Few people need to be convinced of the prevalence of social media and the opportunity it presents to connect with and open a dialogue with friends — or in the case of businesses, buyers and influencers. What is less certain, however, is how some industries — especially those that are strictly regulated — can go about adopting and deploying a social media strategy.
“Social media marketing has reached a stage of maturity that places it firmly in the mainstream of marketing channel activity, with fully 96% of marketers engaging with social media in some fashion,” according to a new BtoB study, Social Marketing Reaches Critical Mass.
Retail and consumer brand companies have it pretty easy. Followers generally want to look for deals, see the latest arrivals, and read or provide reviews of the merchandise.
But companies in sectors such as healthcare, pharmaceuticals, banking, and financial services face greater challenges in building a social media following and serving up content to keep them engaged. These businesses face the additional hurdles of complying with rules and regulations regarding privacy, SEC rules and regulations, and protecting customer information, not to mention clients’ reluctance to divulge medical and financial information.
To help provide direction on how to approach social media, Rajib Chanda and Todd Menszak from the law firm Ropes & Gray wrote “Ten Things to Know About Social Media in the Financial Services Industry in 2013” (Social Media Law Reporter, January 2, 2013). Here’s a summary of their advice:
1. Individual Employees’ Business Use of Social Media
People tend to trust other people more than faceless corporate e-mails or Facebook posts. When you see something from a corporate account, you suspect that that’s what they want you to hear. However, when individuals share about your company, it doesn’t just get the word out, it also endorses (for or against) the company and topic.
Do you allow all employees to use social media on behalf of your company or just designated individuals (see #9 below, Training and Supervision)? Can employees use social media during business hours? Do you have policies (formal or informal) that safeguard compliance with regulations that govern the sharing of information and disclosures in the financial services sector (see #8 below, Policies and Procedures)? Do you have different policies for Facebook, Twitter, and LinkedIn, or do you treat them all the same? If employees connect to clients, who “owns” the connection: the employee or the company? What happens to the connection when the employee leaves?
Promotions through social media are subject to the same antifraud regulations as placing ads in other mediums. Tempting as it may be, you need to ensure that employees refrain from making performance claims that could violate SEC guidelines. In industries that are driven by fine print, there isn’t much room for footnotes and asterisks on Facebook, Twitter, and the like. Therefore, it’s best to articulate what can and cannot be said on behalf of your company and police yourself before someone else does.
3. Static vs. Real-Time Communications
Know the difference between static (e.g., profile and about pages) and real-time communications (e.g., posts and replies to others’ posts) and when real-time communications become static. In the ever-changing financial services environment (bear vs. bull, up today and down tomorrow), comments made can be construed as advice. Generally speaking, static information must receive corporate approval before going live, while in-the-moment tweets and Facebook posts (although still subject to review) don’t require the same level of scrutiny.
Remember when teachers would say, “If you didn’t bring enough for everyone to share, then no one can have any”? That’s the essence of suitability requirements, specifically, “that all recommendations be suitable for each customer.” When interacting with financial services clients through social media, it is better to avoid recommending specific products and services; rather, save that for one-on-one conversations and e-mail exchanges.
5. Third-Party Posts
Do you allow others to post on your site, page, or wall? The answer is likely yes, since the point of social media is to engage your constituents and not just speak at them. But in doing so, you are also allowing other opinions and advice to be given, which may run counter to your philosophy or just be plain wrong. (And of course you could be spammed.) Police comments on your sites, and avoid “adopting” or becoming “entangled” in third-party posts by giving your consent or approval (unless you choose to do so). If you have partner organizations, work out the guidelines for cross-selling and promoting on each other’s sites so as to avoid problems and illegal activity.
Continuing on from third-party posts is the matter of testimonials. This includes solicited or unsolicited posts by others about your company, products, and services, as well as suggested performance or results. “Under the Investment Advisers Act, testimonials about products or services are prohibited.” Facebook and LinkedIn further complicate compliance due to users’ ability to “Like” posts, which can be viewed as an endorsement or testimonial of sorts. Twitter presents its own difficulties, with companies unable to prevent others from tagging them in tweets.
7. Record Keeping Responsibilities
Financial services firms have recordkeeping requirements by law. Some communications are supposed to be kept in an easily accessible, indexed file for periods of three to five years. You can imagine the challenges companies could face in maintaining such a log for themselves. Add in relevant posts, tweets, and the like from employees who represent the company, and that really complicates matters. The authors advise considering software for tracking purposes — remember, if it’s not automated, then someone has to do it manually. (And don’t neglect tracking deleted posts.)
8. Policies and Procedures
The whole point of social media is to create spontaneous, interactive dialogue with your clients, prospects, influencers, employees, and other constituents. But when you think of the amount of damage that one person can do, the need to adopt policies and procedures for your employees’ use of social media becomes obvious. The risks and liabilities are too great to avoid a tight partnership among marketing, sales, legal, and compliance officers. And with the pace of evolution across the social media landscape, constant review is a must with any policy changes clearly communicated to all affected employees in a timely manner.
9. Training and Supervision
In such a regulated environment, it is prudent to train employees in how to safely use social media. Consider restricting permission to post to those whose training is current. In addition to training trusted users of social media, supervisors should also become experts on monitoring posts, ensuring compliance with policies and procedures and ultimately safeguarding against violating SEC or other regulations. The authors provide a poignant example of Netflix getting into trouble for a seemingly innocent post congratulating employees. Therefore, it would be prudent to preview posts before they go out rather than work from a defensive posture and have to “undo” posts that are out there.
Most of what you’ve read above might be enough to scare some firms away from social media. “Why bother?” Because content marketing is on the rise, and interacting with your constituents in real time through social media has become the baseline standard. If you’re not doing it, your competitors likely are, which is giving them a louder voice in the marketplace. When used effectively and according to rules and regulations, social media can provide a tremendous benefit to firms. But turning a blind eye to it will not only put you behind the curve, it will also expose your firm to liabilities from unpoliced employees. One last word of caution: as social media sites are constantly evolving and new ones join the mix, aim for proactive compliance, because the SEC and other watchdogs will expect you to remain current.
Bloomberg BNA’s Social Media Law & Policy Report: http://www.bna.com/social-media-law-p12884909455/