Digital Investor Relations

How Digital Visibility Is Driving Small to Mid-Cap Investment

Being seen is crucial for small to mid-cap investment and more companies are now using digital marketing to increase market visibility.

With strong volatility expected in the market for 2019 more investors are researching lesser known companies and are also eyeing smaller stocks such as gold stocks before they make important investment decisions.

With social media and mobile device usage at record highs and growing, publicly listed companies catering to the digital palate are being rewarded.

The ASX-listed life sciences company Cellmid recorded its highest ever quarterly sales for its Evolis range of hair-loss inhibitor products in the opening quarter of the 2017 financial year.

Financial news publication attributed the growth to a regional advertising program which cemented a rise in web sales, and included both digital and social media marketing campaigns delivering measurable returns.

The Cellmid website is geared toward investors with the day’s share price displayed prominently on the homepage, and a dedicated Shareholder Information section containing important company data including interactive annual reports.  These can then be more easily shared by engaged digital investors on social media thus recommending and sharing the Cellmid investment story with peers. It allows the company to keep track of its investor interest and understand what information they are looking for thus better crafting their key investment messages to their stakeholders. In the lead up to EOFY it can be very easy for many listed companies to forget the positive impact a well presented, visually appealing and interactive Annual Report can offer in engaging new investors.

Cellmid’s interactive Annual Report and corporate website

The shareholder information section also charts Cellmid’s (ASX:CDY) share price movement, ASX announcements, public disclosure policy, share registry information and analyst coverage. With many communication touch points available, Cellmid has made it easy for current and potential shareholders to make an informed investment decision.

With a solid digital marketing strategy in place like Cellmid, the next step for companies is to reach out to their target audience, and engage and retain them with new and up-to-date information on company news, product releases and sharemarket results. Some innovative companies are finding new ways to do this in the digital space, such as CEO videos and even CEOs on social media.

Digital communication is also preferred by socially conscious investors, and helps companies target those shareholders who look for stocks putting ethics before earnings. Cutting down on paper, printing and postage costs for mail-outs also offers obvious cost-saving and time-saving benefits. Woodside Energy like many ASX companies both large and small, have for many years embraced the need to be more sustainable across many areas of their business. They consistently use the Green Reports initiative that enables them to offset their carbon footprint.

Suncorp Group, one of Australia’s top 20 listed companies, ran two campaigns to encourage shareholders to opt for the online version of the annual report, and it worked. They successfully obtained the email addresses of almost 20 per cent of their investor base.

Dianne Monopoli, Suncorp’s IR Manager at the time, said their success confirms increasing digital visibility can be simple and affordable.

“We dangled a carrot which was ten, $100 Coles Myer vouchers. So it was very small cost and we got 15,500 responses.”

By going online, Suncorp cut the costs of producing its annual report by approximately 50 per cent. Using Interactive Investor‘s digital reporting format has also given shareholders several advantages including the ability to view just the sections they are interested in, download the entire document, search for specific words, and email or print the annual report without needing to download extra software.

MGC Pharmaceuticals (ASX: MXC) is an Australian medical and cosmetic cannabis company on the cutting edge of medicinal marijuana production. With more than 40 years experience in the field, MGC understands the importance of divulging information to its shareholders, and it’s using the digital space to tell its story.

In May 2017, the MGC Pharma signed sales agreements with companies in Europe for its anti-ageing skincare product line MGC Derma. To support this, the company launched a social media campaign to build brand awareness and generate support. While this is a great start for maximising their visibility there is still opportunity to further build a cohesive branding strategy delivering greater results.

As a medical cannabis company, MGC Pharma has many competitors in this space globally vying for investor attention. One way to really implement a total cut-through strategy was to invest in a new best practice, mobile responsive website that maximises its ability to rank highly in Google searches. With a growing number of millennials looking to invest in shares, the need to be easily found online is even more critical today. Adding a link to fresh content such as blogs as well as increasing relevant back links to the website, built over time, can all serve to enhance the companies ability to be found and included by investors as a potential investment choice.

MGC Pharma’s corporate website with dedicated Investor Centre

The dedicated Investor Centre on their website features real time share price, charting, financial reports, corporate governance and ASX announcements. The MGC Pharma website allows investors to request an investor presentation which details its core strategy, introduces its leadership team, talks about its business strategy in Australia, the types of pharmaceutical products and production facilities it offers, and the Australian market scenario. All this is achieved through a highly immersive, interactive experience with creative WHO, WHAT, WHERE and WHY navigation headings to guide the investor through the sites content.

As with many other communication disciplines, there is no one-size-fits-all approach to investor relations and no one single digital platform guaranteed to garner results on its own. LinkedIn, Facebook, Twitter, EDM, videos, webcasts, blogs, SEO, interactive reporting and of course websites all form part of the multi-faceted approach leading small and mid-cap companies to greater digital visibility and the ability to capture investor interest. It is only through a strategically developed and well executed “stock marketing” strategy underpinned by actionable analytics, that can deliver these type of results.

Small caps are increasingly embracing the digital side of communication as shown above and have, in 2017, done a little better. The returns on small caps may have illustrated this with the small ordinaries returning 1.15% in 2017, compared to the broader market’s 4.06%. The laggard has been the “top 20” stocks, dominated by the banks, Telstra and the major retailers, which are really struggling to grow and increasingly labelled as “growthless”. For many investors the weaker Aussie dollar and the growth shown by stocks outside the Top ASX  means they are on the look out for real growth opportunities. Arguably, this is the end of the stock market that investors will be looking to in order to find the growth they want to see. This represents an opportunity for smaller/mid caps investment stories to be heard.

Source: S&P Dow Jones Indices

Social media communication is increasing among small-cap companies such as Australia-based explorer Iron Road (ASX:IRD), which used social networking to talk to investors about its A$4.5 billion iron ore project in South Australia. It has even reached out to China, a key market for iron ore, through the country’s local social media platform Sina Weibo.

Accurate and timely information is crucial for managing company reputation and both consumer and investor confidence. Many investors are now conducting their due diligence online, which is why regularly updated web content needs to be the foundation of every IR and corporate communications plan.

But it’s probably not the first place stakeholders will land. Regardless of how many communications platforms a company uses, they can all feed into and link back to the corporate website, bringing greater control and uniformity to company and IR messaging.

Social media remains the fastest way to communicate with, and influence investors. Twitter, which is often described as the first draft of modern history, is one platform with repeated examples of simple posts prompting significant stock market shifts.

Brunswick Digital’s Mike Krempasky reported that the web ‘lit up’ when business magnate Carl Icahn announced on Twitter in August 2013 he had taken a ‘large position’ in Apple and called the stock ‘extremely undervalued’.

“Within an hour, Apple’s $425 billion market cap rose 4 percent, adding $17 billion. The move gave Icahn an important advantage, tilting discussions with CEO Tim Cook, board members and shareholders in his favor for weeks afterward.”

Krempasky also claims research shows 77 percent of surveyed buy-side investors and sell-side analysts have investigated an issue based on information from blogs and social networks.

“When news breaks, a company’s social media channels are often the first place that observers and stakeholders look for information,” he said.

In 2015, Brunswick Corporation acquired Boating Lifestyle Adventure (BLA), Australia’s largest provider of products in this segment. BLA is an active user of social media platforms like Facebook to keep its customers informed and engaged.

Like the previously mentioned small cap listed company strategies, this approach reinforces a successful digital strategy should combine the objectives of stakeholders end-goals with delivering positive outcomes for shareholders, organically growing investment and increasing a company’s online footprint and digital visibility.

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