The web's fundamental attributes include interactivity, storage capacity, low cost access and multimedia. It enables IR teams to communicate with shareholders and analysts in many new ways. This guide is written to help you make the most of the web's unique strengths.

Make the most of the web's unique strengths
Investor relations professionals saw the potential of the World Wide Web early. In the late 1990s they realised that they could replace expensive paper with low cost digital media, and also that the web provided a neat way of releasing announcements simultaneously round the world.

So it is not surprising that IROs were receptive when technology companies pointed out that the web could do more than replace existing activities – it allowed companies to service the investment community in ways that were impossible before.

By looking at the fundamentals of the medium, both professional and individual investors could be served more effectively at lower cost. The key was to introduce “tools” onto their sites.

Here is a sample of these online tools: a share price calculator, configurable share price chart, share price look-up, webcast, email alerts, online proxy voting, video interviews. So what holds them together and makes them tools?

The real differentiator is that they add functionality in ways that other media cannot match. Some could be offered by information providers such as Bloomberg, but the web gave companies the opportunity to offer them directly.

Thanks to web-based tools, investor relations teams are able to communicate with shareholders and analysts in ways they could not hope to before. In a subtle fashion, therefore, online tools are shifting power back towards the company.

The web is able to provide all these disparate services because it is immensely flexible and complex. As it has floated into most of our lives in a fairly painless way, this complexity is easy to miss. But think about it: what other medium can be a shop, a meeting place, a notice board, a newspaper, an auction house, a cinema and an advertisement all at the same time?

The best way of getting to grips with this is by looking at the web’s fundamentals. Here are some. Interactivity – used for searching, two-way communication and anything that manipulates or retrieves data.

Storage capacity – a website can hold or give access to huge amounts of data, which can then be searched and manipulated. Updatability – the data can be changed instantly (or with a 20 minute delay). Low cost access – anyone, anywhere can see the same information at the same time, pretty much for free.

Multimedia – audio and video make increasing sense as broadband access spreads rapidly. Online IR tools tap into most, if not all of these abilities. BP’s site is a good place to see what can be done, if only because it has a section conveniently labelled “Investor tools.”

At the simple end there is a share price look-up. Then there are share charts that can be adjusted to cover particular periods, and also to compare with competitors and the FTSE 100 index. Both exploit three strengths of the web: interactivity, storage capacity and updatability. BP also shows how the medium can be pushed with the help of money and imagination.

The interactive “Java” share chart is one example, but a greater one is “Interactive Analyst” – an extraordinary device that allows visitors to create their own charts, drawing on more than 70 sets of data over five years.

While impressive, Interactive Analyst raises an important question: when does a useful tool become an unnecessary adornment? When it is clear that few people are using it, obviously. Or is that right?

When a tool as sophisticated as this is launched, it is unlikely that analysts, or anyone else, will rush to it – they are not used to it and they may not even know about it. So it is only by educating its audience – and then waiting – that a company can properly judge the value of a new online tool.

Analysts already know that corporate sites are the places to go for historical data. I suspect it will be a while before they accept that they are also home to greater functionality than is available from their third party screens.

Online tools are not just for the big boys. Northgate Information Solutions, a UK software company, provides video interviews of its senior executives explaining results or acquisitions. Analysts find this useful and it is a good way of attracting the attention of international investors.

Entertainment group Rank and retailer HMV also find that video interviews are a good way of attracting overseas capital and of making them stand out in competitive sectors.

The perfect IR web site should be a hybrid between valuable resource and company showcase. Online tools are the element that brings both together.

David Bowen is a website commentator for the Financial Times

What does your audience want?
The equity analyst
Wyn Ellis, Credit Suisse Asset Management

I find webcasts incredibly valuable. Where I used to have to spend a day going to Paris or Amsterdam for a presentation, it now takes just one hour to watch it via a webcast. If I can hone in on the Q&A section, it can be even less.

Today I spend less time travelling and more time watching webcast presentations. The shame is that there are still many companies not yet using them. Some companies also offer online transcripts of the presentations, which can be helpful.

