How retail investors in Australia view the importance of social and digital media channels
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Contents
Why did we do the survey?
01
How was the research conducted?
02
What did we find?
03
Research findings
04
Profile of survey participants
17
About nightingale
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Published March 2013 Š nightingale communications 2013 Suite 5.10 | 2 Queen Street Melbourne Victoria 3000 Telephone +61 3 9614 6930 www.nightingalecommunications.com.au
Why did we do the survey?
Social and digital media platforms are fundamentally changing the way people behave and interact, and this in turn is causing a shift in the way organisations interact with different stakeholders. ___
Companies and the people who run them are grappling to strike the right tone in social media and are quickly discovering that when you get it wrong the impact can be swift and harsh.
While social media has become an exciting tool for marketing executives, it is posing a whole new set of challenges for corporate affairs professionals as advocacy groups and customers find a powerful way to air their views and hold organisations to account. Investor relations professionals are also grappling with how they should evolve engagement with their key financial stakeholders.
We thought it would be interesting to find out directly from retail investors how important social and digital media channels are to them when making investment decisions, and how these channels compare with more traditional ones.
nightingale commissioned Colmar Brunton to conduct research among Australian retail investors, the findings of which are captured in this report. We think it makes for an interesting read.
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How was the research conducted?
nightingale commissioned Colmar Brunton to conduct an online survey using their Investor Pulse panel which comprises more than 4,000 retail investors residing in Australia who own shares in ASX 100 companies.
___
All respondents were shareholders in a listed company, or owned equities indirectly through an investment fund, and had bought or sold stocks or shares in the last 6 months.
In total, 507 retail investors completed the survey. Charts are based on all 507 responses except where stated.
Data was collected between 3 October and 6 December, 2012.
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What did we find?
One of the interesting aspects of the research is that a very low 5% of retail investors said they rely on financial planners or brokers when making investment decisions, preferring to back their own judgement, or advice from friends, family or the media. ___
For these investors, faced with a plethora of information sources, the research shows that nothing beats information straight from the horse’s mouth. Investors place a high value on traditional company-generated information sources, with the company website widely considered to be the most useful medium for accessing company news and information. Perhaps surprisingly in today’s world where published content quickly becomes out of date, 41% of retail investors continue to place a high value on annual reports as a source of information. Around 25% of investors said they place a high level of reliance on business media when making investment decisions, with over a third saying that the online format has become more important to them in the last year. Paid for subscription services were also popular amongst those surveyed. In terms of social media, investors interviewed appear to be quite engaged online and in digital formats with 61% saying they buy and sell shares via online trading platforms, and 28% saying they contribute content and comments in social media and online platforms. That said, social media channels are currently viewed as less influential than traditional media channels in the context of decision-making, and investors expressed a lower reliance on those channels compared to others. With over 10% of retail investors saying they place a high reliance on social media channels like micro blogging services and social networking sites, it will be interesting to see if social media channels become more important in the future.
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Research findings
4
Reliance on information sources
Retail investors rely on a broad mix of information sources. ___
Information direct from companies is the most important, but around a quarter of retail investors are highly reliant on digital channels such as online investment subscription services and online business media.
Investors are less reliant on social media relative to other sources of information, however over 10% of retail investors place a high reliance on social media channels like micro blogging services and social networking sites.
Information sources investors place a high reliance on (rating of 8 –10 out of 10)
40%
30%
30%
28%
28%
27%
26%
26%
20%
16% 13%
11%
11%
10%
0% Information direct from companies
Business media print
Subscription newsletters
Real time subscription services
Business media online
Online investment advice subscription services
Internet forums Social Micro-blogging or message networking sites services boards
Blogs
Q. Here is a list of sources which you might use for information about business or companies. On a scale of 1-10, please tell me how reliant you are on each source, where 1 = not at all reliant and 10 = highly reliant.
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Influence on investment decisions
Information direct from companies ranked the highest in influencing investment decisions. ___
Business media, both print and online, were the next most influential information sources.
While social media such as internet forums, blogs, social networking sites and micro-blogging services were not ranked as highly as other sources, 12% – 15% of investors rate these sources as being highly influential.
Information services which have a high level of influence on investors (rating of 8 –10 out of 10)
50%
40% 31% 30%
25%
25%
23%
23%
21%
20%
15%
13%
12%
12%
10%
0% Information direct from companies
Business media print
Business media online
Real time subscription services
Subscription newsletters
Online investment advice subscription services
Internet forums or message boards
Blogs
Micro-blogging services
Q. Thinking about the same information sources, to what extent do they influence your investment decisions or recommendations, where 1 = no influence and 10=highly influential.
