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If you can’t beat ’em, friend ’em and follow ’em

Public companies can’t ignore the candid conversations occurring with increasing regularity among investors on social networks, but must heed disclosure rules before joining in

Business In Vancouver
Curt Cherewayko
Tuesday January 4, 2011

It’s likely one of the more unique uses of social media: the promotion of two largely unknown elements, tantalum and niobium.

Nonetheless, Facebook and Twitter have become key tools in Vancouver-based Commerce Resources Corp.’s efforts to raise the profile of the two metals among investors, analysts, industry colleagues and social activists.

Chris Grove, head of Commerce’s corporate communications, explained that the market for niobium and tantalum has historically been cornered by cartels, keeping the minerals off the radar of North American investors.

“So the market has really not understood the upside in a company like us that is focused on those metals,” said Grove.

As well, a large international activist community has deftly used social media to assemble protests and build opposition against electronics-makers and other manufacturers that use niobium, tantalum and other minerals that come from the war-ravaged Democratic Republic of the Congo (DRC).

By diving into that online activist conversation, Commerce has been able get the word out that its exploratory mining projects in B.C. and Quebec hold what could be a key alternative supply to the so-called “blood minerals” of the DRC.

Natasha Netschay Davies, a communications consultant who helps publicly traded companies develop social-media outreach strategies, considers Commerce a progressive company in terms of communicating through social media.

“[Investors] don’t want to go to your website every day and look for that long, boring release about drilling results,” said Netschay Davies, director of social media at Peak Communicators Ltd.

“They want to see you chop it down into tweets as breaking news on their smartphone.”

However, she said that a fear of overstepping securities law keeps many publicly traded companies from building strong social-media presences.

As well, stakeholders in the stock market can be an impassioned bunch motivated by certain vested interests.

By joining in the social-media conversation, public companies expose themselves to public slights made by over-anxious investors or by stock manipulators.

Netschay Davies said that many companies stick to the social-media basics: posting information about or links to announcements that have already been vetted through a disclosure process. They avoid active two-way conversation with the online audience.

“This is where public companies are not at the same depth of engagement of, say, a regular retailer,” said Netschay Davies.

“When the questions [posted through social media] start coming, that’s when public companies get nervous because that’s when they don’t know, ‘Am I allowed to answer this? Am I giving information away? Can I get in trouble?’”

Andrew Richardson, the BC Securities Commission’s deputy director of corporate finance, said that guidelines regulating the public disclosure of securities information emphasize the message over the medium of disclosure.

“Whether you publish through a news release … or use other methods, you have to put the information out in way that is calculated to effectively reach the marketplace and allow investors to assess the information,” he said.

The securities law encourages the use of technology by companies, but notes that, given that the web is not accessible to everyone, it is considered a supplementary form of communication.

Richardson added that the commission warns companies about getting into the habit of responding to things posted online about them.

“Because once you get into that habit then there is that risk that if you don’t correct a false statement, there may be an expectation that it may not be false.”

Netschay Davies noted that companies have little control over what is posted about them on online bulletin boards like Yahoo Finance and Stockhouse.

Nor do they have control over what is posted about them on StockTwits – which is the evolved, Twitter-powered version of online bulletin boards.

But companies can control the online conversation on branded channels they sign up for on YouTube, Twitter and Facebook.

On such channels, companies can block offensive comments while still maintaining a reasonable dialogue with those who want one.

While there is consensus among investor relations folk that it’s best to avoid the often vitriolic conversations that take place on bulletin boards, Netschay Davies advises clients to acknowledge concerned shareholders’ questions or comments posted on company-controlled social-media channels.

“Say something like ‘That’s a great question, were going to get back to you with some answers,’” she said. “At least they know you’re listening and are participating on the social platforms that you’ve created.”

As well, such a response provides a company with time to ensure that any answer or response it posts isn’t overstepping disclosure rules.

Grove noted that even company-controlled social-media channels are not foolproof.

“We’ve de-friended a few people on Facebook because they were not providing any kind of reasonable commentary, all they were providing was an outflow of bile,” he said.

“I’ll call them and say, ‘I’m with the company, you can go on my Facebook page and slag the company or we can actually have a conversation offline and I can explain to you what’s going on.’”

Natasha Netschay Davies’ five social-media musts for public companies

1. Gauge investor sentiment by following conversations on StockTwits, Facebook Investment Groups and in the comments strings below YouTube videos.

2. Share more than just headlines: tweet details from earnings, post quotes from speeches on Facebook, upload stand-alone investor presentations to SlideShare.

3. Acknowledge questions and comments posted by investors; never ignore them. That’s how rumours spread. Get back to them when you have a legally vetted response.

4. Live tweet from investor conferences. “Tweetvite” prospective investors to your booth or presentations.

5. Manage investors’ expectations: brand your social-media profiles and define the level of engagement.

@NatashaNDavies

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