When Bombardier Inc. launched the maiden flight of its CSeries jet last September, the company broadcast the three-hour-plus event in a live, bilingual webcast that was more Canada AM than a traditional corporate video.
Held outdoors at the Mirabel airport near Montreal, with Bombardier (TSX:BBD.B) employees in bleachers as the backdrop, actor Adam Reid anchored a news desk, joined by Hélène Gagnon, Bombardier vice-president, public affairs, communications and corporate social responsibility and Eric Laurendeau, an associate professor in mechanical engineering at the École Polytechnique de Montréal.
A roving reporter worked the crowd, there were interviews with key Bombardier executives and engineers, executives from potential clients such as Lufthansa and Porter, and even a Transport Canada official. The broadcast, which was carried live at 30 Bombardier sites around the globe, featured a discussion about the company’s background, the aviation industry and the CSeries, the jet that Bombardier is betting its aerospace future on.
There are many milestones in a jet development program, but from an investor confidence point of view, that maiden liftoff is hard to top. The proof? In the month that followed, the company’s share price surged to a two-year high. “You don’t have first flights every day,” says Shirley Chénier, Bombardier’s senior director, investor relations.
Such thinking and such results explain, in part, why the company elected to turn the flight into a major event, staged and produced for online viewers, and promoted heavily through social media.
But this wasn’t just about investors and employees. Bombardier also realized that, from a strategic corporate communications point of view, its potential audience included every company stakeholder. And so it went all out to create an event, complete with a post-flight press conference, that included and addressed everyone from potential customers and financial and industry analysts, to regulators, subcontractors and even the general flying public.
It was a polished, professional show. As a case study in corporate communications and investor relations, it’s also a classic introduction to the blessings—and cursed dilemmas—of social media and 24-hour connectivity, circa 2014.
Bombardier’s approach highlights the integration that is (or should be) underway at public companies when it comes to public communications. It’s rare today to be thinking only of investors or the media, and much more likely to include customers, suppliers, business partners, regulators and non-governmental organizations. That also means thinking of how to address them across a growing array of channels, from traditional print campaigns to online platforms like Twitter, YouTube, LinkedIn and Facebook. “Everything is changing because of social media,” says Chénier.
While the power and potential of these platforms and all this connectivity is impressive, the fact that audiences once easily segmented and differentiated now mix and meld and get the lion’s share of their information at the same time can be vexing. And that goes equally for company strategists and market regulators.
Indeed, this new ecosystem of stakeholders and communication channels is part and parcel of a trend that’s seeing regulators increasingly focused on disclosure issues. “As disclosure officer, you are responsible for effectively everything the company says,” notes Darren Seed, vice-president capital markets and communications for Westport Innovations Inc. (TSX:WPT), a global leader in natural gas engines and vehicles.
He says the focus used to be confined to press releases. But with the advent of laws such as Bill 198, which created secondary market liability in Canada for public utterances, and the U.S. Sarbanes-Oxley legislation and new rules around fair disclosure, Seed says it extended the scope to all lines of public communications.
What that has done, he says, is drive investor relations and corporate communications closer together. “You can’t just have people pointing at each other saying that was IR or that was communications.”
He says the challenge today is “being consistent so that you have one message, one tone” across all the channels a company uses to communicate.
Experts agree this issue is critical for public companies. Analysts and investors are savvy to a slight change in tone or direction. What is being said in the sales channel or through marketing and on the firm’s social media must reflect what is being said through IR.
In fact, what a company is telling a non-governmental organization is equally important to investors as it is the NGO, says Steve MacKinnon, national practice leader in financial communications and transactions at the public relations firm Hill & Knowlton in Ottawa. “Take companies in big resource projects. The perception of risk is such that the investor and financial communities are acutely aware and alive to possibilities that major deployments of capital can be delayed or canceled as a result of social license issues,” MacKinnon notes.
Building a consistent narrative is critical, adds David Ryan, vice-president, financial communications at public relations firm Edelman Canada. “For public companies the challenge they are wrestling with is how do you communicate with a diverse group of stakeholders…and have conversations on a number of new communications platforms?”
When Twitter announced its IPO in a tweet last September, it highlighted the growing impact the social media channel has on public companies. It also highlights the opportunity.
Social media allows companies to speak directly and unedited to an audience, without media filters. For Westport’s Seed, Twitter and YouTube have become a communications staple. “We have a very robust social media presence,” he says, adding, “investor relations officers have to have Twitter in their repertoire.”
“You have to be active,” when managing social media channels, he notes. The company uses its YouTube channel to highlight its technology, tout the benefits of natural gas over other fossil fuels, and provide information, such as how companies can switch their fleets to natural gas vehicles. It uses its blog, “Fuel for thought,” for thought leadership and maintains a complement of videos on its website. He is also a proponent of Slideshare, a site/application for sharing presentations. “It has got a lot of hits and it doesn’t cost us anything,” he notes.
Westport has a Facebook presence, but Seed says after a few months it only had one friend, leading him to conclude that “certain social media channels are not for everyone.”