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Social networking sites
Importance of paid for digital information
Retail investors are using a mix of paid for digital media channels, including subscription services, which have all grown in importance in the last year. ___
Over a third of retail investors say that online business media has become more important.
Increased importance of digital information sources over the last year
40% 36% 33% 29%
30%
28%
20% 14% 10%
10%
7%
7% 3%
0% Business media online
Subscription newsletters
Real time subscription services
Online investment Internet forums or advice subscription message boards services
Blogs
Social networking sites
Micro-blogging services
Other digital media
Q. Which, if any, of the following digital information sources have become more important in the last year?
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Business media in print and online is highly influential and online business media is growing in importance 25% of respondents said business media in both print and online formats is highly influential when making investment decisions. ___
26% of respondents said they place a high reliance on print business media and 28% said they place a high reliance on online business media.
Online business media has become more important for 36% of respondents over the last 12 months.
Reliance, influence and growing importance (rating 8 –10 out of 10)
50%
Business Media – Print
40%
Business Media Online 36%
30%
25%
26%
25%
Influence
Reliance
Influence
28%
20%
10%
0%
8
Reliance
Increased importance in last 12 months
Engagement in social and digital media
18% of retail investors plan to use social and digital media more over the next year, while 9% plan to use it less. 20%
Q. How is your use of social or digital media for work likely to change over the next year? Are you likely to use it more, less or the same?
15% 10% 5%
Use more 18%
0%
Use less 9%
-5% -10% -15% -20%
28% of retail investors contribute online content, either as authors or contributors. Blogs, forums and message boards are the most common platforms.
Contribute 28%
Do not contribute 72%
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Q. Do you post to or contribute information on companies or business to any of the following? Forums
66%
Social networking sites
36%
Blogs
32%
Micro-blogs e.g. Twitter
19%
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Benefits of social media
54% of of retail investors consider that social media delivers no real benefits for investors. ___
Among those who could identify a benefit, getting regular updates on investments and having access to the opinions of experts were the main benefits identified.
Benefits of social media for investors I get regularly updated with key communications relating to my investments
Q. What, if any, are the benefits of social media to you as an investor?
22%
I get access to the opinions of experts
19%
I can connect with other investors and share experiences and opinions
19%
I get the inside track about a company’s performance and investment potential
17%
5%
I get a better investment return
54%
No real benefits
0%
10%
20%
30%
40%
50%
60%
Main single benefit of social media Q. Which benefit do you value the most?
I get regularly updated with key communications relating to my investments
34%
I get access to the opinions of experts
24%
I get the inside track about a company’s performance and investment potential
20%
I can connect with other investors and share experiences and opinions
17%
I get a better investment return
4%
0%
10
10%
20%
30%
40%
Email and company websites considered the most useful information sources Retail investors consider the company website to be the most useful source for accessing company news or information. ___
Three in ten retail investors also consider email to be very useful. A smaller proportion, although more than 10%, consider digital channels such as company videos, Twitter, and Facebook to be very useful.
Information channels identified as “very useful� 45% 42% 40%
35%
29%
30%
25%
20% 15%
15%
12%
11%
10%
5%
0% Company website
Company video Company Company Twitter content (e.g. Facebook page account YouTube)
Q. Below is a list of channels which you might use for accessing market sensitive company news or information. Please rate how useful these are – either very useful, fairly useful, not useful.
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Value of information direct from companies
When it comes to information provided directly by companies, retail investors see most value in traditional sources such as company annual reports, ASX filings and press releases. ___
Relatively lower value is placed on video content and company digital media channels such as Twitter, LinkedIn, YouTube or Facebook, although 15% of investors said they thought these channels were very valuable.
Information direct from companies that investors place a high value on (rating 8 –10 out of 10) 45%
41%
40%
38%
35%
32%
30%
30%
25% 20% 15%
15%
15%
10% 5% 0% Annual reports
ASX filings
Company press releases
Company website Company social media channels
Video content
Q. In terms of information direct from companies, please rate the following information sources in terms of their value to you, where 1 = no value and 10 = high value.
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Australian companies use of social and digital media in investor communications About a quarter of retail investors give Australian companies a score of eight or more out of 10 on their use of social and digital media.
___
The majority rate Australian companies as average to good, which suggests there is significant room for improvement.
