For several years, Sun CEO, Jonathan Schwartz has lobbied the SEC to allow disclosure of financial information through corporate blogs. In a landmark announcement, it seems that Mr. Schwartz may indeed get his wish, and with it, a historical decision that could break the age-old shackles that bound businesses to traditional media and distribution channels in order to satisfy full disclosure.
In a speech yesterday, SEC special counsel Kim McManus outlined new guidance the SEC is about to give companies on when they can use their Websites, including blogs, to disclose material information. What this means is that we can now finally kill the press release, at least in its current form (more on that below).
The IR Web Report explains, “UNDER certain circumstances, companies can rely on their websites and blogs to meet the public disclosure requirements under Regulation FD (Fair Disclosure), according to new guidance unanimously approved by the US Securities and Exchange Commission today.”
Chairman Christopher Cox opened up the discussion by recognizing that the Web has matured providing a big step forward for investors, “Ongoing technological advances in electronic communications have increased both the market’s and investors’ demand for more timely company disclosure and the ability for companies to capture, process and disseminate this information to market participants.”
The SEC outlines boundaries for sharing information as well as holding companies and their employees liable for the information that they post on blogs and discussion forums.
Regulation FD and Social Media
The SEC is taking the right steps to embrace the new tools and services that reach people in addition to wire services. With the recognition of blogs as a viable form of disclosure, under certain circumstances of course, the SEC is officially recognizing Social Media and in a sense, socializing the rules associated with Reg FD.
Perhaps, the most significant change stemming from the new SEC guidance is that Web-based disclosure does not have to appear in a format comparable to paper-based information, unless the Commission’s rules explicitly require it.
This is music to my ears as it finally opens the door for the Social Media Release.
For a few years, Todd Defren, Chris Heuer, and I have not only defended and charted the opportunity for Social Media Releases (SMRs), but also fielded emotionally-charged questions from the financial and IR communities asking about whether or not an SMR would ever meet disclosure requirements for Reg FD, and without it, what good would it ever be…
While there have been many discussions and debates to whether a Social Media Release should cross the wire and if so, what format and design it should resemble, my belief is that SMRs should always reside on dedicated blog platforms (WordPress, MoveableType) as part of a Social Media Newsroom. And, Social Media Releases should only complement a traditional press release and disclosure activity and not replace it.
Originally introduced by Todd Defren in response to Tom Foremski’s call for the death of press releases, the SMR represents a new socially-rooted format that complements traditional and SEO press releases by combining news facts and social assets in one, easy to digest, and repurpose, tool.
Giving everyone what they need and how they need it, requires a different approach. Almost every press release issued today is done so without video or audio, and many still do not include links to additional information or supporting content.
While these multimedia pieces are underlying components of SMRs, there’s more to the presentation than multimedia content. The value of aggregating Social Media in one digital release connects information and content across social networks with the people looking for it, as well as the conversations that bind them together.
Picture a blog post that announced corporate data (not unlike a standard financial press release) but now, along with a custom video hosted from YouTube, supporting graphs and exec images funneled from flickr, pre-recorded audio podcasts/conferences piped in from iTunes, packaged market data sourced from Docstoc, related company and landscape stories and public commentary linked from Delicious. Content can also push to micromedia services such as Twitter, Identi.ca and FriendFeed to contribute to the company’s brandstream. In a sense, the Social Media Release, hosted as an elegant and media rich blog post, acts as an aggregated hub for these disparate brand beacons, and at the same time, each piece is findable and sharable within each social network and they all point back to the Social Media Release.
Also, the SMR can feature tags and outbound links to increase exposure in social networks and blog-specific search engines.
Disclosure is an Expensive Business
Naturally, this at the very least, represents a potential harbinger of doom for each of the popular wire services.
A significant percentage of their lifeblood is tied to market-relevant or earnings content that, until now, required wire services, and hundreds of dollars (in some cases over $1,000) per announcement in order to satisfy SEC disclosure. For many companies, a fixed budget for disclosure absorbed the critical resources necessary to support the activity of sharing news and therefore relied upon wires to do their public and investor relations on their behalf.
But as many PR and IR professionals will concede, issuing releases on the wire is merely an expensive step in a process of creating and distributing news using traditional tools. If you represent a publicly traded company that is actively monitored by market influencers, it’s very likely that your press release will reach their systems via the wire.
