NIghtingale Communications

How retail investors in Australia view the importance of social and digital media channels

nightingale communications

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 20

© nightingale communications 2013 Suite 5.10 | 2 Queen Street Melbourne Victoria 3000 Telephone +61 3 9614 6930 www.nightingalecommunications.com.au

Published March 2013

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.

1nightingale communications

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.

2

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.


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)


11% 11% 13%

16%

26% 26% 27% 28% 28% 30%

0%

10%

20%

30%

40%

Blogs Micro-blogging services

Social networking sites

Internet forums or message

boards

Online investment

advice subscription

services

Business media online

Real time subscription

services

Subscription newsletters

Business media print

Information direct from companies

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.

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)

6

12% 12% 13% 15%

21% 23% 23%

25% 25%

31%

0%

10%

20%

30%

40%

50%

Social networking

sites

Micro-blogging services

Blogs Internet forums or message

boards

Online investment

advice subscription

services



services


Business media print

Information direct from companies

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.

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


0%

10%

20%

30%

40%

36%

33%

29% 28%

14%

10%

7% 7%

3%

Other digital media Micro-blogging services


Blogs Internet forums or message boards

Online investment advice subscription

services


services



Q. Which, if any, of the following digital information sources have become more important in the last year?

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)

8

36%

28% 25% 26% 25%

0%

10%

20%

30%

40%

50%

Increased importance in last 12 months

Reliance Influence Reliance Influence

Business Media - Online

Business Media – Print

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.

28% of retail investors contribute online content, either as authors or contributors. Blogs, forums and message boards are the most common platforms.


-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Do not contribute 72%

Contribute 28% Forums 66%


36%

Blogs 32%

Micro-blogs e.g. Twitter

19%

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?

Q. Do you post to or contribute information on companies or business to any of the following?

Use more 18%

Use less 9%

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

Main single benefit of social media

10

22%

19%

19%

17%

5%

54%

0% 10% 20% 30% 40% 50% 60%

I get regularly updated with keycommunications relating to myinvestments

I get access to the opinions of experts

I can connect with other investors andshare experiences and opinions

I get the inside track about a company’sperformance and investment potential

I get a better investment return

No real benefits

4%

17%

20%

24%

34%

I get a better investment return

I can connect with other investors and share experiences and opinions

I get the inside track about a company’s performance and investment potential

I get access to the opinions of experts

I get regularly updated with key communications relating to my investments

0% 10% 20% 30% 40%

Q. What, if any, are the benefits of social media to you as an investor?

Q. Which benefit do you value the most?

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”


11% 12%

15%

29%

42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Company Twitter account

Company Facebook page

Company video content (e.g.

YouTube)

Email Company website

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.

Q. What, if any, are the benefits of social media to you as an investor?

Q. Which benefit do you value the most?

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)

12

15% 15%

30% 32%

38%

41%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Video content Company social media channels Company website Company press releases ASX filings Annual reports

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.

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


27%

56%

18%

0% 10% 20% 30% 40% 50% 60%

Excellent (8-10 out of ten)

Average to good (5-7 out of ten)

Poor (1-4 out of ten)

Q. 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.

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

14

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.

27%

55%

18%

0% 20% 40% 60% 80%

Australian companies perform better than overseas companies

Australian companies are on a par with overseas companies

Australian companies perform worse than overseas companies

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


54%

21%

20%

5%

0% 10% 20% 30% 40% 50% 60%

I rely on myself and don’t trust anybody else

I rely on the investment tips from from commentators, experts orspokespeople on TV/radio/internet

I rely on my friends, relatives and colleagues for advice when making investments

I largely rely on my financial planneror broker in my investment decisions

Q. Which of the following best describes how you make your investment decisions?

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

16

63%

22%

18%

12%

0% 10% 20% 30% 40% 50% 60% 70%

Directly via an online trading platform

Through my financial/investment adviser

Directly via a full service stockbroker

Through my accountant

Q. Which of the following do you use to buy and/or sell stocks and shares?

17

Profile of survey participants

Share trading profile

Age and gender 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

___ Two thirds of retail investors in the sample were aged 40 years and over.

64% of the investors were male, 36% were female.

18

25%

32%

43%

In the last week

In the last month, but more thana week ago

In the last 6 months, but more than a month ago

Income profile

___ 34% of respondents had incomes of more than $104,000 per annum.

Household income

19 nightingale communications

1%

2%

3%

5%

9%

10%

13%

15%

34%

9%

0% 5% 10% 15% 20% 25% 30% 35% 40%

$7,800-$12,999 per year

$13,000-$20,799 per year

$20,800-$31,199 per year

$31,200-$41,599 per year

$41,600-$51,999 per year

$52,000-$67,599 per year

$67,600-$83,199 per year

$83,200-$103,999 per year

$104,000 or more per year

Refused

About nightingale

20

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.

___ 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


nightingale communications

Suite 5.10 | 2 Queen Street Melbourne Victoria 3000 Telephone +61 3 9614 6930 www.nightingalecommunications.com.au

NIghtingale Communications

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