Investors are Confused and Intimidated by Data on Corporate Sites, warns Nielsen Norman Group

At their best, the investor relations functions of corporate websites should serve to inform, attract and retain investors, suggests Jakob Nielsen.

Researchers from Nielsen Norman Group observed investors conducting standard investment-oriented tasks on 20 corporate websites including Johnson & Johnson, Symantec and Tyson Foods.

'If ever there was a time for corporations to present on-target investor relations services on their websites, it's now. In this cautious investment climate people are turning to the Web for help. But instead of feeling empowered, even savvy investors are feeling completely confused and intimidated,' said Nielsen. 'Corporations need to be realistic about the types of content and features most needed by investors. Simplicity and a coherent story about the company are better than drowning people in incomprehensible data.'

Testing was conducted with 28 individual investors and 14 professionals (professional investors, financial analysts and financial journalists) interacting with the corporate websites. Users were asked to complete nine specific investor-relations tasks such as getting the latest quarterly report and finding out the date for the next earnings release.

Study findings include:
* Users had the most difficulty finding the high-low share price of an earlier quarter, a fundamental investor relations task. Only 23% succeeded in finding it;
* Users were most successful in finding out what the company does (100%) and on what market(s) the company is traded (98%);
* On average, users successfully completed 70% of the tasks, (comparing favourably with other Web usability studies completed in recent years which have typically recorded success rates between 55% and 65%);
* Professional investors despised the marketing-oriented information on companies' websites, but appreciated getting the company's own "spin" on things such as its goals and prospects.

'It may seem silly to measure whether users can discover what a company does, but in the past, websites often didn't bother saying so,' said Nielsen. 'A small victory for usability that people can now find this basic fact. But companies still don't explain their main business very well in language that outsiders can understand.'

The research team suggest that companies can help individual investors by presenting simplified views of financial data and summarising the highlights. They can support professional investors by providing a look at the company's past, present and future, summarised in a way to help tell the story behind the company's numbers.

Although Nielsen adds in his Alertbox: 'All of the professional users had the same general conclusion: They would not rely on a company's own website for most finance data. Instead, they would use the specialized services that their companies subscribe to, such as Bloomberg, Reuters, and First Call. Investment professionals often rely on downloading large amounts of financial data into their own modeling tools or spreadsheets, and they prefer doing so in standardized formats from a single source so that they can easily compare multiple companies.'

(The full report is available as "Designing Websites to Maximize Investor Relations" from NNg for $248.)

Associated Link: Alertbox: Investor Relations Website Design

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