RESEARCH: DIGITAL MEDIA AND THE INVESTMENT COMMUNITY
FACE TIME RATHER THAN
FACEBOOK STILL DRIVES
INVESTMENT DECISIONS
— Amanda Duckworth, Brandon Borrman and Jason Golz
Brunswick, San Francisco
— Andrew Gunn, Brunswick Research, London
g This is the second In July 2008, eBay became one of the first examples
annual Brunswick of a publicly traded company using Twitter as a way to
Digital Media Survey. reach investors.
g An online survey by Led by Richard Brewer-Hay, the company’s lead
Brunswick Research blogger, and its IR team, eBay delivered a play-by-play
of 401 buy-side investors account of the management’s second quarter 2008
and sell-side analysts conference call with analysts and investors via Twitter.
in Europe and the US. The corporate blogger believed the value added would
be found in his ability to extract key kernels of information
g Research conducted during
from management’s prepared remarks and the live
July and August 2010.
question and answer session with analysts.
Several months later, Brewer-Hay took part in
a panel discussion with Brunswick, focusing on the
value of social media as a tool for investor relations.
Brunswick’s Digital Media Survey for 2009 had found
information direct from companies was the most
influential factor for institutional investors when making
investment decisions. Participants discussed whether
that category included company-sponsored blogs and
Twitter feeds.
This conversation prompted our team to repeat the
survey in 2010 to see what, if anything, had changed
regarding investors’ use of digital media. Were investors
and analysts tapping digital media more often to help
make investment decisions?
The power of direct interaction
Consistent with our findings in 2009, in our latest survey
a full 50 per cent of respondents said direct interaction
with management is the most influential source of
information from companies when making an investment
decision or recommendation. Only 1 per cent said
a  company’s digital media presence was the most
influential source, one percentage point fewer than those
who pointed to the influence of a company’s website.
The picture did not radically change when
participants were asked to name the top three most
influential information sources. Digital media presence
Brunswick Issue three
Review Winter 2010
again remained at the bottom of the list, with 1 per cent
of those surveyed placing it in the top three, while a
company’s website was in the top three with 12 per cent
of respondents.
In fact, traditional methods of investor
communications dominated the response to our
question. News releases, presentations and regulatory
filings were in the top three of at least half of all survey
participants. Conference calls and webcasts were
picked by 62 per cent and, perhaps unsurprisingly given
its frequent appearance in the top spot, management
interaction was in the top three with 73 per cent
of responses.
Consistency of influence
The answers to this question were consistent with the
results of the overall survey, which saw little major
change from the 2009 results. Information direct from
companies remains the dominant source of influential
information. If anything, it has increased in importance,
with 52 per cent indicating it as the single most
influential source against 44 per cent in 2009, and 84
per cent including it in their top three, up from 73 per
cent the prior year. Real time subscription services,
such as Bloomberg and Reuters, also saw a statistically
significant increase, with 64 per cent placing them
in the top three, up 5 per cent in 12 months.
On the other hand, the influence of print media on
investment decisions continues to decrease, perhaps
replaced, in part, by the growing influence of real-time
subscription services. In 2010, print media saw an
8 per cent drop, with only 16 per cent of respondents
naming it as a top three source of influential information.
Digital media, too, saw a decrease in its apparent
influence on investment decisions, appearing in the top
three of only 6 per cent of those surveyed, down from
11 per cent in 2009.
41
INFLUENCE OF INFORMATION SOURCES ON INVESTMENT DECISIONS INFLUENCE OF INFORMATION FROM COMPANIES

Respondents identified information direct from companies as the most
influential factor in their investment decisions. this has increased in
importance since last year. Real time subscription services and primary
market research are the next most influential sources
% single most influential information source
In terms of information from companies, direct interaction with management
was identified as the most influential. Regulatory filings, company news
releases and conference calls are of secondary importance
single most important information source direct from companies

% respondents were also asked to give their top three

influential information sources

44
50% 19% 15% 7% 7%
2009
50%
Direct 19%
Regulatory 15%
Company 7%
Investor/ 7%
Conference
73
Direct
interaction Regulatory
filings Company
news Investor/
corporate Conference
calls,
information 52 interaction
with filings news
releases corporate
presentation calls,
webcasts
direct from 2010 with
management releases presentation webcasts
companies 84 management
2% Company website
2% Company website
1% Company digital media presence
18 1% Company digital media presence
2009
59
real-time
subscription 19
information 2010
services 64 respondents were also asked to give their top three information sources

