Social Media Compliance and Audit

How to Reconcile Social Media & Corporate Compliance

Mike Lewis, Chairman and CEO, ILD Corp. and Social Strategy1Steve Ennen, President and Chief Intelligence Officer of Social Strategy1Ed Brown, Partner of Burr & Forman

TODAY’S AGENDA

• How to build a social media strategy • Guidelines and strategies companies must consider when dealing

with social media• Turning corporate policies upside down• Reporting on financial, regulatory, and corporate compliance• Moving shareholders from passive administrators to active

participants • Sharing Competitive Intelligence• Protecting Trademark, Patent and Goodwill • How to apply social media to real business

Proprietary & Confidential | Social Strategy1, Inc. Proprietary & Confidential | Social Strategy1, Inc.

TODAY’S SPEAKERS


Ed BrownPartner, Burr & Forman LLPBurr & Forman LLP is a century old, full-service law firm with a forward-thinking approach to providing legal solutions. We have nearly 250 attorneys and offices in Alabama, Florida, Georgia, Mississippi and Tennessee. Burr & Forman offers a wide range of business and litigation services to diverse clients with local, national, and international interests.

Steve EnnenPresident & Chief Intelligence Officer, Social Strategy1Social Strategy1 activates the social web for business by combining marketing and data mining technology with human analysts. Clients gain profitable insights, sales leads, competitive intel, benchmarking, and online buyer support. Steve joined Social Strategy1 from the Wharton School at the University of Pennsylvania and brought direct research and focus on meaningful metrics and proofs of performance in a total media strategy.


MEDIA IS IN THE HANDS OF EVERYONE

Facebook > 500 Million LinkedIn >70 Million

QQ Messenger >485 Million

MORE THAN 1 BILLION MORE THAN 1 BILLION USING SOCIAL MEDIA, GLOBALLYUSING SOCIAL MEDIA, GLOBALLY

HOW TO BUILD A TOTAL MEDIA STRATEGY

• There is no denying the reach & penetration of online media.– More than 100,000,000 blogs worldwide.

– Two-way conversations are the norm - communities can respond to, and transform a message…overnight.

– User generated content (UGC ) affects sales, reputations, brand affinity; identifies leads, competitive analyses, etc.

– Facilitated by ‘ubiquity’.

SOCIAL MEDIA CAN ALTER GOVERNMENTS

Proprietary & Confidential | Social Strategy1, Inc. Proprietary & Confidential | Social Strategy1, Inc. 77

Massive Egyptian Protests Powered by YouTube, Twitter, Facebook, Twitpic [Pics, Video, Updates]

Egyptian pro-democracy protesters are embracing Twitter, YouTube, Facebook and Twitpic.

NEW FACTORS NOW AFFECTING COMMUNICATION

• Academic research has proven that online conversation can affect purchase decisions, brand image, and even stock prices.

• “This is more than just an interesting programming exercise. For many businesses, online opinion has turned into a kind of virtual currency that can make or break a product in the marketplace.”


Stock Price (adjusted) UGC Chatter

Chatter ConsumerOpinion

Negative Chatter

NegativeExpressions

Short Term

Cum Short Term

Cum Short Term

Cum Short Term

Cum

Stock Returns ** 3.8 4.8 -2.1 -3.6 -2.9 -3.9 -3.7 -4.7

“You can take UGC to the Bank”“You can take UGC to the Bank”

Tirunillai and Tellis“Does Chatter Really Matter? Dynamics of User-Generated Content and Stock Performance”



• “…7% said they are able to integrate social media into their overall marketing strategy, such as campaign management, retail analytics, CRM and business intelligence.

• Without such information and integration, companies are missing the chance to market products, and manage their reputation…”


LESSON #1


Update your policy.

INBOUND USE OF SOCIAL MEDIA

• Review of employees' access to social media. – Often focuses on limiting access to social media as

opposed to using social media for employees benefit.

– Enforced through a stated policy or simply through denying access.

– Easily avoidable with smartphones. Also ignores the potential benefits of social media access.


LESSON #2


Be aware of what your employees are doing.

OUTBOUND USE OF SOCIAL MEDIA • 3 Policies: Employee personal use and employee company use.

― Personal: Do you mention the company?― Employee use: Does your job include using social media?― Company sponsored sites: blogs, Facebook, discussion rooms

• Purpose is not to control personal use but, rather, to be sure that any use by an employee that could be identified as part of the company is appropriate.

• Simple Rules― Be transparent, respectful, truthful and do not talk about specific

clients/projects. ― “What would a client or jury think?”

• Company blogs, Facebook, Twitter, LinkedIn sites – FTC and employment/ labor concerns, and present additional issues including privacy policies and terms of use.


LESSON #3


Ignorance is not bliss – communicate to your investors.

PUBLIC COMPANIES

• In addition to SEC reporting, using social media to keep investors aware of product developments and results.

• Regulation FD and Rule 10b-5.

• Generally done in conjunction with SEC reporting.

• Could also be in conjunction with marketing/PR initiatives.

• Investor relations generally focuses upon a company Facebook page, blogs, company Twitter account, LinkedIn account, or other centralized distribution of information.

• Coordinate use by Company and Company offices.


LESSON #4


Know Thy Enemy.

COMPETITIVE/SHAREHOLDER INTELLIGENCE

• Reviewing social media messages from competitors.• Reviewing blogs, tweets, Facebook pages, etc. used by

adverse shareholders as a method to gain support for proxy contests or votes.

• Identifying tweets, blogs or Facebook pages for customers or other non-shareholder activists that may be discussing the company, its products, its people, etc.

• "Know thy Enemy."



Understand trademark, patent and goodwill.

LESSON #5

WATCHDOG PROTECTION

• Affirmative search for policy violations by employees.

• Search for social media sites for:—Misuse of Company trademark—Improper use or disclosure of a patent or trade

secrets—Any incorrect statements regarding the company that

might become an “urban legend.”

• Create a “Response Team”


PRACTICAL SUGGESTIONS AT 30,000 FEET• Create Policies based on your business use of Social Media

– Public Companies– Businesses that have employees on Social Media as part of their job– Special confidentiality/privacy concerns for Law Firms, Accounting

Firms and Investment Bankers– Special intellectual property concerns– Businesses hosting blogs, Facebook pages, discussion rooms, etc.

• Be careful of Federal Trade Commission rules on advertising - many apply to social media!

• Be sure to comply with employment and labor laws - don't use social media to discriminate.

• Update policies and third party terms of use regularly.• Talk to your General Counsel about e-discovery and record

retention policies.• Check your insurance coverage.


17COMPANIES MUST RETHINK

• Compliance

• Competitive analysis

• Due diligence

• Customer service

• Organizational structure

Push v. Pull

HOW APPLY SOCIAL MEDIA TO REAL BUSINESS

• Understand the environment• Listen, strategically• Have a plan• Communicate the plan through the organization• Be agile

– Know what to do with what you hear• Check your org structure• Measure, measure, measure

– All efforts can be tracked

HOW TO BE SUCCESSFUL USING SOCIAL MEDIA

• Metrics can help determine ROI and proof of performance for several media strategies

• Need to align metrics with strategic objectives– Includes overall compliance and governance

controls

CONTACT INFO

Steve Ennen,[email protected]

@EnnenSS1646-334-5893

Ed [email protected]

404-685-4292

Proprietary & Confidential | Social Strategy1, Inc.

Social Media Compliance and Audit

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