This article first appeared in the Summer 2023 issue of IR Update magazine, published by NIRI: The Association for Investor Relations. It is written by our Managing Director of Investor Communications, Chris Israelski and used with permission.
In today’s rapidly evolving digital world, effective communication plays a pivotal role in engaging with shareholders, attracting potential investors, and, most importantly, building trust. IR teams face the unique challenge of connecting with an investor base that is more diverse and tech-savvy than ever before.
To adapt their approach, investor relations (IR) professionals should consider tapping into the power of digital marketing, with content marketing serving as a cornerstone. Content marketing acts as a powerful, complementary strategy to connect with investors, tell their company’s story, highlight its value proposition, and showcase compelling financial opportunities.
Technology continues to reshape the way information is consumed and the frequency of communication. Integrating direct, in-person engagement and direct digital engagement can provide IR with more meaningful and continuous interactions with investors.
Changes within investor marketing, however, have largely reacted to external events and have the potential to advance much further. For example, the adoption of webcasts for management presentations was driven by the implementation of rules governing fair disclosure. Use of video conferencing attained critical mass only recently in response to the pandemic.
Many corporate marketing departments have adopted a more agile and measurable approach that blends search, social, and content marketing with analytics for continuous learning. This type of approach can supplement traditional methods of investor communication to more fully capture investor attention and effectively convey complex information. Gone are the days of simply issuing lengthy press releases and posting dense presentations. Today’s investors expect engaging content that not only informs but also breaks through the noise, sparks curiosity, and establishes a connection.
The Value of Storytelling
“Storytelling is at the core of all good communications, whether it originates from investor relations, marketing or any other function,” said Lynn Tyson, Executive Director, Investor Relations at Ford Motor Company. “We strive to have an integrated strategic communications plan across the company, underpinned by a compelling narrative and intentional story arcs, punctuated by key events like earnings, conferences, product launches and corporate announcements. Everything must ladder up to one story that supports our investment thesis and Ford+ plan, and resonates with all stakeholders, from employees and customers to the capital markets.”
Active, bottom-up asset managers are running faster and faster to compete with passive, quantitative, and alternative funds. Analysts and portfolio managers are inundated with an overwhelming amount of data and information, making it challenging to sift through the noise and extract meaningful insights. Even a company’s most ardent followers can struggle to incorporate and contextualize news, updates, and commentary during busy earnings seasons.
Activate Content Marketing
As Herbert Simon, a founder of the Carnegie Mellon School of Computer Science and researcher on decision making, noted, “A wealth of information creates a poverty of attention.”
To counteract this attention deficit and bridge the gap, content marketing offers a compelling solution. By crafting and delivering content in a clear and concise manner, IR teams can captivate their audience and provide valuable insights. Strategic use of content formats, such as informative videos, engaging infographics, and thought-provoking blog posts can effectively convey the company’s story, educate investors, and reinforce the investment thesis.
“Part of our job in investor relations is to not only describe our business and outlook, but also help educate investors on the category,” said Andrea James, Chief Communications Officer with responsibility for IR at Axon, a maker of public safety technology. “The better our investors understand policing, our products, and the customer landscape, the better they will understand what drives our demand profile.”
In the following sections, we explore five essential ideas to consider when incorporating content marketing into your IR strategy. These ideas will help craft your narrative, navigate the digital landscape, unleash the full potential of digital engagement, and ultimately help build a robust investor brand. Through the fusion of analytics and emotions, content marketing has the power to bring the investment story to life and forge lasting connections with investors in this digital age.
Focus attention on your story and your story alone.
A great deal of content is available to general business audiences on product and service categories, market trends, and forecasts. Even though much of it emanates from reputable market research and management consulting firms, the sheer volume of information can just as often confuse issues for investors as they clarify them.
