This post previously appeared in IR Magazine.
As the 2017 proxy season looms, recent precedent and enhanced compliance clarity is empowering public companies to consider a new set of innovative digital and social media strategies when they are working to counter activist investor campaigns.
Since the SEC released its most comprehensive guidance on social media use in 2013, many notable public companies have expanded their financial communications and investor relations campaigns to include social media platforms. Much of this has occurred in response to dissident shareholders using social media platforms to put pressure on companies they target. Icahn Capital, Trian Partners and Pershing Square Capital Management are just a few of the prominent investors known for the savvy use of online channels.
With the landscape shifting, the new normal for many public companies is active use of innovative strategies that include using Twitter to live-tweet quarterly earnings calls, leveraging YouTube to share video messages from leadership and relying on corporate blogs to amplify strategic updates. This evolution is also helping a sophisticated group of public companies harness digital and social media to counter campaigns brought by activist investors.
A great example of a public company adapting to the environment is Ashford Hospitality Prime, which stalled Sessa Capital’s 2016 proxy campaign with the help of a microsite, social media strategy and even targeted online advertising. The “Ashford Prime Facts” campaign helped the company refute one dissident’s shareholder narrative and reinforce its corporate strategy to investors.
Here are some of the top tactics we see companies currently incorporating into their activist defense mix:
- Issue-Specific Microsites – During activist situations or proxy battles, it’s more important than ever to have an established platform for deploying shareholder value messaging and powerfully responding to dissident actions. This need has led companies across industries to launch issue-specific microsites during escalated contests. As a result, they have been able to share more of their own content and perspectives with analysts, investors and media; they are even directing investors to a voting platform in real-time.
- Dynamic and Visual Content – From performance infographics and executive blog posts to board of director videos, companies are no longer limiting their shareholder communications to PowerPoint presentations or letters. This kind of multimedia content can often help tell a more compelling story about topics spanning capital allocation, corporate governance and overall business strategy.
- Social Media Amplification –Companies being targeted by hostile activists are increasingly using Twitter, Facebook, LinkedIn, email newsletters and corporate blogs to push out their own content and amplify their narrative. These digital media platforms then drive traffic back to company websites, microsites and other resources that companies build to counter activists. Going forward, a cross-channel social media strategy will be an essential part of any integrated activism defense campaign, particularly as activists are often using multiple social media platforms.
- Paid Search Targeting – Activist investors are already using paid ads to reach investors online. To ensure their story is prioritized in search results, smart companies are now proactively leveraging these paid resources to drive users to their own microsites, social media communities and investor relations pages. Many companies are also opting to go one step further and use micro-targeting to ensure their content is being seen by a hyper-focused audience that is reflective of the company’s investor base.
- Analytics Reporting – Leveraging data on content performance is one of the most essential, yet overlooked, components of a successful digital campaign. By analyzing data on everything from the geographic breakdown of microsite traffic to the number of external link clicks a social media post drove, savvy companies are tracking and reporting whether their content is being seen by the right audience each day. This ongoing review enables content shared across all of a company’s digital channels to be optimized to perform best for its intended audience.
We predict that these tactics for shareholder activism defense will become commonplace in years to come. We also expect activists will look to stay one step ahead with their own digital communications strategies and demand even greater innovation. This means corporate leaders should be proactively infusing smart social media and online programming into their communications and investor relations approaches.
With this context in mind, is your company prepared if an activist comes knocking with a digital campaign?
Greg Marose, senior account supervisor, Financial Communications and Capital Markets.