50% more difficult to use than
before.
How annual report PDF
blobs cost you more in the long run
Companies that provide PDF blobs of their annual
reports demonstrate an almost complete disregard
for communicating effectively with their shareholders
and investors.
Some IR departments will claim that cost is
their main reason for providing unusable PDFs,
but that is not a valid excuse. Even companies
with extremely tight budgets can take simple
steps to improve the usability of their
PDF annual reports without having to use HTML.
 |
| While
you can appreciate the warnings, why is
this company even bothering to provide these
documents if it thinks they require caution?
|
In fact, if companies were to invest a modest
sum to publish their annual reports and proxy
statements in formats other than PDF blobs,
they'd probably end up saving money.
By providing HTML
annual reports or optimized
downloadable reports, companies would make
it more attractive for investors to sign up
for electronic delivery. The subsequent reduction
in print runs would more than offset what companies
would have to spend to produce better online
documents.
Right now, the choice for investors is often
between a nice printed report delivered by mail
or a PDF blob sent by email. No prizes for guessing
which they'll choose.
Perhaps the biggest cost of publishing PDF
blobs, though, is the lost opportunity to
attract new investors and keep existing
ones fully informed. This is because any information
contained in a PDF blob is much less likely
to be read.
By not downloading PDF documents, or viewing
them only superficially, investors learn less
about companies' investment merits. This is
bound to result in investors making inaccurate
assessments of companies' attractiveness as
an investment.
Since the primary job of IR departments is
to help their companies achieve accurate valuations,
any department that publishes its online annual
report, proxy statement or similar important
document in a PDF blob is simply not doing
its job. Period.
What are the alternatives
There really is no excuse for companies to provide
PDF blobs on their IR websites. There are a
variety of alternatives that can provide a better
experience for investors without breaking your
department's budget.
HTML is by far the best option for Web documents.
With a bit of planning and a small investment,
there's no reason, for instance, that every
large-cap company cannot provide a highly usable
annual financial
report in HTML.
Mid- and small-cap companies with limited budgets
can easily afford to provide a Downloadable
Annual Report using a combination of PDF
and spreadsheet downloads that are optimized
for onscreen use.
Apart from these, there are no other suitable
options. Companies should avoid
image-based annual reports from vendors
like Shareholder.com and Thomson Financial
because these are almost as bad as PDF blobs.
How regulators can help
Regulators must bear some of the responsibility
for the PDF blob problem and for the general
poor state of online securities disclosure today.
There has been little sensible guidance from
regulators on online disclosure and most disclosure
systems are still based on an outdated printed-document
model.
|
|
| The
above pieces of advice are provided to investors
by the Australian Stock Exchange on its
website. Any time you have to explain to
people how to use something on the Web,
you know it's not usable. |
Canada's technologically challenged regulators,
for instance, require companies to use PDF blobs
when filing reports on that country's SEDAR
regulatory filings system. The same applies
to the Australian Stock Exchange, which
seems to accept that the PDF format is not ideal,
yet offers no alternatives (see above screenshots).
The U.S. Securities and Exchange Commission,
the most technologically astute of all regulators,
has also contributed to the problem of PDF blobs.
It has given companies confidence to continue
the practice because the commission's guidance
for electronic disclosure says PDF is an acceptable
format. Unfortunately, the SEC's guidance in
this regard is inadequate as it does not draw
distinctions between good and bad PDF files
and fails to take into account a wealth
of usability research showing that PDF documents
represent a significant burden to users.
If companies themselves don't improve, then
investors may well need regulators to provide
clearer guidance and to take a lead by forcing
issuers to address the usability requirements
for online disclosures. If the SEC and others
could take regulatory steps to improve communication
clarity with plain language rules, they
can do the same for Web usability.
Of course, companies can preempt a regulatory
remedy by simply doing the right thing. As a
new year approaches, lets make it the year we
rid the Web of PDF blobs.
Read our