Amid the noise, IR practitioners should generate content specifically for investors that is trained squarely on the investment thesis. Formats should prioritize intra-quarter, on-demand, easily consumable digital media that supports the thesis by drawing out the company’s mission, secular trends, growth strategy, operational and financial metrics, and sustainability initiatives. The range of media for delivery can include short-form videos, digital forums, podcast/vlog series, and blog posts.
As Berkshire Hathaway’s Charlie Munger wrote in The Psychology of Human Misjudgment, “Man’s imperfect, limited-capacity brain easily drifts into working with what’s easily available to it. And the brain can’t use what it can’t remember.”
IR grasps the finer aspects of the story perhaps better than many others. What are the distinguishing attributes of the stock relative to direct peers and other companies in the industry? Which performance and valuation metrics will investors use to benchmark stocks in the industry? Who among investors by style, strategy, and size are likely to find the story appealing? And why does the stock represent a buy - today - for those investors?
In addition, IR frequently interacts with analysts and portfolio managers in the course of reporting and marketing. Tracking questions asked during earnings, in-person meetings, and one-on-one calls can validate the most compelling aspects of the story and alternately reveal the least understood.
All the different inputs inform the development of the investment thesis and—importantly—underlying elements of the thesis to drive content generation at certain points on the calendar.
Apply the basic tenets of marketing to investor marketing.
Building a brand requires discipline and repetition.
For IR undertaking work on an investor brand, developing an unambiguous and convincing investment thesis is essential. That work involves simplifying complex material, eliminating industry-specific jargon and acronyms, and streamlining the telling to use fewer words rather than more.
The “Father of Advertising” David Ogilvy spent a great deal of his career researching human behavior and developing the pitch for hundreds of campaigns. “Most campaigns are too complicated,” he wrote in Ogilvy on Advertising. “They reflect a long list of objectives and try to reconcile the divergent views of too many executives. By attempting to cover too many things, they achieve nothing.”
Developing the investment thesis with the management team can feel similar. Drawing on learnings from the current market valuation, ownership data, investor targeting, recent engagement, surveys, etc. is important for IR to bring perspective to conversations with management.
The actual campaign execution starts with creating an ideal path to convert target investors to shareholders. A prototypical marketing ‘funnel’ involves leading a prospective buyer from awareness to consideration to engagement and, ultimately, conversion. Integrating direct, in-person engagement and direct digital engagement at each stage can result in far more informed investors at the all-important, in-person meetings in the engagement stage.
At a minimum, breaking down investor marketing to a tactical level, analyzing current practices, and identifying areas for improvement is a useful exercise in codifying a more formal process.
Deploy content strategically throughout the year.
At a glance, the IR calendar is already brimming with tentpole moments. IR teams are also grappling with ever-increasing demands and relentless pressures.
The strategic objectives of content marketing, however, encompass a dual purpose. The first is to increase engagement with target investors. The second is to better educate investors around important events on the calendar.
Therefore, it pays to smart be about what, when, and how to produce content.
For example, distribution of content on the management strategy and outlook may make particular sense just ahead of a major bank-organized conference or during the fourth quarter when asset managers are seeking the best ideas for the coming year.
The content generation process need not be too distracting. Scripts can be generated using existing materials such as management presentations, earnings transcripts, and regulatory filings. Shooting a short-form video, for example, can be completed relatively quickly around regularly scheduled management preparations for earnings and conferences.
Certain events on the calendar also present opportunities for content that provides investors with critical additional context around areas such as these:
- Earnings: Management has limited time during the conference call to go deep on certain subjects. For example, posting in-depth content on a strategic initiative provides investors with greater detail needed for decision making.
- Proxy season: Although securing the support of investors is critical, arranging one-on-one briefings is simply too time-consuming. Content containing management’s perspective on a certain issue(s) can put a spotlight on the potential adverse consequences that a vote against management could have on competitiveness, operations, and more.
