The Future of Annual Reports on the Web

The Future of Annual Reports on the Web

Whether a professional or an individual investor, the document which is most often cited for value in understanding a company is the annual report to shareholders.

This once a year book is the one place most people in the investment game feel they should be able to go for answers to what a company is all about and how it is doing in its field of endeavor.

But people considering buying the stock are not the only ones looking at the annual report;

If the company is a good target for acquisition, legion of investment bankers, arbitrageurs and acquisitive company executives clamor for copies.

In most companies then, this document is a big deal. Lawyers, communicators, financial staff, the chief executive, marketers, line managers and many others are drawn into the fray of producing it. At many of the world’s top companies production and distribution costs run into the millions of dollars. Often the task is coordinated by an expensive outside firm, which draws upon internal resources as needed, while in some companies one or more full time staff are busy with the document year round, starting on the next version as the latest goes to press.

Thus, it stands to reason, this corporate publication will be a significant focus on any public company’s web site. Let us note quickly that the print version of the annual report cannot disappear - regulators will not be happy and shareholders are still mostly content with a book easily opened and paged through, as well as easily closed and stored close to hand.

Nevertheless, a recent survey by the Corporate Annual Report Newsletter shows 41 per cent of company web sites have a version of the annual report in place and another 40 per cent plan to do something soon.

The Internet in its old days (pre-1993) was almost entirely a print medium. Documents could only be found in text form and indeed, that is still the case in absolute terms; there is far more text available via modem and networks than there is video, animation and sound.

But experimentation and demonstration of technological skills have brought bells and whistles to many web sites. These days on the net, corporate sites may contain useful graphs and pictures from the annual report, while the textual filings at the Securities and Exchange Commission’s EDGAR database are an alternative choice for viewers. Reaching either one is fairly simple. In most cases you can insert the company name or stock symbol between "www." and ".com" and you will get to the main website; the SEC material is at www.sec.gov.

However, with the madcap race to enhance the web -- much, much more is possible. So, it stands to reason, simply putting the text of your annual report on the net is a bare bones first step which will make it available to any computer cruiser of the medium, but it may not be what is called for near-term and long-term.

Adding the print version’s graphics on site makes the message sparkle and starts to bring more of the impact that the printed version carries. But real creative opportunity arises if one steps back, looks at all the tools of the web, and says how might I build an annual report if I started with these?

Before we fly into the bluest of skies, however, let’s gravitate to the poor old user for a moment. A majority of today’s net surfers do not have advanced systems that allow them to see and hear all that might possibly be created. Nor will they for some time. Therefore, while below I paint a picture of what might be done, keep in mind this will not necessarily serve your audience well this year, or even next.

One must balance the desire to communicate with the existing audience against marketing, public relations or technological experimentation goals.

As an example, most companies looking at CD ROM distribution of annual reports in the early ‘90s found their main targeted recipients didn’t have playback capability. Perhaps more importantly, it soon became clear they were not necessarily ready to drop the easily opened book for digital displays. So the idea has been largely scrapped in favor of web site presentations, where financial data has become a significant component of the corporate data gathered for external consumption.

At the world’s largest financial publisher, Bowne and Co. of New York, Toms Vos, Director of Marketing confirmed this, adding that transfer of data to the web has yet to impact traditional printing. "People are trying to do it as an add-on; they still print the same number of annuals," he told me.

Andrew Waller, a corporate communications executive at electronic publisher Reuters Holdings PLC, has produced the annual report, looked at CD-ROM concepts and more recently handled website creation. Like hundreds of other corporate planners, he puts excerpts from the printed document on the site. I asked him if a separate design approach using web tools is far off.

"Given the speed at which the web is developing, it could be that will happen in two to three years time," he says, quickly adding, "that’s a guess."

And while today’s audience is clearly print oriented, Waller believes print versions of the annual will ultimately disappear. An arguable point to be sure, but meanwhile, there is much to be said for experimenting on the development curve if you want to be in front when the dust clears.

Tommy Oddo, a Houston, Texas designer who spent many years working on annual reports in traditional formats has put away his pens and drafting table for the digital tools of the net. He notes that sophisticated software like Shockwave can be used to create such things as pages that can be "turned" on screen, - a visual metaphor for the trusty old paper and pasteboard.

"Companies see this as an expense," Oddo says, referring to on-line publication. "They are looking at it wrong, its a great way to save money." Some companies are already saving on publication and postage costs because of the Internet access to their data. Chuck Wessendorf, an Investor Relations professional for Xerox was quoted last November as saying that web presentation of the company’s quarterly financial reports saved the company over $100,000 a year in printing costs.

So, there is value in getting the annual report onto the web site. Where might it go from here? Oddo sees annual reports becoming more compact and versatile. Putting information into graphical form or video packs more data in one place than straight text -- a picture is worth a thousand words...

At the Massachusetts Institute of Technology, Media researcher David Small has come up with a new graphical way to display text -- creating a 3-dimensional on-screen object which provides what he calls "a sense of journey," something lost on the disconnected flat pages of a web site.

Small’s solution paints text on a virtual cube that can be looked at in its entirety from far away, or zoomed in upon for a close look at blocks of words, footnotes or background. It’s like zooming down to the seashore’s sand and pebbles from a satellite view of the continent. An entire annual report could be on a single cube.

What else? Clickable links in place could carry you to video displays or computer animation of new products and processes. Another click might bring you to a video of the CEO speaking his message to shareholders or the CFO discussing the financials with a smiling face and chart support.Some web sites already do this.

At the whim of the webmaster, you could be transported to extraordinary detail on almost everything in the report as we link the Internet to the Intranet across the Extranet -- whew!!

(To explain for the non-net-savvy: everything in the annual report is built on a pyramid of data stored in company files -- rapidly becoming available on internal Intranets, more of which is being turned loose for examination day after day via password-protected Extranets, which are chunks of the former deemed OK for outsiders to see on the Internet)

Pacific Telecom does a good job of such linkage today with its on-line press releases created with desktop publishing style. Also take a look at the technical data on sites maintained by Northern Telecom, Digital, Intel and Microsoft to get a feel for the scope of this kind of corporate information sharing.

Bill Gates will take you further into these realms in his amazing discourse called The Road Ahead, so I will slide down the rainbow for now. After all, this blue skying doesn’t take care of today’s issues.

Who uses the annual; how and why? The folks at your company who produce it for print distribution should know and assuming they are in touch with their audiences, can advise web builders on how best to proceed.

If that is not the case, it is time to get out and survey the users; find out how many prefer the web and will use it to access the annual report. This fortunately is a reasonably well known group -- the company should have names and addresses -- not as tough a group to get hands around as, for instance, prospective company product users may be.

Once commited, do make sure you let the established audience know about this new medium via old media, something many web contributors fail to do; there is a need to push people along when transitioning.

There is a clear advantage to forging ahead. At the very least some printing and postage costs can be saved as the total number of people demanding printed versions shrinks. Moreover, managers wishing to reach the increasingly on-line audience will have the experience under their belts to put forward the best face of the company as and when people come digitally calling.

This venerable, often dull, stalwart of corporate communications stands rooted in print, but it is peering out from its ledge at this slippery moment in time into glittering blue skies ahead. "Happy days!" to those who will fasten on its new wings.