Never a function ripe with proverbial sex appeal, investor relations (IR) has experienced a makeover in recent years, having been bitten by the digital bug alongside many of its conservative corporate counterparts.

Now, IR executives are challenged to incorporate innovation into their strategies, while at the same time working in tandem with the communications function to engage stakeholders in meaningful ways.

This charge to innovatively communicate business strategies to investors centers largely on the focal point of IR activities: the annual report. According to Diane Cady, president of Cady Communications, “The annual report is changing. Today, innovative IROs [investor relations officers] use these once-stodgy compendiums of facts and outdated financial information to introduce important strategic changes and to rally employee, industry and shareholder support.”

With the combined efforts of communications and investor relations, then, this vehicle is becoming more dynamic to meet changing stakeholder demands. In turn, annual reports are taking on increasingly digital components and becoming interactive platforms that “live” online all year long.

Amanda Clardy, vice president of investor relations with Invitrogen, cites these considerations for taking her organization’s annual report online:

The Securities and Exchange Commission adopted amendments to its proxy rules that allow companies to deliver materials to shareholders through a “notice and access” model using the Internet.

Video features allow for the culture of the company to come through.

Elements that appeal to all audiences, including investors, customers and employees, could be incorporated.

The content can be updated more easily throughout the year.

These benefits apply to all organizations, which can only mean one thing for communications professionals: It’s time to take the lead and move annual reports to the Web. Here’s how.

Think visually. In 2008, the team at Millipore Corp. made significant changes to its communications strategy and tactics to “drive a better understanding of the company, markets and [business] strategy,” says Joshua Young, Millipore’s director of investor relations, noting that these changes hinged on making the traditional annual report and 10-K more innovative and digital in nature. The investor relations team started by adding a new format, color and information design to the 10-K.

“The traditional 10-K format lacked effective visuals to deliver key messages,” Young says. “We implemented a measured approach to changing the 10-K, [with a] new format that’s easier to read and provides flexibility in drawing the reader to specific messages.”