These days, it’s almost certain that a reporter or analyst will, in the best case, see and file the release but most often, the very people we hope will find and in turn, report on the information discovered, will honestly never know that you released news at all unless they’re proactively contacted. Any good public relations or investor relations professional will ensure that their top financial and business contacts are alerted to upcoming news, without giving away the news, in advance.
There is no substitute for the real world relationships we forge in order to bridge the right content specifically for the right people.
Do these new guidelines offer companies the ability to shift some or all of its wire budget back into the critical role of outbound support for corporate news?
Disclosure Versus IR/PR
Disclosure relates to the market - the people who may trade or act based on the information you publish. Reg FD protects the voice of the investor and guides companies on how to publish information so that it reaches a fair share of the market so that no one person has access to information before the other.
We can’t deny or ignore the value and benefits associated with strategic support for connecting corporate news to market influencers. Now, to the defense of wire services, and as I’ve written before, wire services can bypass those very influencers to reach people directly.
Not only does wire distribution meet disclosure, the art of search engine optimized press releases (SEO releases) have the unique ability to appear in search engines tied to the key words your market uses to search for related and relevant information. PR Newswire, MarketWire, Business Wire, and PRWeb offer businesses the ability to distribute news with added SEO functionality. When paired with a well-written, SEO optimized press release, wire distribution can more than satisfy disclosure, it can carry your story directly to the people looking for it.
In addition, wire services have invested over the years in the development of a secondary distribution channel that has, in my opinion, remained relevant even as the Web continues to rapidly change and evolve.
When a press release crosses a wire, many search engines and their financial properties (finance.yahoo.com or finance.google.com) and all market-powered hubs, portals and dashboards, receive wire feeds which automatically populate respective “Recent News” sections. Similar to how we receive RSS feeds to seamlessly receive the news and information we prefer, investors, analysts, press, and decision makers can see, in one place, the trading status, coverage, related news, and crowd-powered discussions around the activity. This has been the case since the days of Web 1.0 and was our first taste of the Social Web that is now becoming pervasive.
Without wire services, penetrating these valuable dashboards, that are still today, a primary source of finance information and activity, is incredibly difficult, if not impossible.
This new guidance, however, presents an opportunity to connect corporate information from sites and blogs to these powerful financial online hubs so that important corporate news can still reach people, the way they’re used to receiving it.
Forcing them to change their habits isn’t a realistic expectation in the short-term.
This is a Chance to Reach More People, Their Way
Not only do SMRs socialize content and link conversations across the Social Web, they also help bloggers and online journalists more effectively write a rich media post using one resource that provides them with everything they need.
Now that we don’t need to adhere to a fixed form or design and presentation aesthetics, technically there’s nothing holding us back from carrying the torch forward. It can only help present and share information in an alternative method that complements traditional releases, outbound contact, and market-related conference calls.
Coming back to my belief that Social Media Releases should be hosted on blogs and not cross wires, with the new rules for Reg FD, an SMR by default, could now meet disclosure - assuming that the host site is recognized as meeting the disclosure standards.
Social Media Releases offer the ability to not only share relevant financial data, but also feature social content that reinforces that data and the overall company story.
We’ve discussed how information can reach the market, investors, peers, and customers through search as well through articles and blog posts and also via financial portals. Search engines are manipulated by SEO (search engine optimization). Social Media is powered by SMO (social media optimization) and the results are different in how, when, and where they appear. In most cases, SEO doesn’t affect the outcome of content within social networks. But, dedicated tagging, key words, and crowdsourced participation drive the “discoverability” of content in the Social Web.
Social Media Releases not only feature social content to more visually and authentically tell stories and share information, they also provide the tools necessary for people to further socialize and interact with them.
For readers of an SMR, the options for interaction are virtually endless. They can respond through a “moderated” comment system, much in the same way they do today in online financial forums. They can grab pieces of the content, such as embeddable video, audio, documentation and images, to repurpose as blog posts and online stories, which can also send trackbacks to help pool collective coverage. Stakeholders can subscribe to RSS feeds for the entire news stream or just those related to financial/market information. Readers can send the story back out to the social web through bookmarking tools such as diigo or delicious, as well as crowdsourced news communities including Digg and Mixx. As the existing social tools evolve and new services are introduced, the potential for SMRs aka blog posts, are truly a blank canvas for PR, marketing, and the community to define how they’re read and shared.
Executives and marketing professionals must now weigh whether the company Web site or blog are indeed a recognized channel of distribution and more importantly, whether these online properties meet public disclosure requirements under the new rules Regulation FD.