Both Seed and Chénier say that communicating to analysts has changed dramatically since the financial crisis. There is high turnover in the analyst community and budget cuts, making it difficult for them to travel and visit management. The Internet and webcasts make it easier to deliver critical information. However, analysts are also swamped and must deal with information overload, making it challenging for public companies to break through the noise. The Internet can level the playing field for smaller and mid-sized companies.
A recent Canadian Investor Relations Institute Survey found that in 2012, 47% of IR professionals report using at least one social media site, up from 21% in 2010. A further 30% report using multiple channels, with Twitter leading, followed by LinkedIn and YouTube. A growing number indicate that they plan to add social media to the mix.
However, they could be butting heads with their bosses. A recent KPMG C-suite survey found limited enthusiasm in the corporate suite for social media. Only 23% of C-level executives said it has substantially changed how they market or communicate. A further 44% said a social media presence was unnecessary. The greatest support is found among service companies, where 74% said social media is either very important or somewhat important. The biggest naysayer were resource companies, where 65% said a social media presence was either not at all important or not very important.
However, reality suggests that companies ignore social media at their peril. MacKinnon notes that activist investors and protestors are getting much more adept at using social media to advance their causes. “They may have picked a bank AGM in the past. Now they can slice and dice several issues in several industries and run campaigns. They have the ability to speak to niche audiences. They have adapted and gotten very good at it.”
Carl Icahn, in a much-heralded example, used Twitter in 2013 to object to Dell Inc.’s buyout and in eBay’s recent proxy contest. This April, the SEC issued new/updated compliance and disclosure interpretations involving the use of social media for securities offerings, business combinations and proxy contests. Companies that use social media with character limits, such as Twitter, can satisfy disclosure requirements by incorporating a hyperlink to fuller documents.
“The SEC is getting a little more relaxed about the means by which issuers can disclose information,” says MacKinnon. “Canadian regulators will have no choice but to follow.”
The challenge with social media is that communications is a “two-way street,” says MacKinnon. “The really good companies understand how to get information, as well as give it.”
Edelman’s Ryan notes, “There’s a code of conduct and a way to engage effectively as a company.” However, he adds, “There’s a risk a conversation can snowball out of control.”
Chénier says that while social media creates direct channels to different audiences, it also has a dark side in that it can be a proverbial rumour mill. “What is very frustrating is that you have a lot of non-confirmed things that circulate. Everything is immediate and not necessarily real or true or validated by anybody.”
The challenge for IR is that if you engage and squelch one rumour, then the next time something arises and the company doesn’t respond, people will think it’s true, says Chénier. “We have a policy not to respond to rumours. We would always be confirming or denying something. It doesn’t make any sense and at some point you would lose credibility.”
When it comes to communicating in today’s burgeoning stakeholder ecosystem, content is king, says Ryan. Thanks to social media and digital technology, “everybody can be a media company and have the ability to create compelling content and distribute it.”
He suggests it’s time for companies to add a chief communications officer to the C-level suite to be in charge of the broader company narrative and how it is told to individual stakeholders. That is happening in the United States, where a handful of companies such as Netflix, Intuit and Levi Strauss, have appointed people to such a position. It is also popular in the highly regulated healthcare industry. The person in this role should be equally adept in terms of advising on the risks and disclosure responsibilities associated with this new reality along with its strategic opportunities.
In a world where a company’s reputation can be tarnished with a tweet about bad customer service or a YouTube video showing luggage being tossed around at an airport, the need to take control of the narrative is essential. “There are important conversations happening about your company online,” says Ryan. “You can engage, educate and inform stakeholders on those platforms.”
However, he says, “a lot of companies are reluctant to take that first step,” which could lead to tragic consequences. “Companies need to take control of communications before it takes control of them. It’s critically important to build trust with all stakeholders.”
SEC guidance ups the online ante
The normalization of social media use in the regulated, legally fraught world of securities offerings, mergers and acquisitions and proxy contests continued this year, with the Securities and Exchange Commission releasing new guidance for issuer communications in April. Notably, the rules also apply to other parties in these engagements, such as hedge funds and governance activists.
Specifically, users of character-limited platforms such as Twitter can now satisfy “legending” requirements by including hyperlinks to full legend documents and including language that indicates the link takes the reader to important information. However, the exemption doesn’t apply to sites without character limits, like Facebook and LinkedIn.
The upshot of this guidance is that market participants will be freer to use Twitter to communicate and disseminate information to investors and other stakeholders. It also puts increased onus on issuers to be active on platforms like Twitter, to communicate proactively and be prepared to respond quickly and tactically to others’ potential posts. Previously, for example, suitors and activists would have been prevented from using Twitter to release information in a proxy fight without first filing and mailing a formal proxy statement. Relieved of that restriction, their tactics and messaging are likely to change.
The SEC guidance also included other technical clarifications. In the past, for example, issuers wary of potential disclosure regulation transgressions even had to be concerned about other unrelated parties retweeting/reposting their communication. Now the SEC has made it clear that as long as the third party reposting the communication is not the offering participant or acting on behalf of the issuer, then the retransmission will not be attributed to the issuer.
Canadian issuers must of course pay attention to see if Canadian regulators follow the SEC’s lead on this guidance.