Online communication in times of recession

Tuesday, April 28, 2009

Communication strategies are generally designed for the ‘good times’. Their goal is to raise awareness and interest from the media, analysts and other stakeholders in areas such as booming markets, high profitability within a specific area or a new and promising CEO. But what should they talk about on the website in times of difficulties?

In troubled times and recessions, the topics we talked about before may suddenly seem risky and unsafe. Today many companies realize how investors mistrust growth or profitability goals, and are more interested in questions regarding for example the dept structure of the company. Companies going through downsizing in their organizations are challenged to find a consistent message concerning layoffs and necessary cutbacks which holds its credibility with employees, media and investors. The various areas of the organization must, more than ever, work closely together.

Some companies prefer to communicate as little as possible during difficult times hoping to re-enter the scene when business is improving again. However being within sight - or at least within reach - is crucial for survival. The information or the topics being discussed on the corporate website is often quite similar to ‘ordinary’ times. If we had to identify a trend, it is that the information is thinner or at least not reflecting the demands from stakeholders. This supports the argument that; in good times companies communicate frequently but find it harder to express themselves in times of recession.

The risk of saying nothing

We have addressed this question through the H&H Webranking target group; analysts, journalists and investors.

The Media

The media is less likely to accept this low profile strategy and will, on the contrary, intensify its review of the companies. Furthermore, when the economic situation improve, it may be even harder to re-enter the scene and raise interest in what the company stands for. Therefore we believe that is even more important to listen to the demands of journalist and offer them all the necessary information through the website. It is also important to meet and capture the journalists’ interest; be quick in answering emails, post clear contact information, offer user friendly press sections and ready-made material that easily can be used in articles and news broadcasts.

Since we have observed that many companies tend to turn inwards become less active on their websites in troubled times, it’s an even a better opportunity for those companies wanting to move forward and strengthening their awareness.

Analysts and investors

Especially during this downturn, with its instability and unawareness of future risks, stakeholders are more cautious than ever before and the demand for clear and updated financial information is sky high. The 2008 H&H Webranking survey, which was conducted a little bit before the financial crisis hit, showed a smaller increase in the demand for financial statistics, risk management and dept structure on corporate websites compared to previous years. We think it’s fair to say that this year’s survey will enlighten theses topics even more.

Today, analysts are looking for information and statistics that used to be low priority and therefore often hidden in notes in the annual report. Examples of such are remuneration, debt structure, bank relations, risks of various kind and interest rates. We believe that a change in demands on information is something that everyone should take into consideration and address on the web. Since those questions are difficult and likely to be raised it’s a good idea to start preparing for them and have clear and consistent answers. Companies are today working hard on improving their companies’ creditability and trust, and the website is an important channel for addressing this.

The example below by Adidas Group goes one step further and publishes their Compensation report easily found on the Corporate Website.

 
http://www.adidasgroup.com/en/corporate_governance/remuneration/default.asp

The 2009 Questionnaire

We predict that the questionnaire that we every year send out to the capital market will be effected by the financial instability and the mistrust that is out there. There is likely that the questionnaire will show that new criteria are necessary to address this in our 2009 H&H Webranking protocol.

The process of compiling the H&H Webranking questionnaire is taking place as we speak, but only the future will tell us how the demands have increased or changed since last time. We do however know, from earlier years, that analysts and journalists are looking for the most important information in relation to climate of the market. In which for example CSR really hit the corporate scene in 2007 and the Social media boomed in 2008.

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