Author Archives: Emily Holbrook

About Emily Holbrook

Emily Holbrook is a former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writing at EmilyHolbrook.com.
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The Risks of Social Media: Avoiding Disaster

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In this day and age, most every large organization or company has a Facebook or Twitter page (if they’re not living in the dark ages, that is). But just because a company puts itself out there in the world of modern marketing does not mean mayhem won’t ensue.

Tweets or Facebook posts on a company’s site can help or harm said company — and it’s a fine line between the two. For this issue, a social media policy should be put in place at any company that plays the social media game. If you want to take it a step further, a community manager should be responsible for all social media outlets that pertain to your brand.

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But that’s not all a company has to worry about. As we all know, angry customers often take to the internet to air their grievances, often launching attacks on a company via Twitter or Facebook after a bad experience. Here are a couple of angry tweets aimed at your neighborhood pizza maker, Dominos:

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But Dominos, unlike some companies, responds immediately to customer complaints on Twitter. It is obvious that the pizza chain employs several community managers to take care of such issues or forward the complaints on to the appropriate department. This, everyone, is a great example of the right way to use social media.

Another pioneer in the land of corporate social media is Delta.

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It was announced today that the commercial airline will now allow users to book flights directly on Facebook.

While it’s commendable that the company is looking to social media to boost sales, Delta is not the first airline to use the social web to reach consumers. Southwest, Virgin and event JetBlue have been communicating deals and information to customers via Twitter and Facebook for some time. I’d expect these airlines to start rolling out a similar sales feature to Ticket Window soon.

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Examples of bad business twitter moves include not checking in regularly, mixing business with pleasure (make a separate personal account), mostly self-promotional tweets/posts and not helping others. Having a Twitter or Facebook page that represents your brand means responding quickly and directly and planning for the worst while expecting the best.

What’s the worst case scenario your brand could possibly suffer in a social media PR meltdown? That situation probably won’t occur, but by imagining the worst, you can craft “first line” responses ahead of time, so you won’t be caught off guard. That way you’ll be well prepared if sentiment around your brand suddenly begins to trend negative. This kind of brand take-down, should it occur, happens extremely fast—in a matter of hours.

So, while social media is a great marketing tool for every business, a professional and responsible manager should be in charge of all communication on the various sites and this person should be very well versed on the many risks of social media.

Demand for Oil Cos To Prove Disaster Preparedness

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In a likely move, investors are demanding improved disclosure of oil disaster response plans. In fact, 58 investors representing $2.5 trillion in assets came together recently to demand just that.

The group penned a letter to G. Steven Farris, chairman and CEO of Apache, a company that recently purchased $7 billion of oil and gas fields from BP. As the letter states:

“The April blowout at BP’s Macondo well in the Gulf of Mexico, and the explosion and fire on the Deepwater Horizon drilling rig that killed 11 workers, has led to one of the greatest environmentally-related destructions of shareholder value in history. The shareholder harm that has flowed from the BP spill has focused investor attention on governance, compliance and management systems needed to minimize risks associated with deepwater offshore oil and gas development worldwide.”

The 1-page letter (with 10 pages of questions and signatures) goes on — urging all companies, including Apache, involved in subsea deepwater drilling to be open and transparent with investors and stakeholders regarding the programs they have in place for managing risks. The questions submitted inquire into the amount of money spent on R&D with respect to safer offshore drilling technologies, contingency plans, lessons learned from BP Macondo and the well blowout, contractor selection and oversight and governance and management systems.

With pressure like this, it is hoped that the Exxon’s and BP’s of the world will be forced to answer tough questions regarding managing the extreme risk they encounter. Like every other public company, they must answer to the owners — the shareholders. Let’s hope they do . . . and do so truthfully.

Tweeting Earnings: Bad for Your Company?

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That’s an issue many have mixed feelings about. I, for one, think it’s a great way to relay investor information to the modern, web-loving world in a timely manner. Along with posting earnings on their websites, companies (well, some of them) are using Twitter to announce, among other news, performance numbers.

The microblogging site has seen a flood of earnings tweets for the second quarter of 2010. Some, however, are doing this better than others. IR Web Report compiled a list of 10 public companies that are using Twitter as an investor relations tool — with comments on what they’re doing right and wrong. Here’s a snapshot:

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URL: https://twitter.com/PGNewsUS
Followers: 5,166
Apps used: Twitterfeed, CoTweet, TweetDeck
# of Earnings Tweets: 14
# of Clicks from Tweets: 75
Comments: The tweets are coming from P&G’s media relations team, so strictly speaking their activity doesn’t qualify as IR. Except it does because investors don’t discriminate. The tweets are plain vanilla, no hashtags or tickers. There’s a bit of “spin,” but mostly the tweets are informative. Still, the company’s IR department should have it’s own account. It’s hard to find the signal when sales numbers are mixed in with soap suds. The low click-thrus suggest that earnings tweets on this account don’t resonate.