Over half of the investors could not name any companies which make the best use of social and digital media in their investor communications. Of those who did, BHP, Telstra and CBA were the most commonly cited.
Rating of Australian companies use of social and digital media in investor communications
Excellent (8-10 out of ten)
Q.
27%
On a scale of 1-10 where 1 is poor and 10 is excellent, how would you rate Australian companies in their use of social and digital media in their investor communications?
NB: The chart excludes those who responded ‘don’t know’ to this question and includes responses from 417 investors. Average to good (5-7 out of ten)
56%
Poor (1-4 out of ten)
18%
0%
10%
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20%
30%
40%
50%
60%
13
Comparison with overseas companies
A large proportion of Australian retail investors lack awareness of how overseas companies use social and digital media in investor communication. ___
47% stated that they were unable to compare Australian companies with overseas companies.
Of those who had an opinion, just over a quarter thought Australian companies performed better, and just under a fifth said they performed worse.
Comparison of Australian companies to overseas companies in digital investor communications
Australian companies perform better than overseas companies
27%
Australian companies are on a par with overseas companies
55%
Australian companies perform worse than overseas companies
18%
0%
20%
40%
60%
80%
Q. How do Australian companies compare to overseas companies in their use of social and digital media in their investor communications? NB: The chart excludes those who responded ‘don’t know’ to this question and includes responses from 271 investors.
14
Influences on investment decisions
Retail investors are split into two distinct groups regarding influence on investment decisions: 54% are largely reliant on themselves, 46% are largely reliant on other people. ___
Of those relying mainly on others, the most commonly mentioned external influences include investment commentators and experts, friends and relatives. A very small 5% of investors rely on investment professionals when making investment decisions.
How investment decisions are made
I rely on myself and don’t trust anybody else
54%
I rely on the investment tips from from commentators, experts or spokespeople on TV/radio/internet
21%
I rely on my friends, relatives and colleagues for advice when making investments
20%
I largely rely on my financial planner or broker in my investment decisions
5%
0%
10%
20%
30%
40%
50%
60%
Q. Which of the following best describes how you make your investment decisions?
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Platforms used to buy stocks and shares
63% of investors surveyed trade in equities via an online trading platform, indicating a high level of comfort among the surveyed group with using the online medium. ___
Stockbrokers, financial advisors and accountants are much less popular platforms to buy and sell shares.
Methods used to buy stocks and shares
Directly via an online trading platform
63%
Through my financial/ investment adviser
22%
Directly via a full service stockbroker
18%
Through my accountant
12%
0%
10% 20% 30% 40% 50% 60% 70%
Q. Which of the following do you use to buy and/or sell stocks and shares?
16
Profile of survey participants
17
Share trading profile ___
All of the 507 retail investors had traded shares in the past 6 months.
Of those interviewed, one in five had traded shares in the last week, and half had traded in the last month.
Among those who estimated how much their share holdings were worth, the average value was $420,000.
Frequency of share trading
In the last week
In the last month, but more than a week ago
In the last 6 months, but more than a month ago
25%
32%
43%
Age and gender profile ___
Two thirds of retail investors in the sample were aged 40 years and over.
64% of the investors were male, 36% were female.
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Income profile ___
34% of respondents had incomes of more than $104,000 per annum.
Household income $7,800-$12,999 per year
1%
$13,000-$20,799 per year
2%
$20,800-$31,199 per year
3%
$31,200-$41,599 per year
5%
$41,600-$51,999 per year
9%
$52,000-$67,599 per year
10%
$67,600-$83,199 per year
13%
$83,200-$103,999 per year
15%
$104,000 or more per year
34%
Refused
9% 0%
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5%
10%
15%
20%
25%
30%
35%
40%
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About nightingale
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nightingale is a specialist financial and corporate communications consultancy focused on helping companies to navigate issues or events that could impact their corporate reputation or share price.
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Our expertise includes: – transaction communications – investor relations – media relations – issues management, crisis communication and litigation support – corporate positioning and reputation management – strategic internal communication – distressed situations including receiverships and administrations
Our team of advisers are financially literate with backgrounds in accounting, finance, law and financial journalism. Together, we have more than 40 years experience, and an international perspective gained through working in blue chip companies and some of the most successful communications consultancies in Europe, the US and Australia.
www.nightingalecommunications.com.au
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nightingale communications Suite 5.10 | 2 Queen Street Melbourne Victoria 3000 Telephone +61 3 9614 6930 www.nightingalecommunications.com.au