What's next with IR Internet connections?

One-on-one communications, long at the heart of successful IR programs, is coming to the net. In fact, its first forms are well entrenched, those such as e-mail and personalized general-interest web pages.

The speed with which the Internet pushed its way into the lives of Investor Relations practitioners has been outdone only by the speed of its evolution. The combination has wrought a chaotic environment populated by vendors who each promise to deliver solutions better than their competitors.

Unfortunately, neither the vendors nor most IR officers have quite figured out what to do with all this. It is, after all, a fast-moving target. But one direction seems clear--more personalized contact.

An in-depth study of large US companies last year by the Temple consultancy of London confirmed what many IR practitioners here have known for some time, that institutions are demanding more and more direct contact with companies and relying less on brokers. Indeed, this trend has been an important driver in the expansion of Investor Relations practice since the early eighties.

How do the Internet and the use of corporate web sites fit in?

Going forward, the Internet will become as critical to the process of communicating with the investment community as the telephone. In fact, what the technology promises is even more powerful one-on-one capability -- just the thing the Temple survey showed IRO clients want.

And net use is on the increase, something we look at a bit further on in this report when we look more closely at some of the new one-on-one applications. First let’s list a few of the other technological innovations in place.

There are several examples of interactivity when it comes to IR on the net. For example, the audio call format now allows identification and controlled recognition of each questioner. IBM added even deeper control last year when it ran such a program, with each slide only being displayed on a special web site as and when the CFO moved to that slide’s topic. Audio calls have long allowed interaction as have expensive video conference calls

But while video conferencing is practiced now only by a few well-heeled companies, the day of cheap and simple versions is close at hand. Skip Berents, a principal in the Boston money management firm Berents and Hess, says his group is currently installing powerful 300-megahertz Pentium computers in order to handle the video conference calls he expects to see from many companies within 18 months.

Berents, by the way, endorses both forms along with their archival capabilities as extremely valuable, especially for small-to-medium sized money management firms.

At least two direct mail specialists are now offering so-called Interactive Mail, which allows automated creation of individual websites for everyone on a mailing list, with dynamic updating each time a user checks in. With this software, a personal website is generated for every name on your mailing list. Thus, each portfolio manager, analyst or retail shareowner feels personally catered to. What’s more, each time they check the site, at your discretion, new information can be made available. You can even select a series of information packages culled from your online files for succeeding visits. And, all this on automatic pilot!

While not truly as personal as a phone call, Interactive Mail gives the perception of change and individualized responsiveness -- not a bad stopgap for busy or thinly staffed IR offices.

Even more intriguing for those with little time to spend on such matters are the products from vendors such as Reuters’ Inc.Link or CCBN, a new firm created by the founder of First Call, Jeff Parker. These companies offer modular solutions which purport to take the worry out of the Internet issue for IR managers by bringing together all the types of information a visitor needs. They also look after on-going maintenance, the dirty little (costly) secret of creating corporate web sites. Dozens of companies have already signed up for these all-in-one information packages.

But while these are excellent solutions for many companies, as with the Internet, or indeed the marketplace, no solution is forever. The competition will not be sitting still. Companies wishing to distinguish themselves will do so by immediately starting to build upon these modular responses, providing even closer support for both analysts and the buy side.

What form will that take? This is where true one-to-one communication comes to the fore. This stalwart of traditional IR managers, who tend to think of it in purely personal contact terms, is being powered up by the technology of the Internet.

Some examples

Organizations like Texas Instruments, Dow Chemical and Yahoo, Inc., the Online directory company, allow individuals to create so-called personal versions of their corporate web sites. Standard & Poors joined the fray in January, marking that old line Wall Street firm’s first move to individual investor support.

Brokers and banks -- Citibank, Quick & Reilly and Suretrade among them -- are rolling out individualized web sites as part of their investment service. The end user getting a personal site is not only their customer, but your customer, too. Naturally, inclusion of trading software is an easy add-on for these big market players who have no interest in seeing someone else stealing the business.

What does this mean for corporations?

Well, if the systems are going in which give personalized data on portfolios, the best performing IRO will want to tune message delivery for those systems. Locking in to the investor’s pathway to information is the goal. The director of money and technology strategies for Forrester Research Inc., Bill Doyle, was quoted on this topic when the S&P announcement was made.

"The trend toward individual investors as self-directed acquirers of information is booming," Doyle said. "It’s a strong trend that’s bound to continue and anybody who taps into that is headed in the right direction."

But just how far down the road is this for the big targets of IR officers, the money managers? Not too far.

Frontier Capital Management is a buy side firm in the vanguard. Managing nearly four billion dollars in capital for more than 100 institutions and 250 high net worth individuals, they have opted to offer customers personalized web sites. That is, a website tailored for every, single client.

The sites are password protected and located in a secure technical environment. They carry individual portfolio information including up-to-date performance. But more importantly, from the IR perspective, they carry research geared to the portfolio. One can "drill down" according to the company and industry investments shown, access Frontier’s portfolio managers’ comments along with other resources, and plans are being set to expand the offerings.

A savvy IRO, aiming to ensure closer ties to money managers and end-user share owners will want at a minimum to ensure these sites carry links to the IR section of his or her corporate web site. This will mean some active involvement, or the hiring of someone to ensure you get the desired exposure. With applied effort, even more intricate connections can be fashioned. The outcome of this extra effort will be an enhancement of your company’s image versus that of the uninitiated, or slow-moving, competitor who is also seeking buyside attention.

Is the buyer actually interested in all this?

A survey released at the end of 1997 by American Century Investments indicates fund investors are. More than a third of the 750 investors they surveyed have access to the net, and of that number, 56 per cent checked their holdings using the Internet last year, up from 43 per cent the preceding year.

What about professional money managers?

Early response to the individualized web sites from Frontier Capital has been tremendous, said Chris Cool, who worked on the system’s development with Thusith Mahanama. Dozens of users of the individual sites have responded positively, providing both encouragement and new ideas for the evolving service.

And while other studies show this is still a very divided target audience, down the road, says Cool, "We would not be surprised if plan sponsors will say: ‘You have to do this if you are going to run my money.’"

I submit that the savvy IRO will tailor his or her company’s information to slot neatly into such end products - personal web sites provided by Frontier, S&P, and very soon, by many others such as the brokers and bankers mentioned above. At the very least, an active IRO will lobby the likes of Quick & Reilly to ensure their company listing on the portfolio page is hotlinked to the corporate website for more detailed information.

In a world of increasing competition for the resources of institutions -- specifically their time and money -- the responsive and innovative IRO will stand out. Commoditized responses, IR programs run without regard to client information usage patterns or, falling back to the one-for-many message, are not likely to rise above the noise when compared to thoughtfully tailored, one-to-one responses like those now coming into play.

Even as management consultants have advised marketers to produce the "batch of one," so will IR practitioners need to offer prime constituents personalized, albeit technically supported, Internet contact.

[First published: NIRI UPDATE 1998]

© Copyright 1998, 2001 Hally Enterprises, Inc.