It's growing like Topsy and it's here to stay, for now, but the spread and popularity of social media raises an important question for commercial enterprises: what are the risks to a company's share price and reputation if the opinion-driven, sometimes truth-defiant world of blogging, tweeting and posting is not carefully monitored? Protecting corporate reputation is one thing. Managing corporate information,especially of the kind that falls into the category of continuous disclosure, is another.
Once solely the concern of the corporate communications unit, the information a company chooses to publish and the method and timing of its dissemination are becoming insistent issues for boards and senior management to address.
And after market-sensitive information has been given first, as required, to the Australian Securities Exchange, listed entities have a wide range of publishing options, ranging from press releases to webcasts and Twitter.
Village Roadshow chief financial officer Julie Raffe predicts that listed companies will increasingly include social media as instruments in following their continuous disclosure policies.
"The whole thing for us about social media is not to overreact to it but to view it as a tool in the same way that there are other tools available to us," she says.
"Clearly the use of these platforms from a marketing perspective is very important for a company like ours. So we need to understand what those opportunities are and how we want to pursue them. Then we need to think about how we might bring in other areas of the company, such as people working in company secretarial practice and continuous disclosure roles."
The ASX listing rules state that companies must not disclose information that a reasonable person would expect to have a material effect on the price or value of the entity's securities until the information has first been provided to the ASX.
The ASX does not have a specific position on using social media to fulfil disclosure obligations, but it does support the dissemination of information as widely as possible.
"It's clearly within the spirit of the listing rules for an entity to provide investors with timely and direct access to information," an ASX spokeswoman says.
"The ASX and ASIC [Australian Securities and Investments Commission] encourage entities to adopt practices which will result in wide dissemination of information. For instance, entities may also wish to consider other methods of providing information to the market as not all investors have access to every form of media. The key element is equity of access to information, which is best achieved by dissemination across the widest practicable range."
Raffe agrees and confirms that Village Roadshow is in the process of developing a digital media strategy that will include using social media as one way of communicating with its shareholders.
"I don't see that we would use social media platforms as a [method for] continuous disclosure in its entirety," she says. "It would simply be an add-on to ensure coverage of information we wanted our shareholders, customers and so on to be aware of.
"For example, we might use Twitter or Facebook for press releases or to make people aware of changes to the business. But it would be [part of] an entire continuous disclosure strategy and it wouldn't be in isolation."
Social media such as Facebook, LinkedIn, Twitter, blogging and podcasting are increasingly moving away from the social space into the domain of business where they are being put to work in marketing, sales, customer relationship management, human resources and recruitment. The spread and depth of the take-up varies according to the type of business and the industry.
"Never before have individuals been able to become global publishers in an instant and with ease," Deloitte consulting partner Katherine Milesi says.
"There are those businesses that are quite open to the opportunity of social media and are quite enlightened and are embracing it and there are those who feel they have no choice but to use it. The motivation is different and the way companies use it, depending on their motivation, is different also."
Retailer Myer, for example, completed its new marketing policy six months ago, and included a social media strategy as an integral part of its way of communicating with its younger customers.
"Social media are a key part of our strategy for any youth campaign," says Myer's general manager for marketing, Adam Stapleton. "There's nothing that we'll send out as part of our youth message that won't have those social media sites involved."
At the age of 34, Stapleton is by far the youngest member of the department store's management team. He says the company communicates about three times a week through sites it has set up on Facebook, Twitter and Yammer.
"The reason why we go on those sites is because in the younger demographic it's about building a community of brand advocates - people who'll talk to their friends and family and will recommend Myer," he says. "It's about getting them and keeping them as customers because we have something that they're interested in."
Research by Deloitte shows that directors of companies with younger employees and customers are by necessity becoming more involved in how social media work, and learning to appreciate the business opportunities inherent in a culture that is fundamentally collaborative.
"Social media came to our consciousness in that mode of being social, frivolous and banal, so they were seen as something that was easy to ignore, a personal pursuit rather than something for the business world," Deloitte's Milesi says.
"I think there's a risk of a board not understanding how social media work - a risk on the upside and the downside."
The downside, she says, is that social media could be used in the organisation without the board's knowledge, with negative consequences.
"The upside risk," she says, "is that they fail to capitalise on the ability of social media to drive sales, reduce costs, engage customers and to find new markets and employees."
Control the message
In a world where opinion is king, some are already saying social media is causing companies to lose control of their brands.
While there are tools such as Radian6 for monitoring conversations on social media networks so companies know what's being said and have the opportunity to respond, there are others who say that whether it's at the pub, on Facebook or in the letters pages of the local newspaper, you can't stop people saying what they think.
If companies needed any further examples they got one last month when Nestlé's Facebook page was flooded with "unfans" following a Greenpeace campaign claiming the company's use of palm oil was contributing to the loss of orang-utan habitat in Indonesia. Initial attempts to remove posts only made matters worse, and within days Nestlé was assuring consumers it was switching to "sustainable" palm oil providers.
Myer's Adam Stapleton says: "There's always a risk, but word of mouth goes around anyway. Everyone I know has an opinion about Myer and the fact that they're posting opinions reflects conversations that are out there anyway. We haven't had any problems so far with regard to adverse reactions."
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