A corporate website is useful for general information such as annual reports and press releases, but also for giving a feel for a product. The web is like having a mass of glossy brochures to look at.

In addition, I use email alerts for important pieces of news, particularly when companies produce results. Being alerted to these results almost instantaneously is really good.

The greater the transparency, the more information that is available, the easier my job is. A good effective and efficient website, one that gives you comfort and allows you to feel that you understand the stock better, could quite possibly have an impact on the stock rating.

The credit analyst
Rick Deutsch, BNP Paribas
I use the internet to look at analyst presentations, press releases – we don’t get hard copies – and to get a feel for the way that companies present themselves to customers. Webcasts are useful if they cover events that I can’t otherwise get to – say in Frankfurt.

The internet has hugely increased access to information, which is great, but most companies could still do a lot more for debt analysts – for example, posting details of terms and conditions of bonds or maturity schedules. They also tend to scrimp on the detail.

They’ll post financial summaries, but not the official filings, which then means a further trip to the official regulatory body in question to get the full filing. I also think that more attention should be paid to the design of websites.

A lot of them seem fine at first glance, but try to dig down to get some serious information and it can become very difficult.

The fund manager
Colin Wood, NFU Mutual
I use the internet to find information on companies within my portfolio and ones less familiar to me. The difference is that, with the latter, you start from a point of “who, what, where, why.”

You look at the structure of the company, its geographic spread and its type of business, before drilling down to the results, interim statements, and then, most helpfully, PowerPoint presentations.

The greatest value of the internet is being able to get hold of information quickly. So a site should be easy to navigate.

The same rules apply for all forms of information. Take webcasts. Once they have been broadcast, break them down into segments for archiving.

It’s frustrating to have to plough through an hour-long presentation when you only need one part – normally the Q&A, which can be very informative.

Webcasts and online interviews are extremely useful to me. For example, the service Cantos provides helps me to make investment decisions. This is a people business, so it’s good to be able to gain an impression of people, to see the whites of their eyes, even if you can’t physically be there.

Assessing the people that run a business is the magic piece of the corporate jigsaw. CEOs’ performances are undoubtedly becoming more polished but if the questions asked are searching enough, there is still a lot of value to be had.

The private investor’s champion
Terry Bond, director, Proshare
I visit company websites for financial information. There’s a real range out there, from the totally useless – built and then forgotten about – to the quite useful.

The most important thing is that sites are up-to-date. They should have a current share price on the front page and quick, easy access to new information. I find the press releases quite useful too – to be able

to see what the company actually said before the statement was subbed by the financial press.

The web has levelled the playing field between private and institutional investors. We can now all receive briefings simultaneously and have access to the same information. Private investors will also benefit from online voting, which has to be the way of the future.

I use independent financial information providers in conjunction with company websites, and the amount of information to which I now have access is phenomenal.

Each morning, I log on [to Digital Look] and I can see my whole portfolio. I can see what activity there has been, which shares are up or down, how they are faring against the rest of the sector and any patterns that may be forming. It’s easy to buy shares and hard to ignore any aspect of your portfolio, with the facts staring back at you. And it costs me nothing.

The website
The internet isn’t just a passive tool. The savviest firms use their IR site to manage expectations during times of crisis and rapid change.

The corporate website has come of age. For many investors, it is the first port of call when looking for information. For companies, it is increasingly seen as a 24/7 expression of themselves.

Web-savvy firms have moved away from the static relaying of previously-published information in documents at best updated monthly. They are seizing the opportunity for ongoing communication, in a way that no other medium offers.

Gold Fields is using its web site as an active weapon to combat a hostile bid. As Rosie Catherwood of Cantos, the online video communication provider, says, “nothing moves as fast as a hostile bid, and a website is a perfect tool to have in the corporate armoury as part of the defence.”

Gold Fields has built a microsite (hosted by Cantos) that is updated daily. It puts forward arguments from Gold Fields as well as Harmony, the hostile bidder. It also has all the content relating to Gold Fields’ defence, including video interviews with the CEO and FD, and documents such as voting forms.

