Despite the inroads the Internet has made in PR, new findings from a study conducted by a New York marcom house show that in investor relations, annual reports, faxes and mailed press releases are used more by money managers and analysts than electronically delivered information.
For those in IR, it's a conclusion that shouldn't be ignored because it's the analysts who can help make or break a company and the money managers many investors defer to when making decisions.
Straightline International Inc.'s "Internet Communications Survey" revealed that only 22 percent of financial professionals prefer to use the Internet to access financial data and to research companies' financial histories and standings. The finding was based on a polling of 572 analysts and money managers and 368 corporate communications/IR professionals from 10,000 public companies during November 1996.
Among usage preferences, annual reports were cited by 90 percent of the respondents; faxes by 79 percent; conference calls by 53 percent and regular mail by 38 percent. E-mail received a 39 percent share.
IR sources told PR NEWS that investment specialists aren't using the Internet as much as traditional IR approaches, such as poring through a written report or calling an expert, for several reasons. They conclude that many professionals still aren't familiar with the Internet, aren't well-versed with how to find what they need online, and are frustrated that online company searches end up being time consuming.
In fact, in the IR scheme of things, the Internet has yet to claim any top spot among the hierarchy of tools IR specialists use to do their jobs (see accompanying chart). Remove the Internet from the formula and there are still countless ways - research reports, annual meetings, conference calls, 10Qs, road shows, networking, speaking with CFOs and Dow Jones and Blomberg news services - for investment professionals to find what they're looking for. And that list doesn't include annual reports, which Investor Relations writer Richard Carpenter called (in the magazine's issue this month) "the opportunity for business leaders to communicate directly with the owners, and potential owners, of the company."
What the Study Means in IR
"This study shows that until the Internet has a meaningful point of difference, meaning it provides information you couldn't get elsewhere, it's not likely to be the medium of choice," said Jane Gundell, executive VP of Straightline.
And there are reasons for that - most of them linked to the fact that Web browsers and search engines can be gruelingly slow at times as well as the knowledge that downloading information can take p time you don't have.
"I rarely go on the Internet to get investment information," said Robert Chaplinsky, a senior technology analyst with Hambrect & Quist, San Francisco. "This is a momentum market and usually by the time it's on the Internet, it's too late. I usually prefer direct contact with customers or companies or written documents I can get my hands on easily. When I use the Internet, it's for background on a product or business."
Even though the Straightline survey doesn't fell any longstanding myths, it does underscore some interesting issues for PR professionals - particularly those in the IR arena. Although it's common knowledge that it's taking some industries longer than others to convert to the Web, the study points to how yoked to tradition some in the investment trade are. And it also points to how establishing trust - something that may be difficult to do on the Internet - is key to IR transactions and relationships.
"The Internet will never replace face-to-face meetings or pressing the flesh," said Shirley Thompson, president of Denver-based Carl Thompson Associates, which specializes in IR. "The Internet can't duplicate the importance of being able to look into management's eyes or to see the zeal or feel the fire for something. If you're betting on the future of a company, it's likely you'll want to look into the CEO's eyes."
But Thompson admits that although the Web will never completely usurp other IR methods, it is a medium that's gaining strength in the investment community. Among her 30 clients who outsource to her between $60,000 and $200,000 in IR work a year (not including annual reports), the leveraging power of the Internet is netting some attention. Take, for instance, client Granite Financial, Denver, which for the first time next month will host an online chat with its CEO William Wehner.
"A year or more ago I would say that none of our clients asked about the Web side of an IR program and today, about 90 percent of them think it's value added," Thompson said. "We've been in business for 12 years and a year and a half ago, we created a division specifically for Internet IR services."
But Bob Pickard, senior VP and partner of Environics Communications, Stamford, Conn., said that most of the IR services he heads for clients only have a small portion devoted to online efforts. Of Environics' 50 clients - including big leaguers like Mecklermedia Corp., PointCast, Prudential Insurance and Xerox - between $5,000 and $25,000 is devoted to total monthly IR programs, an expenditure that's about 25 percent of their budgets.
Pickard ranked today's most often-used IR methods in this order:
1. Annual Meetings
2. Annual Reports
3. Teleconferencing
4. Faxes
5. Mail
6. the Internet/E-Mail
However, Pickard did note that his ranking isn't likely to be the same two years from now when the traditional annual report - what he called a dying "expensive legacy" - will be overshadowed by what the Internet can deliver as professionals become more savvy at placing, and finding, financial news on the Internet. (Straightline, Jane Gundell, 212/779-2626; Hambrecht & Quist, Robert Chaplinsky, 415/439-3300; Carl Thompson Associates, Shirley Thompson, 303/494-5472; Environics, Bob Pickard, 203/325-8772)