- Event-driven activity: A detailed update on the integration of an acquisition or planned uses for cash after an asset sale are subjects of great interest to investors. Dedicated content on certain issues can obviate the need for extensive questioning during presentations and calls.
- Special events: Content can be created and distributed to highlight special events and milestones throughout the year such as investor days, annual general meetings, presentations at investor conferences, analyst upgrades, raising guidance, annual reports, and initiatives related to environmental, social and governance (ESG) issues.
Strategically seeding the calendar year with specific pieces of content can deepen understanding among investors while increasing confidence in management.
Incorporating content marketing into the IR planning process can enhance overall financial reporting and investor marketing.
Lean into creative to express the investor brand.
Creating an investor brand is much more than the investment thesis and relative attributes of the stock. The goal is to make the story as vibrant and appealing to investors as possible. Design, voice, and IR values such as responsiveness and transparency are incredibly important.
At a minimum, the design should be consistent with the latest brand identity materials and properties such as the corporate website. Utilize a mix of media formats to augment management presentations and earnings materials - including interactive, video, and infographics - to fully bring the story to life.
A few specifics to keep in mind when developing creative for investors:
- The core message should be understandable in five seconds. Don’t make investors work to get the point.
- Colors and images should not distract attention from the information presented.
- Consider whether investors need a chart or table with 36 data points, for example, when four really matter. The place for full charts and tables is in the financial section of the management presentation.
- Use the absolute fewest words necessary to communicate the essential takeaway and avoid dense blocks of text.
- Seek feedback from investors and stakeholders to continuously improve creative effectiveness.
In setting out to build an investor brand around the thesis, the goal is to make each communication to investors as dynamic and impactful as the work on the ground across the organization.
Incorporate digital measurement tools.
The standard forms of measuring investor marketing from direct engagement are limited.
At present, IR tracks the number of interactions with target investors at conferences as well as small group and one-on-one meetings. Periodic perception studies provide blind feedback from a select set of firms. And, of course, share ownership levels among target firms serve as the ultimate market feedback.
Direct digital engagement through content marketing involves more frequent posts to the IR site, which generate automatic alerts to subscribers. Content is shareable by recipients to personal networks and on social media platforms. Leveraging social media to increase reach through platforms such as LinkedIn, Twitter, and YouTube further increases distribution.
It is essential to recognize the distinct differences and purpose of each distribution channel. By tailoring the approach, IR teams can effectively leverage each channel to achieve specific objectives. Each channel possesses its own promotional capabilities, directly influencing the reach and impact of the content.
Additionally, adding digital marketing results in an expanded and more dynamic dashboard for reporting to management and board members.
Metrics associated with digital content marketing include IR site traffic, time on the page, traffic sources, returning and new visitors, visitor geography, click-to-open rate, click-through rate, content shares, and new subscribers. AI tools can analyze and benchmark IR site traffic relative to a peer set.
As with any new initiative, tracking metrics over time can inform future efforts to continue honing digital engagement as a complement to purely analog marketing through in-person meetings and events.
“Understanding what the street needs from us and recognizing how investors consume information, will ultimately force us to create and deliver materials in an entirely different way in the next 10 years,” said Matt Tractenberg, Vice President, Investor Relations at Wallbox. “I may not be able to get someone to take my call, but I can give them links to short, digestible pieces of content they can watch on their own time and live on the IR site for as long as I want them.”
The content can be five minutes, or even 20 minutes long, and cover subjects like a new product launch, mergers and acquisitions, a strategic initiative, geographic expansion, or a new member of the management team. Communicating in new ways can be a bit scary if you let it, but it’s also wildly exciting if you embrace it.”
By harnessing the power of digital engagement and content marketing, IR teams can transform their investor outreach. The adoption of smart and consistent content marketing techniques across mediums can lead to expanded reach, deeper engagement, and better educated investors. Remember, the key to successful content marketing lies in understanding investors’ needs, delivering valuable insights, and fostering meaningful connections to build the investor brand.