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May 31, 1996

Web Watching

Which companies are providing the most successful IR Web sites?

How do you best use the Internet to bolster your investor relations programme? No-one yet knows the answer, but IR professionals at companies across the US are busy experimenting, and early results indicate that the Net can be an inexpensive and ideal way to attain a number of IR goals.

Some benefits have already become clear. A Web site allows a company to get information quickly into the hands of analysts and investors - whether it be press releases, SEC filings, comments from senior executives or detailed descriptions of the company's history and activities. And the cost is minuscule, at times as little as a few thousand dollars.

However, several key issues remain unresolved: What kind of information should be made available? How should the material be presented? Who is visiting the site?

Although corporate use of the Internet by IR departments is still in its infancy, the number of people visiting the sites already is impressive. Each day, for example, about 30,000 people visit the 3M Company's Web page (, according to John Cornwell, investor relations programme manager. That's comparable to the circulation of a small-town newspaper. The 3M site was launched in May 1995.

What those 30,000 'hits' mean, however, remains unclear. The problem is that nobody knows the 'quality' of those visiting Web sites. Who are they? Why are they stopping at the site? Are they just browsing? Are they looking for something specific or just general information?

'It's mostly anonymous,' says Jonathan Nelson, president of Organic Online, a California-based company that sets up corporate Web sites. 'You can know what type of software they're using, but all 5 mn people from America Online look the same.'

At this point, the best clues come from responses generated by Web pages. An informal survey of corporations by Investor Relations magazine indicates that the Web can be particularly helpful with dividend reinvestment plans. In fact, many sites allow visitors to type in their names and click a button to send an e-mail telling of their interest in such programmes.

Colgate-Palmolive's site - - draws 10-15 inquiries a week, many of them wanting to know about the company's stock reinvestment plan, according to Ann Crawford, Colgate's IR director. The site, which was launched earlier this year, also gets a significant number of questions from students writing papers. The students, Crawford says, run the gamut from grade school kids to people writing their MBAs. Investment clubs are another source of inquiries at the Colgate site.

Crawford says that she is impressed by the 'fair' number of inquiries from overseas. Despite these indications, she doesn't claim to have a good feel yet about who is actually using the page or what effect it is having.

Indeed, few if any corporations that have established pages on the Internet are certain about the impact, despite the surprisingly heavy traffic. And it is even more difficult to judge the specific effects on investor relations programmes.

Use of Web sites for IR purposes undoubtedly varies greatly. Some companies emphasise marketing their products - rather than their stocks - through the Web; others, including Colgate, offer a hearty basket of IR-oriented intelligence. Much depends on which department initially pressed for a presence on the Net.

Coca-Cola's IR department, for example, had little to do with setting up the Coke page, or running it - and it shows. Coke, which earlier this year won the Niri Award for Best Overall Investor Relations in the US, almost makes fun of investors (

The Coke site is so hip, colourful and humourous, that a browser must wonder if he or she has found the actual Coca-Cola-sponsored site or whether it was set up by an outsider having a good time. Because there is such heavy emphasis on Coca-Cola collectibles, a browser gets the feeling that the site was set up by someone whose major interest is in Coke memorabilia.

The light tone continues into what might be regarded as the serious IR section. 'Management wanted a place in the domain, so we let them have this part,' says the section labeled: About the Coca-Cola Company. And even within this About Coke section, the really serious stuff, such as Coke's stock price and its most recent earnings release, are relegated to a very low position on the page.

The story is very different when the IR department is the initiator of a site. Colgate's IR department took the initiative in pushing for its Web site. 'We figured it would be nice to be in the forefront,' says Bina Thompson, vice president for investor relations at the company.

Actually, Colgate's oral care division was considering setting up a Web page at the same time that the IR department was, and when their plans became known to each other, the project was coordinated through corporate communications. But IR played a very active role in its area of the site. 'We have a very proactive IR programme at Colgate to reach institutional and individual investors,' says Crawford. 'This was really another step in being proactive.'

It took about a year of thinking and planning before the site was launched early this spring. As a first step, the investor relations department began to examine other corporate sites. Crawford says she was particularly impressed with those run by Campbell and Bell Atlantic.

Crawford, who headed the project for the IR department, said they decided to place the site on a third-party server, partly to avoid the risk of a hacker entering Colgate's own computers through the Web site.

A problem with many Web sites is the long time it takes for them to pop up on a browser's computer screen. Colgate was well aware of this - 'If you get too much on there it freezes up the system,' Crawford says - and compromised between glitzy artwork, which can take a huge amount of time to appear on the screen, and a pure type page, which pops up very fast. The result is an attractive but - unlike Coke's - not a beautiful page.

The IR content of Colgate's site is based on its pre-Web experience. Its priority is on information about the dividend reinvestment plan, the latest earnings and dividend information and historical stock-price data. The site, in fact, provides tables showing the high, low and closing price of Colgate stock for every day for the past five years.

Colgate's home page has four easy-to-select categories, including Investor Relations. The investor relations section is huge in itself, but easy to navigate. In addition to the stock's price history, it includes an overview of the company and its products, the geographical balance of its revenues, where it expects future growth to come from, Colgate's dividend history, earnings releases for each quarter of 1994, 1995 and 1996 and other press releases. It also allows browsers to hypertext to the Edgar site, which contains Colgate's SEC filings.

Of course, it allows stockholders to transfer stock through the site and to join dividend reinvestment plans. It also asks for comments, which can be sent by e-mail with the press of a button. The site tells browsers how to contact Colgate's IR officers, both institutional and individual, names them and gives phone numbers.

At the 3M Company, the IR department played a much smaller role in design of the Web page. The corporate marketing department was the key driver and when its people were setting up the page, 'they came to us and said they thought it made sense to have an 'investor relations room,' says IR programme manager Cornwell.

