The Coming Social Revolution in Online Finance

The online social media revolution of the last 5+ years has touched nearly every facet of society with one glaring exception: Open and direct online conversation between public company executives and equity investors remains minimal.

But as 2010 comes to a close, change is afoot. Public company executives are taking aggressive steps to improve and increase their online and offline investor engagement. They’re choosing novel ways of expanding the reach of their message, especially online.

These moves suggest that social media could finally play the transformative role public companies and investor relations reps have been anticipating for some time and thereby usher in a new age of transparency. This should be welcome news for investors.

Public Companies Shifting Investor Relations Tactics to be More Social and Transparent

As earnings season comes to a close it’s become increasingly apparent that public companies are focusing more heavily on their investor relations (“IR”) efforts. What explains this phenomenon? With so much volatility in the stock market, fear of another crash, and so-called “experts” proclaiming the death of “buy and hold”, management teams are experiencing a more challenging environment in which to appeal to the much coveted long-term oriented institutional investor. But while public companies’ more aggressive IR efforts are understandable the strategy being employed is somewhat surprising.

Investor Relations & Social Media -- A Bust?

It's now mid-2010. And still, investor relations (“IR”) professionals are largely avoiding use of social media. Yet, the topic of social media has not only dominated IR discussion for what seems like an eternity but it’s also widely considered -- especially among IR pros -- an essential online tool for investor communications. Is there a good explanation for this -- so much talk and so much praise, but so little action?

Individual Investors Play Crucial Role in Ares-Allied Merger

5 Ways Public Companies Can Take Investors Home

With all the new opportunities they have to engage investors on various social media platforms (discussed here and here), public companies remain somewhat focused on driving traffic back to their own corporate websites.

Volterra CFO Discusses Virtual Investor Relations Efforts (VLTR)

Is StockTwits a Useful Social Media Platform for Public Companies?

(Disclosure: I’m one of the core group who built SeekingAlpha.com. I launched the China Stock Blog in 2004 (now Seeking Alpha China Stocks) and subsequently worked on product development. I’m no longer affiliated with the company. All opinions are my own.)

There’s much talk in investor relations (“IR”) circles about the challenges of social media. But, as discussed in my recent post (Investor Relations 2.0 – Is Seeking Alpha the Answer?), and, as you’ll see below, the opportunities for public companies to engage investors online using social media are real, measurable, and shouldn’t raise any red flags with the SEC.