There is a growing demand for Google Adwords by public companies and the investor relation firms that manage their campaigns. Google Adwords definitely get the traffic to the websites of the companies, and bring awareness to stock symbols often without having to even click on the advertisements.
However, many of the advertisements skate a thin line on breaking SEC regulations, especially considering the statements made without any forward looking statement disclaimer. The reality is within those little advertisements, where are they going to fit a 300+ word disclaimer? They can’t. Although, I have read many of the Google Adword advertisements and the ads scream for people to invest, comments such as “XYZ company going up 200%” up from when, how, why, etc, not there. But investors see the ads and may not even click on them, they have bought mindshare with a possibly fraudulent statement.
You don’t have to be a genius to see the possible damaging outcome of Google Adwords to investors and for companies, and why I have chosen to soapbox about the dangers of mixing online advertising with your investor relations strategy. Go to Google and search the phrase “stock picks” and I can almost guarantee you will see what I am talking about. I would post an example, but I am not sure if I would be hurting someone’s reputation, so I suggest you take this exercise into your own hands.
Of course, some of them are more blatant than being touted by a stock newsletter analyst, claiming hot stock returns, and stocks that are “about to soar” but they also appear to be from the company as the links go back to the investor relations pages. As mentioned in my other blog, if people are running your investor relations on the internet and they have never dealt with a regulator before, they can seriously harm your business and your reputation. (www.publishknowledge.com)
Investor relations is about dialogue, interest, value, and quality volume of followers, not a flash in the pan 70 character advertisement enticing people to buy stock. I honestly believe that Google Adwords will soon face the same problems with the SEC and Public companies as pharmaceutical companies have with the FDA.
In April, the Food and Drug Administration slapped 14 warning letters on pharmaceutical companies for not including risk information in their Google Adword classifieds. After two years of doing nothing, the FDA decided to protect the public from dangerous ads.
At least a majority of the Drug companies had the courtesy to have a “one click” rule which popular belief suggested being one click away from the full disclosure of the health risks and package information was ok, but the FDA took a stance against this “one click” rule due to the outlandish claims being made by pharmaceutical and alternative medicine companies in 70 characters or less.
If this doesn’t sound familiar, than you better check again. Most stock IR advertisers on the internet don’t even play by the “one click” rule, in addition, the proper use of the internet document published by the SEC, a 47-page report, clearly states that there is no space for outlandish comments like the ones made within Google Adwords on the use of the Internet for public companies.
“…companies are responsible for statements made by the companies, or on their behalf, on their web sites or on third party web sites, and the antifraud provisions of the federal securities laws reach those statements.”
So why has the SEC not sent warning letters out to Public Companies and advertisers on the Internet using Google Adwords? The reality is, they most likely will or at least will form a guideline, and one complaint from an investor who made an investment through a Google Adword recommendation, and IR on Google Adwords will come tumbling down. In all respect to the wonderful use of Google to drive leads, Google Adwords is not meant for investor relations. The moment you try to make 70 characters a pitch to the public, you have just crossed the line.
In addition, Google Adword accounts carry records of the past advertisements, and even though you may not be publishing an advertisement anymore that broke the law, if you did publish it, its not hard to get access to the records, statistics, and damage caused by the advertisement.
Investor Relations is building a presence, trust, brand loyalty, and allowing for full disclosure to sell the merits of your business. Favourable research reports, articles, and press are all strong components that make the brand awareness possible. Building an interactive community of investors and analysts, fans and friends, all within social media platforms engages far more interest and appropriate investors than catchy phrases. Buying Google Adwords to direct traffic to research reports, blogs, and publications with disclaimers included is much more responsible as a public company and IR team. The evidence of how the SEC could approach this topic is foreshadowed by the reaction of the FDA.
I rephrase that Google Adwords is for investor relations, but its place in the IR world could be limited in the near future if the abuse of the system continues by damaging promises by companies who have never dealt with a regulatory bodies like the SEC before, or even a more scary thought… don’t care.
I suggest that you care, and use your Google Adwords sparingly for investor relations, build a complete social media marketing campaign with responsible initiatives that drive qualified interested individuals who will be sure to read the disclosures and full information on your company before they take investment choices or talk to their broker.
Just a word of advice, and I am not going to charge you for this word, but there are many ways you can get “charged” for a word, so use them wisely.
Ryan Gibson, Guest Writer