Using the words “CFO” and “social media strategy” in the same sentence would have been unthinkable a few months back. What does a CFO have to do with social media? Social media is for the marketers to focus on, right? Well, read on.
A few months back, I wrote an article in which I said that social media management should be on the senior executive agenda--not left to only marketing and/or HR. The article was based on the SEC’s investigation of whether a Facebook post by Netflix’s CEO violated the rules of disclosing material nonpublic information for a listed company.
Earlier this month, and on the back of the Netflix investigation, the SEC ruled that companies could use social media sites such as Twitter or Facebook for investor news distribution, as long as they tell investors in advance which sites they plan to use.
This ruling has interesting ramifications for those constituents of the financial news industry who rely heavily on their speed of publishing such information to a large user base. Some of them, such as Bloomberg, are already adapting by incorporating market-moving Twitter feeds into their terminals.
More interestingly, this ruling has significant ramifications for the use of social media by listed companies. Until now, companies have used social media as a vehicle for marketing campaigns, PR, brand awareness, customer service, brand engagement, sales, etc.--activities that all hover around customer engagement. Now they can use the same channel for engaging with their investors, retail, as well as institutional.
In listed companies, the investor relations team traditionally is tasked with engaging with investors; this team usually reports into the finance function. Most of the communication this team puts out is one-way engagement--from the company to the investors. The channels used by this team for communication, such as SEC filings and Web sites, do not lend themselves to going viral. Nothing wrong in that.
However, social media is a two-way street; it’s a viral medium by default. It is also a fantastic medium for analyzing sentiment, as CMOs have been doing. Now CFOs can use it to measure (and, in the future, predict and hopefully influence) investor sentiment.
The reality is that over time some companies will turn out to be better users of social media for investor engagement, just as some have turned out to be better users of social media for customer engagement. The companies, which will be better at using social media for investor engagement, will leverage the learning of their marketers in this space and will also walk into this with a plan. Hit-and-miss will not work given we are talking about communicating listed companies’ financial information.
And that is why CFOs need to start thinking about their social media strategies now.