The IR department cooperated, putting on what Cornwell describes as 'relevant' information. He says that it, 'really hasn't been a high priority for our IR department,' but adds: 'It's been a learning experience to try to package our information in a new medium, to use a new technology.'

Cornwell says he believes that the Web page attracts mainly individuals, while two-thirds of 3M's stockholders are institutions, a mix that the company is happy with. 'Individuals are important shareholders, but they're not our primary focus.'

Despite 3M's lack of enthusiasm for the Web as an IR vehicle, Cornwell says the company remains open-minded about it and that the site 'is still under construction.' He goes on:'We're evaluating what kind of research should be devoted to this and how it fits into our future.' The company is already planning more enhancements. Cornwell says it plans to put a larger portion of its annual report on the page, not just the chairman's letter.

But 3M remains cautious and, according to Cornwell, allocates its IR resources carefully. 'We don't have a good way of analysing the type of people who use this medium and therefore it is a guessing game at this point,' he says.

When interviewed in April, Dow Chemical Company was in the process of upgrading the IR content of its Web site. A problem was the length of time it took for the pages to come on screen. In Computerland, a few seconds feels like hours, and can turn people away - or at least put them in a nasty frame of mind.

From an IR standpoint, Dow's site had little to offer. Its theme stressed education and although there were six buttons to choose from, none was specifically about investor relations.

Nevertheless, according to Darlene MacKinnon, the Dow site - which went up in March 1995 - attracts about 55,000 hits a week, up from 5,000 to 6,000 last September. 'When we began putting together our home page, we decided to put public information out there to see what kind of response we got,' she says. As a result of the feedback, Dow has decided to include a substantial financial section on the site.

Dow is planning to put a 'financial information' button on its home page which will enable browsers to access its annual report, its 10K and 10Q statements (through a link to Edgar), quarterly releases and other releases. It also will provide information about how to get hold of Dow's stock-transfer agent and articles to help investors interpret the raw figures.

'The challenge is to put all of this complex data, which can be in tabular or graphic form, on our home page in a way that doesn't take too long to come up,' says MacKinnon. She adds the company's outside consultants suggest that visitors be given the option of getting photos (which take a long time to come on screen) or not. If a browser seeking the annual report's letter to shareholders wants to see what the CEO looks like, 'they can get it,' says MacKinnon. If not, they don't have to waste the time that it takes to appear.

MacKinnon has the same qualms as many IR people about the value of a Web site: 'The trouble with the data is you don't know the qualitative side,' she says. 'You don't know if they're the same people who pick up every brochure in the mall.'

Ipalco Industries, Indiana's power company, presents an example of a site that's modestly good-looking, rich in IR content but lacks pzazz. Despite its apparent intricacy, the home page pops up quickly on the screen and navigating the overall site is easy.

The Ipalco home page presents eight buttons: Quick Look; Customer Services; Shareholder Services; What's New?; Financial; About Indianapolis; Executive Remarks; and Shape (Shape Energy Resources Inc is a joint venture with Dow Chemical and Mid-America Capital Resources to commercialise technologies).

Jennifer Kent, Ipalco's IR director, says much of the work in setting up the page was done in-house, although an outside designer did some of the graphics. The Web site has its own server, a free-standing personal computer. The impetus for the page, which went online in July 1995, came from both the IR and corporate affairs departments. It has already gone through several redesigns. 'We want it to look good but also to come up quickly,' says Kent.

A problem with the original was that the home page was a huge photograph of Ipalco's headquarters. That took a long time to come up and readers had to scroll fairly far to get to the substance. 'That's when we decided to bring in an artist,' says Kent.

Kent has been particularly impressed by the interest the site has generated in a company white paper about restructuring the electric utility industry. An executive summary is available on the Web site and Kent says that it prompts about five people a day to request the full text. 'It's a good way to build our mailing list,' she says.

Ipalco is so pleased with the results of the page that it is considering putting an IR newsletter on it. Part of the reason for its success is that the site is heavily promoted. All press releases and business cards, for example, carry e-mail addresses and the home page address.

Ipalco has a very different view from, say, 3M. Ipalco believes that the investment community was one of the first to use the Internet, and that 'the general public is only catching up,' says Marni Lemons, who is in charge of maintaining the page. 'Investor types, brokers and analysts, are always in search of the quickest and easiest ways to get information, so we saw them as an obvious initial audience,' says Lemons.

'It was something we knew we wanted to do because we're working real hard to present an image of being out front in our industry,' says Lemons. 'We knew that the way to do that in 1995 was to be among the first utilities to have a home page on the Web.'

Initially Ipalco did practically the whole job internally, but found that 'a Web page is like a small child that takes constant care and feeding.' Because the Ipalco staff were dissatisfied with the quality of off-the-shelf software available to produce their page, they did the coding entirely by hand. 'We'd do a news release that we wanted to put on the home page and it would take us a week to get it done,' explains Lemons.

As a result, Ipalco turned to David Cook and his firm, Cookware, which designs pages for a number of corporations. Now, 'we just e-mail him the information and it's on the page within an hour.' Cook, however, says that Ipalco is unusual in having him maintain the page. Most of his customers do it themselves; only 5 per cent use him on an ongoing basis, he says.

Despite the use of an outsider, Lemons says producing and maintaining the page is inexpensive. 'We estimate that we've spent less than $8,000 at this point.' That excludes staff time, however. Lemons estimates that between them she, Susan Hanafee, who heads corporate affairs, and a secretary devote about 20 hours a week to the page.

'It's such a new technology,' says Lemons, 'that we, like many other companies, are just trying to feel our way through.'