I believe this new guidance only expands the ability to share information using a variety of approved channels. It may or may not reduce costs associated with meeting disclosure, but it will in fact, improve the infrastructure for investor and public relations by socializing the process to more effectively communicate with investors and the people who care.
The reality is that businesses can only benefit by not limiting itself to one form of communication. People seek, discover, and share information differently, and combining strategic wire, Web, and blog channels will only amplify reach and visibility.
Thanks to Jennifer Leggio for getting this story started.
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(Photo by Terence T.S. Tam).
Editor’s note: Brian Solis is Principal of FutureWorks, a PR and New Media agency in Silicon Valley and also blogs at PR 2.0. His last post for TechCrunch was PR Secrets for Startups
Guess I can stop writing those press releases. Nice job Brian.
LONGEST. POST. EVER.
You should see his Introduction to the book Now Is Gone. 19 pages!!
Here come the intense regulations.
http://blabtech.blogspot.com
Haven’t companies had the opportunity to publish SEC press releases AND these so-called social media releases (with lots of interactive information) all along? Companies haven’t bothered, why would this change that? I assume these disclosures require lots of legal jargon, so there will still be the need for a separate boring release that lawyers can sign off on as clearly meeting the SEC’s legal requirements.
Brian, thanks for highlighting this. There is obviously a lot of potential here, and it should help to increase the visibility of social media to those companies and PR firms that are not yet using it.
Brian,
A well written piece, however I’ll point out that most of your arguments are rooted in the reach of the digerati. Most of the mainstream world does not read blogs, nor do they watch YouTube, or have they ever heard of Twitter. Hence, this ruling is a start, but the full disclosure communications you describe are many years away.
This said, I think you’ll see some changes in how the news wires disseminate information. I doubt that there will be a big embrace of Youtube and Twitter. The blogosphere has a good chance, but will still take some years to develop.
Best,
Curtis
What a great article, Brian… it’ll definitely be interesting to see how companies respond to this over time.
Hmmm, I wonder why TechCrunch would advocate social media releases…? sounds like a huge opportunity Brian! Can’t wait to see what you guys could do with SMR’s
Company news posted on a company blog IS a press release that happens to be published on Web 2.0 infrastructure. Maybe it also went out on the wired and maybe it didn’t.
I’m not sure why it is so important to sound the death knell for the press release. What HAS been dead, forever, is lobbing untargeted press releases randomly at bloggers and journalists and hoping they stick. We should not confuse blogger/media relations with random, unfocused pitching.
couldn’t agree with you more Joel. there has been a rush to join the social media bandwagon for the newest latest thing…but common sense good PR tactics don’t go out the window just because there are new channels by which to communicate and means to express the message and news.
If you can use a corporate blog for disclosure, why would you even bother with a social media release? Seems to me that the real losers in this affair are PRWire, and MarketWire. If you don’t have to tell people your disclosure via a wire, why use them?
Winners include anybody in the RSS feed business.
This is a much needed move on the SEC’s part. I think it will also make those who currently have not embraced blogs, SMNRs and other social media tools for communicating their company’s messages take notice and get them to seriously consider using these tools. I agree that it has implications for the wire service companies and it will be interesting to see how they navigate the waters in the coming years. This probably doesn’t affect them immediately because the masses have yet to adopt social media as their main source of news, but in time it will spread to the masses and it will be interesting to see how the wire services handle the loss in revenue, which I imagine will happen.
Just put up a new post on the “4 Winners and 2 Losers in the SEC’s Press Release Decision”
http://www.convinceandconvert......eting-blog
This is huge news for the overall economic health especially in light of the Sarbanes-Oxley Act. In order to save the costs associated with the traditional methods of disclosure for foreign companies trading in the US, many have shifted out of the market and trade overseas. By allowing this level of disclosure, it should free up some of the resources and welcome foreighn trade. Just my humble opinion…
This could easily go too far in the other direction, and begin to affect the freedom of corporate employees to blog.
Net net, a huge negative.
umm.. you are supposed to post the Press Release on the Blog…
p.s. a companies Insurance company may have policies on employees blogging.
it will be interesting to see if white font on a white background becomes popular.
“No, we did tell about that missing billion. its right there on google.”
So can someone explain why Berkshire Hathaway bought BusinessWire?
