IR therefore I AM

Have we had enough of social media yet? Apparently not, as more and more companies and their senior managements embrace applications such as Twitter as a way to communicate with various constituencies and promote their companies and products. And, it doesn’t look like it is going to end any time soon.

The Internet remains a vast untamed frontier where anyone with access to a computer can comment on just about anything. Information, once released, can’t be taken back and can remain online forever. Erroneous information can become “institutionalized” and accepted as truth, propagated throughout the blogosphere and find its way into the mainstream media. Corporate reputations can be destroyed in a matter of minutes.

Of course, violating insider trading laws is a major risk for publicly-traded companies unless disclosure is properly monitored. And while the stock exchanges and other regulatory organizations are encouraging companies to post financial information and filings online, certain material statements or those perceived as such might run afoul of SEC regulations, financial disclosure requirements or other exchange rules, given the lack of Safe Harbor language. Some companies avoid blogs and Twitter for investor issues altogether for fear of violating SEC disclosure rules or inviting public criticism in a company-hosted forum.

We offer some advice for aspiring bloggers and tweeters and the like on how to minimize risk and achieve the maximum benefit for your company:

• Establish a corporate social media policy. Before delving into the world of social media, your company should have a policy in place, which should be read by all. Such policies might require employees to add disclaimers to their various accounts indicating that their views are their own and not those of the company. Your company’s law firm can be helpful in this regard.
• Innocuous stuff or inside information? People can tweet about the most inane and trivial matters; however, seemingly innocuous information can lead to rampant rumor-mongering. As CEOs tend to hang out with other CEOs, mentioning a social lunch date could lead to speculation about a merger between the companies. A visit to a doctor can touch off speculation about an illness. A simple rule to follow is to view social media like you would any other disclosure channel and observe the rules.
• Would you like your words on a billboard in Times Square? Then you better be aware of your privacy settings, regardless of the vehicle. You should always know who will have access to what you tweet. Twitter allows you to either broadcast your tweets or deliver them to the individuals you designate.
• Hold the brickbats. Face it, we are emotional creatures and when under attack there is a temptation to strike back. Social media is not for airing grievances against the competition or spreading rumors. Such activities can quickly escalate and result in costly litigation.
• No monkey see, monkey do. Don’t jump on the bandwagon solely for fear of being left behind; instead, pursue social media only if it is a good fit for your company, your customers and your overall business strategy. Know your audience and the tools they use to learn about companies like yours. Social media sites are not interchangeable or one-size-fits-all, nor do they make sense for every type of customer or business.
• How committed are you? Keep in mind that participating in social media represents a significant time commitment. Keeping content fresh is critical. Nothing turns people off faster than having “stale” and outdated content (in the digital world that’s just less than five minutes). Your constituents have gotten more sophisticated in their search for and use of information and are demanding equally sophisticated tools from the businesses they patronize.

We really just scratched the surface here. There are many things to consider when building a social media program for your company. There’s no denying that social media has dramatically altered the way we communicate and deliver information. A few simple considerations such as those outlined above can help you achieve the maximum benefit while minimizing the potential risks.