“Of real value to Gold Fields is the ability to assess which parts of the site are receiving the most hits, and adjust the position of content if some material should be getting more viewers,” says Catherwood.

Websites also come into their own during an IPO. Many companies are scared of the disclosure requirements surrounding a float and shy away from putting any information online. But given the exponential increase in web traffic that companies experience during this period, this is a huge mistake, says Helen James of Investis, an IR web site specialist.

“When a company is in the news, its user statistics rocket upwards. Companies will attract a lot of attention from people who have little knowledge of their business, and posting relevant information on the website, such as corporate strategy and information on the board, provides an excellent opportunity for people to start understanding the organisation.”

During the IPO, there are undoubtedly restrictions on the information that can be given, but there can always be the promise of more, including an investor web site ready to go on the day of listing. Creating a favourable impression at this stage could be invaluable and, as James says, “it is a relatively easy and inexpensive thing to do.”

Online disclosure
New reporting rules are placing unprecedented demands on European IR teams. Email, SMS and webcasts are the solution.

Email and SMS
A range of online tools are available for disclosing information cheaply, instantly and simultaneously across the world. Investors, analysts and others can go to the website to set up email alerts that will deliver information of use to them as and when it is posted on the site.

Similarly, users can sign up to receive mobile phone text messages of important announcements. However, the constraint here is that with a limit of 160 characters, the message could only be used as an alert.

“Email and SMS alerts of, for example, press releases have become fairly standard,” says Al Loehnis, a director of Investis. “More sophisticated companies have incorporated a feed from the news service onto their web site, the updates from which they can then offer as part of an email or SMS messaging service.”

The Daily Mail and General Trust site, for example, allows visitors to set up email alerts specifically targeted to their needs, be they a compliance officer or credit analyst.

The Virgin Mobile site similarly allows users to choose either email or SMS alerts (or both) on whatever information is relevant, rather than receive all corporate press releases.

Webcast
A webcast is the broadcast of information (usually in audio and/or video format) over the internet. At its most basic, it’s used for the capture of live events such as analyst presentations.

Its power lies in the fact that it can deliver corporate announcements to a much wider audience, live or on demand, in a full, fair and timely manner without regard to time zones or travel logistics.

The ability of webcasts to reach overseas investors has driven its use to a point where it is all but standard among FTSE 100 companies – over 90 per cent offer such a service. However, uptake among FTSE 250 companies remains nearer the 50 per cent margin.

The next step is creating investor relations video content designed specifically for the internet. Cantos has pioneered the creation of senior management interviews and investor documentaries.

The company’s website, Cantos.com, now has more than 43,000 registered viewers, including investors and analysts at over 1,000 financial institutions. Content produced specifically for webcasting help to foster engaging and relevant online communication.

Intercativity
The best firms use the web to talk to investors and allow them to manage their holdings without leaving their desks.

Online proxy voting
The beauty of the internet is that it is a two-way communication channel. Just as companies can feed information to the user, so information can be fed back to the company. Shareholders can now cast their votes online in a quick, easy and immediate way.

Colin Wood at NFU Mutual has been voting online through Votex, an internet-based system, for two years.

At the website of energy firm BP, it is one click through to the “Investors centre,” then one more click to Shareview (see below), which provides shareholders with the option of registering to vote online. The online voting service complements a range of interactive tools on the BP site, including interactive share charts and share price calculators.

Web conferencing
Thanks to the advent of the internet, good old-fashioned teleconferencing has received a new lease of life. Where a teleconference is a two-way communication using the telephone network, a web conference can be seen as a two-way “collaboration.”

Users access a webcast for a visual presentation (through slides), while listening to the audio presentation via a teleconference, during which investors and analysts can actively participate. It is a format favoured by international forest products company, Stora Enso.

“We post the slide show on the web site about an hour before the call,” says Keith Russell, head of IR. Participants are invited by email, and are given the teleconference number, password, where to find the webcast and how to replay it if they are unavailable on the day.

