April 29, 2013
Focus: Social media

SEC's 'OK' on social media taken as validation

John Raser, digital media strategist and director of communications, The LIMU Co.
Tyson Goodridge, principal, Dialogue

Earlier this month, the nation's top securities regulator, bowing to the global social media frenzy, opened the gates to allow companies to share key information with the public via digital platforms, such as Facebook, Twitter and LinkedIn.

Netflix CEO Reed Hastings forced the Securities and Exchange Commission's hand last summer with his Facebook posting about his company's record monthly viewership. Netflix stock soared in next-day trading.

The SEC's announcement has many of Connecticut's top public companies and their leaders scratching their heads trying to discern their new roles in an increasingly social media-centric world.

The SEC has always required that investors get word of any significant company developments the same time as everyone else. Allowing businesses to use social media to share news with their investors signals that regulators now acknowledge the immediacy of the changed technology landscape and its impact on corporate America.

Michael Tucker, a finance professor at Fairfield University's Dolan School of Business, says that while the SEC's announcement opens another outlet to inform investors, it is only a "big deal" if companies actually use it.

"Not everyone accesses social media," Tucker said. "It is a closed environment. What makes it moot is that there will be plenty of people out there willing to pass along anything divulged on social media to the general public."

While there is now another place for investors to look for information, Tucker says the decision could result in a heftier workload for analysts.

"Any information posted will be followed by analysts — more work for them since they will now have to 'friend' companies to stay on top of things if and only if more companies indicate they will be releasing information on social media," Tucker said.

Ultimately, Tucker says the announcement will probably mean very little since it may be only a handful of companies that take this route.

"I think very few companies will use social media as their release point for information," he said. "Facebook would like more companies to use social media for press releases but that may not happen for a long time if ever."

In Connecticut, the initial response to the SEC announcement backs Tucker's assertion. Of the nearly dozen public companies contacted by The Hartford Business Journal, the majority were generally unaware of the decision or said it won't result in changes for them.

"The SEC announcement doesn't change how Webster Bank utilizes social media," said Webster spokeswoman Sarah Barr. "We make our financial announcements through traditional outlets and use social media to enhance it. Social media is a vital communications and marketing tool that we at Webster embrace. It enhances our relationships and interactions with our customers and the media. If anything, social media will help our communications grow."

Brain Ek, spokesman for Norwalk's Priceline.com, echoed Barr, saying the online travel- booking giant has never disseminated material information through social media.

While the SEC decision might not be having an immediate impact in the corporate environment, many are heralding its move as more confirmation of the growing influence social media has on businesses.

"Social media's validity and longevity have long been affirmed," says John Raser, a digital media strategist and director of communications at The LIMU Co., a nutrition-products marketer in Lake Mary, Fla. "Traditionalists and old-school marketers are just catching up with the digital age we live in."

Raser foresees a wave of company officers and directors emerging from behind the email curtain to engage on digital platforms.

"It's not solely about brands. It's about the personalities and perspectives behind the brands. People follow leaders, not logos," Raser said. "Reed Hastings is simply the newest social-media poster boy. If anything, this will only create a greater public desire for more CEOs to be locked into these social channels."

Tyson Goodridge, principal at Dialogue, a Boston social-media trainer and consultant, said the SEC decision will result in an expansion within many corporate communications offices as social media savvy employees are sought.

But, he offers some words of caution.

"Most social-media talent is young, a bit too young, in my opinion," Goodridge says. "So, tread carefully. I'd rather hire a 30-year-old with a strong PR background and a solid understanding of social, than a 25-year-old who is passionate about social, but doesn't know the basics of PR/corporate communications. One slip-up from the 25-year-old and it's not good."

Goodridge says the SEC announcement definitely reinforces social media's presence in the business world.

"Like it or not, social media is pervasive in our society," Goodridge said. "In fact, social media really shouldn't be considered 'social' anymore. They are media platforms and publishers of content. It may be 140 characters, but it's still content."

John Lahtinen is a freelance writer/editor based in Farmington. Follow him on Twitter @johnlahtinen or reach him at lahts@yahoo.com.

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