Australia: Marketing IPOs through social media - six key considerations

Last Updated: 23 October 2016
Article by Simone Collignon
Services: Corporate & Commercial
Industry Focus: Agribusiness, Life Sciences & Healthcare

What you need to know

  • ASIC continues to put initial public offerings in the spotlight with its latest report on marketing practices used to promote IPOs, which includes a focus on whether social media is changing the way IPOs are marketed.
  • While the regulator's inquiries pre-empt widespread adoption of social media in this space, and we have spoken with brokers who remain sceptical about the value of social media marketing for IPOs, ASIC's report suggests that social media presents a "creative and innovative" way for issuers and brokers to promote IPOs.
  • Companies considering an IPO, or brokers looking for creative ways to engage with potential investors, should consider whether social media is likely to be an effective marketing tool in their IPO campaign. If the answer is 'yes', it's crucial that every LinkedIn post, Facebook ad, tweet, share and 'like' complies with the letter and spirit of the law.

ASIC review of marketing practices in IPOs

ASIC recently issued a report on the marketing practices adopted by companies undertaking initial public offerings and by the brokers selling them.1 While ASIC considered a range of alternative marketing methods (including video, online bookbuild sites and investor forums), the corporate regulator was particularly keen to discover whether social media is changing the way IPOs are marketed. It found (unsurprisingly) that traditional methods still dominate but that social media presents a "creative and innovative" way for issuers and brokers to promote IPOs.

In our view, social media certainly has the potential to be an effective marketing tool for IPO brokers and issuers. The trick is to strike the right approach to ensure your social media marketing efforts are not only legally compliant, but also worth your while.

Drawing on ASIC's report, as well as insights gained through our discussions with brokers (who remain largely sceptical about the attractiveness and practicality of social media to promote IPOs), we highlight six key considerations for those considering IPO social media marketing.

6 key considerations before marketing IPOs through social media

1. Difficulty of complying with advertising restrictions and ensuring adequate disclosure
  • The advertising restrictions in the Corporations Act 2001 (Cth) limit the ability of social media to be a truly effective marketing tool. Section 734 requires IPO advertisements to contain certain statements, including statements about where investors can access a copy of the prospectus and that they should consider the prospectus in full when deciding whether to take up the offer.
  • Technical limitations make it difficult to comply with the above requirements and present a balanced view of the risks and benefits of the offer. For example, Twitter posts are limited to 140 characters, including hyperlinks.
  • Contraventions of the advertising restrictions can lead to ASIC ordering remedial action and criminal liability for anyone 'involved' in the contravention. Similarly, content that is deemed misleading or deceptive can expose issuers and others to criminal and civil liability.
  • Against these limitations, is it possible to market IPOs on social media in a compliant manner? Possibly. One option is to include a link in the social media post to the prospectus or a website landing page setting out all of the required information in relation to the offer, including standard disclaimers. However, brokers appear cynical about whether potential investors will click through and act on an invitation to invest that comes via social media (more on this below).
2. Limitations on effectiveness in certain IPOs
  • While online networks are a potential source of investors, whether those leads can be converted into dollars will depend on the nature of the IPO and whether the issuer and lead manager adopt a targeted and engaging social media strategy.
  • Unless it is a high profile IPO (think Medibank Private) or the company is sitting on a 'hot' commodity (say, lithium), social media is not currently particularly effective at getting investors across the line. Most IPOs are for companies the average investor has never heard of before, so social media alone is unlikely to generate genuine investor interest.
  • In the case of high profile or 'hot' IPOs, it is unlikely that a broker will want or need to spruik it on social media. The reality is that they are unlikely to have any trouble selling the IPO to their existing client base.
3. Cost considerations
  • Posting on social media is 'free' if done from a party's standard account, but that content will not reach far beyond their immediate followers and network. To penetrate a wider audience you need to publish paid ads or 'sponsored' posts. Costs are determined based on how many potential users you want exposure to.
  • You can be quite specific about your desired audience – for example, you can target them based on their location, gender, age and existing network. You therefore need to have a good picture in mind of your likely investor base and tailor an approach and content that will engage them. For instance, are your potential investors more likely to be on LinkedIn, Facebook, Twitter or other platforms, or a combination of these?
  • According to one broker we spoke with, the costs of posting paid posts on Facebook to a reasonably wide audience far outweighed any investment return.
4. Importance of investor engagement through establishing trust and making a human connection
  • As one of our broker contacts noted, "For us, getting on the phone to the client is by far the most effective way of engaging with them. We've used social media in the past and found that we had really poor conversion rates in terms of people actually 'clicking through' and acting on the offer. It was a waste of time and money."
  • Brokers are not inclined to 'waste their time' targeting people that are unlikely to invest, or using marketing practices they deem to be a poor return on investment of time and money.
  • Prolific users of social media are not necessarily an issuer or broker's target market and may not be in a position to invest.
  • Potential investors are less likely to act on an invitation to invest that comes via LinkedIn, Facebook or Twitter (whether as published posts or paid adverts) than they are in response to a phone call or targeted email from a broker with whom they have an existing relationship (or can establish one).
  • The value of human interaction and of a good salesperson cannot be underestimated.
5. If it ain't broke...
  • It is more effective for brokers to call on their existing client base, with whom they already have a relationship, than to put out 'cold calls' via social media.
  • The lack of disruption and challengers to the status quo in the IPO broking space tends to keep brokers and issuers from branching out to explore new marketing methods. At present, the methods that have always worked continue to work, so there is little incentive to embrace social media.
6. Oversight of user content is essential
  • Issuers and brokers relinquish a degree of control over content they post on social media platforms. Social media platforms are designed with the user in mind – that is, they are designed to allow subscribers to comment, share, repost and retransmit content.
  • User content (e.g. comments or posts on a Facebook page, or 'retweeted' posts) must be routinely monitored to ensure issuers and promoters are not exposed to liability for any misleading and deceptive statements.
  • The risk is that issuers and promoters may be held liable for comments posted on their Facebook or Twitter pages if these are deemed likely to mislead or deceive investors. For example, ASIC may not look favourably on promoters who allow users to post and comment only on the company's strong financial position or some exciting new venture without countering those with comments with the potential risks or directing investors to pay attention to all of the information contained in the prospectus.
  • There is also a risk that the overall message an issuer or broker is trying to convey about the company and IPO may be compromised or subverted. Monitoring user activity to screen and respond to negative comments or claims (particularly where these are unfounded) is likely to be difficult and labour intensive.