Shareholding management tools
Shareholding management tools, such as Shareview, run by Lloyds TSB registrars, allow investors to manage their portfolios online, reducing administrative time for shareholders and costs for the company.

Many companies have integrated sites such as Shareview within their own, allowing shareholders to check their holdings, change details or buy and sell shares easily. BT has an award-winning online service, ShareholderPlus.

Subscribers can receive shareholder communications electronically, manage dividend payments, change personal details, vote at the AGM and sell shares online. BT is actively encouraging more shareholders to go online: “we have 1.6 million shareholders,” explains Patricia Day, head of shareholder services at the UK telco.

“The costs savings of not having to send out paper documents to each one are very significant. We have 170,000 online subscribers so far and are looking at different initiatives to increase this number.”

Virtual access
Investors and analysts want a deeper view of your business. Use the web to bring them up close and personal.

Webcast interviews
These should really be called online programmes, or content created specifically for the web. Interviews with senior executives offer viewers greater access and insight into a company than is otherwise possible – in a time-efficient manner.

They are particularly useful for people who would rather not watch a full webcast. Companies use the interviews as a means of providing deep insight into areas of concern, or issues that they are keen to explain, in their own words.

The key to the interviews, says Lucy Parker, CEO of Cantos, the business and financial online video communications company, is editorial credibility. The questions asked must be those that investors and analysts themselves want answered, and must stand up to scrutiny from a buy-side audience.

Investor documentaries and virtual site visits
Both of these virtual tools allow companies to showcase production centres, management, supply chains, customers and any other parts of their business activities to global investors and analysts.

Far from the corporate videos of old, companies use video footage to give access to managers who may not be available on roadshows or to locations that might not be seen on site visits, due to time, cost and logistical constraints (an oil rig, for example).

Take SAB Miller. It needed to tell the market its turnaround story. The brewer had to prove that its recovery plan was really working on the ground.

A ten-minute online investor documentary, produced by Cantos, showed the strategy in action. It illustrated how the new marketing initiatives and distribution relationships were making a difference. Senior managers also conducted short interviews, in which critical questions were concisely answered. All this provided viewers with greater access and insight.

These documentaries can also be used to highlight market dynamics and potential, providing context for a company’s activities. Property firm Brixton plc wanted to show an extended audience the commercial vibrancy and potential of Heathrow. The company produced a video to highlight the area’s huge property potential, not to talk about itself.

The video was put onto CD-ROM, sent out with the annual report, and also appeared on the company’s web site. “Nearly two years on,” says Brixton’s Duncan Lamb, “it is still one of our top downloads.” Since then, the company has released other interviews following strategic investments and is “alive to the idea” of more.

“It works very well,” says Lamb, “particularly as the investor base in commercial property continues to broaden.”

More rules, better technology
Here are the three factors that will most affect online IR in the next two years. And they’re all good news for Europe’s IR teams.

Transparency Obligations Directive
Transparency may be an over-used word but it is also the key to investor confidence. And for the European Commission it is essential for progress towards a truly pan-European investment market.

The main thrust of the Transparency Obligations Directive, which will be implemented in Q2 2006, is that “how” companies disclose price-sensitive information is as important as “what” is disclosed.

In a perfect system, all shareholders and potential investors – whether institutional or retail – would have immediate access to all available information on a company and the trading of its shares. In reality, this is still some way off.

Although websites are an increasingly important way for companies to engage with investors, this relies on the latter actively seeking information or “pulling” it from the web. This may not be easy to find and is time-consuming for those dealing with many companies.

A more effective way for IR teams to meet the Transparency Directive’s objective of fast, simultaneous and pan-European distribution of price-sensitive and regulatory news is by “pushing” information out into the market in real-time through news distribution networks.

This system also has its weaknesses: for example, in many European countries the existing news distribution systems are a mixture of websites, newspaper advertisements and monopoly exchange systems. In the UK, about 700 announcements are made daily including about 200 news announcements containing price-sensitive information and trading updates, compared with about 20 in Germany.