I have plenty of friends at the wire services, but I’ve said to their faces (and with Brian at 2007 New Comm Forum in Vegas) that the social media world will not pay the towering prices for distribution when close to free sounds fair. Jason Baer nails it that RSS is the big winner and continues to be more important than a company’s standard Web site
For my PR clients, cost was always key and I guess compliance and communicating to stakeholders were there too. I always laughed at the Wire claims of connections to journalists who subscribe to feeds - well, OK, but that’s what my clients paid me and PR agencies to pitch (not blast). That’s always been my gripe on how you, Chris Heuer and Todd Defren/Van Hoosear have over-hyped the SMR - yawn - now a social media pitch would be useful
I really like Tom Foremski’s take on the news - especially since he ran with my Utterz post and tip: http://www.siliconvalleywatche.....y_to_c.php
Hope to see you soon Solis - Vegas or otherwise!
Great post, Brian. This is just a natural step towards more visual communication. I predict we will see companies (probably mid-size technology companies) to embrace this more rapidly than others. One thing is to have the SEC making this decision, the other is to change the corporate culture overnight. It will require time and as PR consultants we will need to sit down with our clients and help them go through this process. It seems easy. But it’s not. Game on.
Interesting development following up on the #scmla meeting earlier this week. Anyone who thought Fortune 500 companies don’t have to worry about social media have just been publicly disproved.
As someone working at a large investment firm I can tell you that many people in this industry (especially the old guard), are not even aware of the concept of social media. By integrating this regulation into the emerging reality of our social experience, it sounds like the SEC is helping to move us in the right direction.
Thanks for sharing.
Very very depressing Brian. Mind boggling actually.
1. There are attorneys who specialize in Securities Law. What do you know about Reg FD? Anything… really? Have you worked in Investor Relations even?
2. You article is wrong and biased out of the gate. The SEC is NOT recognizing blogs, per se. They may. But it would ultimately be in such a defined and controlled fashion, you wouldn’t recognize it as a blog. And that’s the point actually. The SEC works to eliminate bias from getting in between company and marketplace. Conversely, in the name of supposed conversational clarity, you and other social media evangelists introduce opinions and agenda loaded bias… not coincidentally, as you do here!
3. The Commission’s announcement does NOT mean companies can kill press releases. Again, the point is to make information available to the securities marketplace in general. Only “under certain circumstances” can companies rely on their websites and blogs.
4. Note Chairman Christopher Cox’ quote “disseminate this information to market participants.” That’s “to” the marketplace not “with.” He is NOT encouraging a bullshit social media conversation there.
5. Opens the door for the Social Media Release? You’re dreamin’.
6. “Giving everyone what they need and how they need it, requires a different approach.” “This is a Chance to Reach More People, Their Way” NO. The SEC requires that everyone get the same opportunity to ensure marketplace fairness. The SEC is about uniform communications by definition, period.
7. “Reg FD protects the voice of the investor.” Ridiculous. Again, the SEC makes for a fair and uniform marketplace. That protects investors. Protecting the voice of the investor is “investor advocacy,” a different topic altogether.
8. And THIS IS THE RED FLAG: “The release addresses antifraud issues that may arise when issuers, their officers, and employees speak on company-sponsored blogs or electronic shareholder forums. In particular, it provides guidance for companies hosting or participating in blogs or electronic shareholder forums about the applicability of the antifraud provisions to statements made by the company or by a person acting on behalf of the company. It also highlights the restrictions on a company’s ability to require investors to waive protections under the federal securities laws as a condition to entering or participating in a blog or forum.”
Hello!!
- Amanda
Thanks Amanda for actually taking a real close look at it. Point 8 looks like a big red flag to me. I would also add another paragraph in the SEC release that scares the s– out of me:
“the release provides further guidance on how companies can hyperlink to third-party web sites without “adopting” the third-party information for liability purposes. The guidance suggests, among other things, that companies explain the context for the hyperlink to make clear why the hyperlink is being provided, be aware that selective choices to hyperlink to specific third-party information may indicate that the company has a positive view or opinion about that information,”
This is in essence will tell compliance officers and lawyers to avoid linking to blogs, social media, and anything with content (comments, RSS feeds?) for fear of giving a whiff of accidental endorsement by accident.