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URL: https://twitter.com/Roche_com
Followers: 4,586
Apps used: CoTweet
# of Earnings Tweets: 21
Clicks generated: 182
Comments: Only company where I had to use a calculator to add up all the various clicks to their site! Probably the best experience from a follower’s perspective. By not live tweeting the earnings call, they don’t overwhelm their followers and drive traffic to the webcast. But the greatest value comes from them referring followers to the media’s rolling coverage of the results throughout the day. From start to finish, it’s a well-managed process that is a valuable enhancement to what the company already provides on its website. The one to emulate.

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URL: http://twitter.com/ebayinkblog
Followers: 4,638
Apps used: Blog, Seesmic
# of Earnings Tweets: 63
Clicks generated: 169
Comments: The original earnings live-tweeter, eBay continues to be a standard setter. It’s one of the few to incorporate StockTwits into its distribution. Its disclaimer at the start of earnings call live-tweeting sessions, and use of an unique hashtag for each call, are best practices. But too many tweets for my liking, but no one else complains so I’m wrong. Could say more but Richard’s already gotten a lot of ink here. He’s posted a good piece about his set-up and process.

Sure, tweeting financial performance data may be good for these large, blue-chip companies, but the same may not be true for smaller, less visible firms. According to research from the University of Michigan, small and micro-cap companies that participate in greater tweeting “during news event windows is associated with lower bid-ask spreads and greater depths.” Meaning, essentially, a lower stock price. Not good.

Tweeting earnings can have other harsh side-effects. If a company announces earnings news on other sites (such as their corporate website) first, then turns to Twitter (sometimes hours later), it is a slap in the face to the company’s loyal followers. Here are some examples of delayed earnings tweets (courtesy of IR Web Report):

  • A gold company listed both in the US and Canada issued a results release at 8:00am ET but only tweeted the news at 6:45pm ET –- a delay of 10 hours and 45 minutes.
  • A uniform company released earnings via a PR wire at 4:15pm ET and tweeted the same information 77 minutes later at 5:32pm ET.
  • A technology company issued its release at 4:15pm ET and only tweeted it at 4:43pm ET, a 28-minute period during which more than 150,000 shares were traded.
  • A health care solutions company released earnings at 4:00pm ET but didn’t mention the results on Twitter until announcing at 4:35pm ET that its conference call had started. Eventually, the results release showed up, but almost 8 hours after the fact at 11:53pm ET.
  • A networking company released earnings via a PR wire at 4:05pm ET but tweeted it only at 4:31pm ET – a 26-minute delay during which more than 100,000 shares changed hands.
  • A hard disk drive maker that released its results at 4:01pm ET but tweeted them only 24 minutes later at 4:25pm ET – a delay which saw more than 200,000 shares traded.

To investors, these are serious lapses from major corporations’ IR departments. If a company that is active on Twitter cannot manage to update its followers and investors in 140 characters or less on important information in a timely manner, how can it expect to keep such a following?

With more and more companies waking up to the power of social media, more and more sloppiness in the the Twitter and Facebook realm is visible. For companies large and small, to be complacent with such technology is to dig your own grave.

 

The Next Financial Collapse?

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Well, maybe that’s a bit of an exaggeration. But to some, it’s not far off.

I’m talking about ID theft and how it poses an enormous risk to the nation’s credit system.

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Apparently, ID thieves are now targeting children’s Social Security numbers. According to a recent article from the Associated Press:

Hundreds of online businesses are using computers to find dormant Social Security numbers — usually those assigned to children who don’t use them — then selling those numbers under another name to help people establish phony credit and run up huge debts they will never pay off.

What’s worse is that authorities have not quite figured out a way to prosecute these people since they never actually use the stolen Social Security numbers. Instead, thy refer to CPNs — or credit privacy numbers, which are set up using a Social Security number.

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And presently, federal law allows the ability for someone to legally use a private ID (CPN) for financial reporting purposes instead of a Social Security number.

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Apparently, online companies are using the internet to find random Social Security numbers. The numbers are then “run through public databases to determine whether anyone is using them to obtain credit. If not, they are offered for sale for a few hundred to several thousand dollars.”

The businesses that sell these numbers have been compared to drug dealers.

“There’s good stuff and bad stuff,” said Julia Jensen, an FBI agent in Kansas City. “Bad stuff is a dead person’s Social Security number. High-quality is buying a number the service has checked to make sure no one else is using it.”

This is an enormous problem that, because of its difficulty to detect, is growing at an alarming rate. In fact, some are worried about another financial collapse because of this fraud.

“If people are obtaining enough credit by fraud, we’re back to another financial collapse,” said Linda Marshall, an assistant U.S. attorney in Kansas City. “We tend to talk about it as the next wave.”

It’s an invisible crime, as some are calling it. And as we all know — it’s not so easy to stop something you can’t see. Check your credit report often, and that of your children — your 4 year-old could have a dreadfully low score.

Credit Fraud