Under the Transparency Directive countries may be expected to improve their cross-border news distribution systems so that there is competition between services.

This will give IROs greater choice, put an end to monopolies and ultimately ensure that information on all EU companies is simultaneously available to all investors and analysts.

The Directive will also require all service providers to keep a public record of when an announcement is made, which should make it easier to identify potential insider trading. It recommends that a central storage system for all material news should be set up, so that all investors have access to a single, searchable database of relevant information.

Although the 2006 implementation deadline may seem a long way off, the sooner that IROs start to offer more regular and relevant information to a wider investor audience, the sooner they will reap the rewards.

XBRL
Imagine if you could type “pharmaceuticals companies, 2003 net profits” into an internet search engine and get a single spreadsheet containing the relevant data, all in a standardised format that can be compared like-for-like.

That’s what XBRL – or eXtensible Business Reporting Language – promises. And it’s almost here.

By providing this universal digital “language” for financial reporting, XBRL promises to make it possible for investors and analysts to “pull” together data from any group of companies, and manipulate it in any way they wish. Think about like this: XBRL promises to do for financial reporting what Google and other search engines have done for the distribution of information.

Companies that move to XBRL early will be saving investors and analysts time and effort. And that’s a good reason for IR teams to look into it now.

Online reporting depositaries
With the Transparency Obligations Directive (see left), the European Commission has taken the first step towards creating a single depository where all price-sensitive news and trading information released by EU companies is recorded.

The idea is to reduce the scope of market abuse, lower the risks to investors and improve their confidence in the market. It is an ambitious project that will take time to realise.

A more tangible example of a one-stop disclosure shop is the London Stock Exchange’s online depository for corporate social responsibility (CSR) information. This is a response to the proliferation of repetitive surveys by ethical and corporate governance rating agencies: the LSE found a 70 per cent overlap in the questions asked.

In contrast, the LSE’s Corporate Responsibility Exchange, launched in August 2004, allows IR teams in the UK to answer questions from a range of different CSR rating agencies in one fell swoop. The service, which involves 330 questions, removes duplication and frees up IROs’ time. It’s also a reliable way for firms to compare their results with those of their peers.

For analysts and investors, the move towards a standardised, searchable database of CSR information is a real breakthrough, particularly with the growth of SRI investment. But why stop there? What about a single depository for all types of disclosure – financial data as well as information on social, environmental and corporate governance policies?

In an increasingly complex reporting environment, companies, investors and regulators need all the help they can get.

Jargon buster
Bandwidth: the capacity of an internet connection, in terms of its ability to transmit data. Increases in bandwidth have made multimedia online IR activity, such as video, accessible to all investors and analysts.

Bitrate: the average number of bits of data (eg audio or video) transmitted per second. The higher the bitrate, the higher the quality of audio or video. Today’s high bitrates allow for clear online video.

Broadband: high-speed internet connection. Allows for higher-quality audio and video. Broadband is fast becoming ubiquitous.

HTML: stands for “hypertext mark-up language.” The basic language of the web. HTML makes visual, interactive IR content possible.

Investor interviews & documentaries: online programming designed to give investors and analysts access to a company from their desktops. See page nine for details.

JavaScript: a computer code designed for creating applications such as interactive share price charts within web pages.

PDF: stands for “Portable Document Format.” A file format developed by software firm Adobe, designed to distribute documents in a form that cannot be tampered with. But other formats such as HTML and webcasts make investor information richer and more flexible.

Real Player: a piece of software produced by Real Networks that allows users to view “streaming” audio and video material such as investor relations webcasts, interviews and documentaries.

Streaming media: a method for broadcasting audio and video material over the web in “real time,” rather than requiring the user to download an entire audio/video file to the hard disk before playing it.

Webcast: video presentation, interview or other event broadcast via the internet. See pages three, four, and seven.

Windows Media: a piece of software produced by Microsoft that allows users to view “streaming” material online.

XBRL: stands for “eXtensible Business Reporting Language.” Designed to “tag” online financial information.

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