Is all this attention on social media marketing for IPOs premature?

ASIC's review found that smaller and medium-sized firms and emerging market issuers have started using more innovative methods to market IPOs, including social media. It suggests that smaller firms are often dealing with risks of not achieving spread or minimum subscription amounts and perhaps see social media as an attractive, relatively cheap way of mitigating the risk of an IPO falling over.

However, as we have noted above, doubts remain as to whether social media marketing is truly effective at converting potential leads into dollars. Although a number of issuers and broking firms have lately been dabbling in social media to promote IPOs, there is hardly widespread adoption of social media in this space at present.

A number of commentators have suggested that ASIC's focus on social media marketing is premature and out of touch with commercial reality, while others have praised ASIC for being 'ahead of the game' or at least following the lead of international financial regulators (including the US Securities and Exchange Commission and UK Financial Conduct Authority) who have already recognised the prevalence of social media usage in the financial services sector.

If one thing is clear, it's that ASIC has lately demonstrated a relentless focus on activity in the IPO space. The regulator's latest report on IPO marketing practices comes hot on the heels of its earlier publication warning that companies seeking to IPO in Australia must adopt robust due diligence processes to avoid defective disclosure in their prospectuses. You can access our summary of that report here. Similarly, if your company is on an IPO path be sure to check out our other recent article which highlights some of the issues that should be front of mind for anyone contemplating an IPO in the near future.

What does this mean for issuers and brokers?

Used in conjunction with traditional methods, social media may yet prove to be a potent promotional tool in the IPO space.

While the brokers we spoke with were clearly in favour of traditional marketing methods, they did not rule out using social media for future IPOs if the barriers described above can be mitigated or overcome. Whether social media marketing grows in popularity will depend on the extent to which ASIC embraces the "innovation that is currently taking place" and can adapt its compliance processes to "encourage digital innovation that fosters investor and financial consumer trust and confidence."2

Companies considering an IPO or brokers looking for creative ways to engage with potential investors should consider whether social media is likely to be effective in their IPO campaign. If the answer is 'yes', then it's crucial that every LinkedIn post, Facebook ad, tweet, share and 'like' complies with the letter and spirit of the law.


1 A copy of ASIC's Report 494 Marking practices in initial public offerings of securities can be accessed at

2 ASIC Report 494, paragraph 18.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Simone Collignon
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.