To me, the guidance provided by the SEC and the way it’ll be enforced may actually be the kiss of death for corporate blogging
There are still thousands and thousands of trade publications read by people working in those fields. These pubs are loaded with ads and require text to fill the space. Editorial staffs are small (and getting smaller). Press releases, copied part-and-parcel, fill those spaces nicely. So, while the market for traditional press releases is certainly diminished, it hasn’t vanished completely. The same holds true for community weekly newspapers (which flourish while metropolitan dailies suffer — local content has high value). Finally, a SNCR study showed that there’s huge value in getting a traditional press release placed on the web. So no, we can’t kill the press release just yet. But why would we want to? Use the best tool for the job. There won’t be many instances where that’s a traditional press release, but there still will be some.
Very very depressing Brian. Mind boggling actually.
1. There are attorneys who specialize in Securities Law. What do you know about Reg FD? Anything… really? Have you worked in Investor Relations even?
2. You article is wrong and biased out of the gate. The SEC is NOT recognizing blogs, per se. They may. But it would ultimately be in such a defined and controlled fashion, you wouldn’t recognize it as a blog. And that’s the point actually. The SEC works to eliminate bias from getting in between company and marketplace. Conversely, in the name of supposed conversational clarity, you and other social media evangelists introduce opinions and agenda loaded bias… not coincidentally, as you do here!
3. The Commission’s announcement does NOT mean companies can kill press releases. Again, the point is to make information available to the securities marketplace in general. Only “under certain circumstances” can companies rely on their websites and blogs.
4. Note Chairman Christopher Cox’ quote “disseminate this information to market participants.” That’s “to” the marketplace not “with.” He is NOT encouraging a bullshit social media conversation there.
5. Opens the door for the Social Media Release? You’re dreamin’.
6. “Giving everyone what they need and how they need it, requires a different approach.” “This is a Chance to Reach More People, Their Way” NO. The SEC requires that everyone get the same opportunity to ensure marketplace fairness. The SEC is about uniform communications by definition, period.
7. “Reg FD protects the voice of the investor.” Ridiculous. Again, the SEC makes for a fair and uniform marketplace. That protects investors. Protecting the voice of the investor is “investor advocacy,” a different topic altogether.
8. And THIS IS THE RED FLAG: “The release addresses antifraud issues that may arise when issuers, their officers, and employees speak on company-sponsored blogs or electronic shareholder forums. In particular, it provides guidance for companies hosting or participating in blogs or electronic shareholder forums about the applicability of the antifraud provisions to statements made by the company or by a person acting on behalf of the company. It also highlights the restrictions on a company’s ability to require investors to waive protections under the federal securities laws as a condition to entering or participating in a blog or forum.”
Hello!!
- Amanda Chapel
hmm.. thank you very much. usefull information
Brian,
Thx so much for alerting us to this huge SEC decision. RIP Press Release. This will put a lot of Investor Relations firms out of business. The slow process of disintermediating large PR firms from the financial communications process has now begun. For most companies, earnings releases are the only reason they keep an Edelman or Burson around at their high retainer rates.
Hi Brian,
Here is a link to Business Wire’s preliminary statement on this issue:
http://www.businesswire.com/ne.....1005612/en
-Tom Becktold, SVP, Marketing, Business Wire
The SEC’s announcement is only about disclosure. It’s not a ruling about the marketplace for marketing and outreach tools. All the press release service providers now offer multimedia capabilities, tagging, sharing and other social media features with their press releases.
At our PR agency, we’re big fans of Brian Solis for promoting social media, and I consider Todd Defren a friend. We employ social media and use social media releases for all our clients. Having said that, we disagree with the conclusion in Brian’s article. In fact, this article was written prematurely as there is no substantive content as yet from the SEC to understand exactly what their electronic communications guidelines will. The only thing the SEC said is that there will soon be some guidelines.
Brian inspired us to post our own thoughts on this subject here: http://www.mobilitypr.com/blog.....-too-soon/
Ultimately, these new guidelines may change the environment for social and electronic media in investor communications, but not the intent of Reg-FD. Rather than killing the press release, the SEC is likely opening the door for additional technology to catch up to what Reg-FD requires — simultaneous and wide reaching disclosure of material non-public information. Today, a blog can’t do that.
What an interesting article. I have sent out so many press releases that should have been done with media. One was a release of a project about Just because I don’t want to be forgotten… http://idontwanttobeforgotten.com
The other was about a new social blog that is bringing our community together. http://www.discoverlowellblog.org
What would the world be like if anyone could do a press release at any time, any where, and the media would actually read it.
Thanks.
Brandon Mulnix
Traditional media companies such as print take forever to change their habits, pus they will not stop releasing PR pieces. Prepare to wait for a long time until this is going to take into effect.
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