Visibility and Connectivity – small companies and the new investor
Prior to Covid-19, investors had themselves been seeking a different model of engagement – one that goes beyond standard annual general meetings and financial reporting. Now, having experienced the effectiveness of remote and digital engagement, they will expect more company visibility and connectivity.
Covid-19 has forced change. Remote working and the use of digital technologies to stay visible and connected have been widely adopted. Previously, it had been regulations such as MIFID II that had the most profound effect on financial intermediaries and investor relations. Now however, Covid-19 seems certain to have an even greater long-term impact. Prior to Covid-19, investors had themselves been seeking a different model of engagement – one that goes beyond standard annual general meetings and financial reporting. Now, having experienced the effectiveness of remote and digital engagement, they will expect more company visibility and connectivity.
Indeed, the CEO of the world’s largest asset manager, Blackrock described his company’s change of approach in his letter to CEOs. Under the header, ‘A sense of purpose’, Mr. Fink stated:
“The time has come for a new model of shareholder engagement – one that strengthens and deepens communication between shareholders and the companies that they own. I have written before that companies have been too focused on quarterly results; similarly, shareholder engagement has been too focused on annual meetings and proxy votes. If engagement is to be meaningful and productive – if we collectively are going to focus on benefitting shareholders instead of wasting time and money in proxy fights – then engagement needs to be a year-round conversation about improving long-term value.”
Blackrock is not alone in pushing for broader and deeper engagement between companies and stakeholders. In the UK, the Kay Report and more recent publications by the FRC have all highlighted the importance of demonstrable governance and better stakeholder communication.
Small companies, big stories:
Sadly, this isn’t a level playing field. While it might be fair to suggest that most mega-cap companies and Asset Managers will have more information to communicate (and more stakeholders to communicate with) than the average smaller companies, it’s certainly the case that they are better resourced to meet the changing needs of investors. For companies that don’t have a dedicated IR function – or large discretionary budgets to play with – this new approach to investor engagement can be intimidating.
However, smaller companies also have certain advantages. They may be able to tell a more tightly focused story than the sprawling behemoths of the Fortune 500 and they may find it easier to create and communicate a genuine company culture. Put simply, your IR and Marketing budget may be small, but that doesn’t mean that your value-creation story can’t be told in a compelling, credible, and effective way.
Tactics for smaller companies:
Breaking down the changing appetites of investors, we can pick out a few themes that companies need to focus on:
- Marketing Teams, Investor Relations and Sales Teams should work together to share information that enables shareholders to better understand your company. If you’re opening a new plant or facility, or launching a new product, why not put out some content aimed at investors that gives them an update and a tangible sense of your progress. This shouldn’t be market sensitive information, simply more narrative about events that are already in the public domain.
- Embrace change and use technology to gain visibility and connectivity. The Covid-19 lockdown has demonstrated that digital technologies are effective and will continue to enhance engagement in conjunction with physical meetings and events. Communicating more frequently and more holistically also helps. It’s all too easy to get stuck in the familiar pattern of reporting as stipulated by regulation.
- Thought Leadership is another crucial area where small companies can differentiate. In an age in which videos can be viewed anywhere, perhaps consider making the most of the technological shift and have your senior management record their thoughts and industry insights to current and potential investors. Part of the underlying success of video is that we hunger for the information about the people behind the story.
Video production is no longer the expensive and time-consuming process it once was and there is no reason not to take advantage of it. People are now used to remote working and Zoom interviews – you don’t need an expensive studio to record a video. And if this still seems daunting – a podcast is also extremely effective.
Getting the message out:
Once that content is created, it’s imperative that you get it into the hands of your investor audience. There are few things more depressing than watching your much-loved new corporate video achieve a handful of views. Go beyond your website to enable your audience to see your content. Your website might be great, but to drive traffic to it, you need compelling content on multiple digital channels. And from an investor perspective, they want to follow you easily and see updates on their personal newsfeed – that is the new norm. They don’t want to wade through Google searches and hundreds of websites all designed differently, just to find you.
And it’s not just about content – it’s also about engagement via interactive messaging technology around the content.
The rate of change in the world has been supercharged over the last couple of months. We should embrace the new positive behaviours and technologies.
To find out more about our Prolifir platform, please visit www.profilir.com.