19
2009
55
73% 62% 52% 50% 50%
primary 15
73%
Direct 62%
Conference 52%
Regulatory 50%
Investor/ 50%
Company
market 2010
research 49 Direct
interaction Conference
calls, Regulatory
filings Investor/
corporate Company
news
interaction
with calls,
webcasts filings corporate
presentation news
releases
with
management webcasts presentation releases
management
8 * Indicates sell-side 12% Company website
2009 and industry analyst 12% Company website
45 research for buy-side 1% Company digital media presence
analysts; indicates 1% Company digital media presence
analyst 8 industry analyst
research* 2010 research for
45 sell-side analysts

4
2009
33
business media
online
(national, 3
international, 2010
trade press) 36

3
2009
business 24
media print
(national, 2
international, 2010
trade press) 16

3 RESPONDENTS IDENTIFY
2009
11
INFORMATION DIRECT
digital media
(blogs, message FROM COMPANIES AS THE MOST
boards, social 1
networking 2010
sites)
INFLUENTIAL FACTOR IN THEIR
6
** Some respondents ranked more than one source as most influential.
INVESTMENT DECISIONS.
THIS HAS INCREASED IN
IMPORTANCE SINCE LAST YEAR

42
 DIGITAL MEDIA – INVESTMENT DECISIONS

Blogs have become increasingly influential over the past year, in terms of prompting
investors and analysts, to investigate an issue. Message boards have declined in importance
in this aspect, as has their influence on investment decisions
respondents prompted to investigate a potential investment because of information
% sourced from:
A unique role for digital media respondents who made an investment decision influenced by information
% sourced from:
Interestingly, while digital sources may not yet have
a significant direct effect on investment decisions,
52
they are becoming increasingly important as sources 47
of information that lead to further research. As with 39
31
last year, blogs continue to lead the charge: 52 per
cent of respondents have read a blog post that has 20 18
14 14 11
11
led them to further investigate an issue, up 5 per cent 5 4 5
not not 2
from 2009. There was a similar three-percentage- recorded recorded
2009 2010 2009 2010 2009 2010 2009 2010
point increase in the number of those who were
prompted to further investigation by a posting on a
social media site, such as Facebook. The only
blogs message boards micro-blogging social
category to see a decrease was message boards, networking
sites
dropping from 39 per cent to 31 per cent, but this is
likely explained, in part, by the inclusion of a new
category in this year’s survey: micro-blogging services
such as Twitter, where posts prompted 11 per cent of CHANGING IMPORTANCE OF INFORMATION SOURCES
respondents to do additional research.
Real time subscription information services were cited by more than half of respondents
as having become more important in their work over the past year. Online business media
Lessons for application has also become more important, but to a lesser extent than in 2009
If anything, the findings from the 2010 survey percentage of respondents who stated an increased importance in the past year
of information sourced from:
amplify the implications of 2009’s. The influence of
communications direct from companies on the % 2010

investment community should not be underestimated. % 2009

While the apparently limited influence of digital
media controlled by companies may give pause for 55
46 45
thought, we do not believe it should dissuade
39
investment of time and resources in new channels of
29 30
communication. In fact, the participants in the survey
bear this out. A full 60 per cent believe it will play an 13 14
10
7
increasingly important role in investment decisions in 4 1
the future. The increasing reliance on digital media as
sources for information that leads to further research
is likely to be the proverbial “tip of the iceberg.”
Familiarity with new channels will continue real-time business blogs, social business other
subscription media online micro-blogging networking media print digital
to develop over time, and companies will be able to information (national, services, sites (national, media
services international, message boards international,
trade upon the trust and understanding they have trade press) trade press)
built with the investment community to engage in new
conversations in new ways through digital channels.
Though the transition will take time, we believe
innovative approaches, such as those undertaken by
Brewer-Hay at eBay, will become the rule rather than
the exception.

Amanda Duckworth is a Partner and Brandon Borrman and

Jason Golz CFA are Directors in Brunswick’s San Francisco
office. Andrew Gunn is a Director in Brunswick’s London
office and a member of Brunswick Research, the firm’s
opinion research practice.

Brunswick Issue three 43

Review Winter 2010