Digital defence against activists

The tools available to help fight digital activists and gauge how an investor is feeling before a vote

As difficult as this may be, imagine that an activist investor is clamoring for change at your company. And now imagine knowing weeks before the decisive vote what shareholders thought of the proposed changes and how likely they were to support them.

How much would you pay for that information? How would that influence your approach leading up to the vote, and determine what you’d be willing to negotiate?

It sounds far-fetched, but a targeted social media campaign can help businesses glean precisely that kind of insight.

Through a digital campaign, a company can reach a meaningful sample size of its institutional and retail investors. Then, the business can analyze investors’ reactions to its messages on key issues, getting a sense of shareholder sentiment weeks before a vote – sentiment that can even be measured by the seemingly light-hearted emojis investors use.

No, really. Emojis. Not just smiles or “likes,” but angry faces, hands clapping, or head scratching question marks. Believe it or not, this data is not only reliable but allows for much more sophisticated analysis of an audience’s response – an audience that includes professional investors. A recent survey by Brunswick Insight found that 90 percent of buy/sell-side investors used social media to investigate investments.

Businesses can use these digital tools to ward off activist challenges in advance, and be better informed about how key proxy votes are likely to go. A digital campaign against activists often calls for a coordinated approach across multiple platforms. LinkedIn might be best for reaching institutional shareholders. Placing ads on Google search can direct investors to a proxy microsite and answer questions your shareholders are asking. Targeted ads on Facebook can get your message into the newsfeeds of retail shareholders and employees. Display ads can appear alongside top-tier news coverage.

There are legal concerns when opening this new front in the battle against activists. Safeguards need to be in place so companies don’t provide material information to shareholders. Businesses that are transparent about what type of information they plan to disclose, and publicize what they plan to disclose and where they plan to do so, should be in the clear.

Having a social media strategy doesn’t guarantee victory in an activist fight – but that’s because these battles aren’t won on any media, social or otherwise. Digital channels simply offer companies a way to tell their side of the story with a precision and reach that wasn’t possible before.