The form and content of corporate communications are changing fast. Adrian explains how to take control and embrace the opportunities of the changing digital landscape. This article was published in the member publication of the Investor Relations Society.
The digital age has had a profound effect on society, altering the way we communicate, think, organise our time and look for information. The internet is an enabling technology enhancing the capabilities and reach of content generators and users alike - control and influence now rests on both sides of the equation.
But the question remains, are corporate communicators embracing the opportunities this transformation represents and do they really understand the full potential and possible pitfalls of this brave new world?
What's happening in the corporate reporting arena demonstrates the benefits of taking firm control of the opportunities, while the recent episode of American Airlines and Mr X (discussed later in this article) illustrates the dangers of underestimating the changing environment. Losing control can in the worst case scenario have a sudden and unhappy effect on the bottom line.
Evolving digital trends
We are seeing some distinct digital trends emerge in corporate reporting, the first of which will come as no surprise. The change in legislation around electronic communication with shareholders is having a dramatic effect on print runs and the increased time and investment being made in digital communication. Look at some of the decisions we have taken with our clients this year; bulky, colourful annual reports with very high production values are being phased out and investment is being heavily biased towards online communication channels. These are dynamic, interactive and much more intuitive for shareholders.
Obviously this approach is not right for every company and the transition away from print will take time. But we are seeing the death of the highly designed printed annual reports that many companies still produce. It has been talked about for a few years, but the change is now actually happening. Research conducted last year by SAS with Thomson Reuters Extel Surveys into institutional investor needs revealed that while the hard copy report was used to 'some extent' by 87% of institutional investors, the dominance of the web is clear. On hundred percent of investors use the online annual report, IR website and corporate website as an ongoing source of company information.
Furthermore, the corporate website is used by nearly 90% of investors to support their investment decisions. This was underlined again more recently at an SAS research session with a group of brokers and fund managers, most of whom were under the age of 35. One of the principal trends that emerged was that they work almost entirely online. They view printed annual reports as statutory documents of record, for which they have no space on their desks. Their days are frantic and web-based communications and tools provide the speed and flexibility they are looking for and enable them to gain insights more quickly.
Another much more interesting trend is the appetite for augmenting the two audited corporate reporting channels - the annual report in print and online - with a third non-statutory online channel. This model is something that we have now adopted for a few clients, most recently for Diageo's 'Great Mix' online review that can be found atdiageoreports.com. We predict others are likely to follow suit in the next few years.
Each client has their specific needs and challenges but, in basic terms, with this model we produce an extra, unaudited, non-statutory online channel that sits alongside the print and online annual report.
This enables clients to break free of the old reporting formula and take full advantage of the online medium. They can integrate messages from their wider communications agenda to provide a stronger, more cohesive approach to all stakeholders - not just investors.
Realising the benefits
There are a number of reasons why this approach works so well.
Firstly, an unaudited, non-statutory channel is free from the burdens and restrictions of the auditor's pen, it's another piece of corporate communication that happens to appear at the same time and be referenced by the audited channels. However, in our experience, keeping your auditors in the loop about your intentions early on prevents any difficulties later in the process, particularly if you are planning to cherry pick and reuse some audited facts and figures. With this freedom of communication comes the ability to express opinions and provide contextual information that would generally never reachthe narrative of the annual report.
Next, as a digital channel, facts and stories can be brought to life using videoand other rich media. This helps enhance the user's experience of the site and provides the insight and authenticity that key City audiences demand.
Finally, it provides real value for money, particularly for companies with large retail shareholder bases. You can reach hundreds of thousands of shareholders, providing them with an engaging experience for a relatively modest budget. If you have digital assets generated for other audiences it also gives you the opportunity to re-use them, providing even better value for money, and a more integrated approach across all stakeholders.
A word of warning
So there is no doubt the digital revolution is providing useful tools and solutions for those in the corporate world who choose to take control of the opportunities. However on the flip side, digital communications can be difficult to confine if the influence of users is underestimated.
This is illustrated very clearly by the tale of American Airlines and Mr X.
In the summer of 2009 a US-based web interface designer and blogger called
Dustin Curtis posted a piece online criticizing the airline's website design and demonstrating how much better it could look even with a few easy fixes. His post was commented on anonymously by Mr X, a member of American Airlines web design team explaining that, although he and his colleagues do the best they can, the organisation is complicated and the culture makes it difficult to get things done - a reasonable response, you may think.
Within hours Mr X had been tracked down and sacked. Dustin Curtis went on to write about his shock at the sacking - "AA fired Mr X because he cared. They fired him because he cared enough to reach out to a dissatisfied customer and help clear the company's name in the best way he could".
Unfortunately for American Airlines, the cause has since been adopted by the global blogosphere. At the time of my writing, googling 'Mr X American Airlines' returned 210,000 results.
Passengers are blogging to say they are choosing other airlines and encouraging others to do the same and the American Airlines employer brand has taken a bashing.
This one example shows how far the digital world has come, breaking down barriers interlinking business, economic and social communities. The internet has changed the way the corporate world connects with its stakeholders forever.
However, it has also given those stakeholders the opportunity to challenge the authority of the information providers, broadcast their own opinions and in some cases effect real change in perceptions and reputations of the companies involved.
Over the next few years the long-term winners in the digital world will be those organisations that take control and embrace the opportunities. They will combine traditional communication approaches with new media techniques, and crucially, they won't underestimate the ability of the internet and its millions of users to seize control for themselves and de-rail the best of corporate intentions.
This article was published in Informed, the Investor Relations Society member publication.
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