As a writer of annual reports and other financial documents, I’ve noticed the trend of online annual reports, a digital or electronic format. However, I wondered just how far the “digital online report” has come in the last few years and set out to learn for myself. Since you found this post, perhaps you, too, are inquisitive about the digital online annual report. Here’s what I discovered.

About one-third of US annual reports are digital

According to a 2010 Annual Report Trends poll from Craib and Blunn & Company, about 32% of US companies publish an online HTML version of their report.

Nexxar, a Viennese company “devoted to the topic of online reports,” states that 42% of 2011 annual reports in North America and Europe are online.  Nexxar research indicates that online reports overtook PDFs, at 38%, in 2011.

Multiple formats for annual reports

Online annual reports can be of several types:

• HTML online annual reports are designed for online reading using Internet technologies like html and micro websites (versus printing), and may include video, audio and interactive elements.

• PDF annual reports had been the standard bearer of offering online financials, but are losing favor, or least becoming the second banana to html reports.

• Flip book style reports typically are print layout pages converted to images (JPGs) and allow one to flip through the gallery in a magazine-style fashion.

• The hybrid annual report, per Nexxar, has become popular in recent years. Parts of the report, such as the financial notes section, are available as a PDF while the front half of the traditional print report is full HTML. Organizations find this a cost-effective balance of reporting technology. Some criticize this approach as being a poor mix of technologies.

Benefits of HTML annual reports

Trends indicate that that the HTML annual report is slowly but surely becoming the status quo for annual reports, especially for publicly traded companies. Benefits of the HTML online annual report include:

• Speed. Interested parties can get to a number of web pages quickly, and are increasingly adept at finding what they want on an html website. In today’s need for speed era, downloading a PDF and then flipping through pages is too time consuming. The flip book may not require a download but are also more time consuming than HTML.

• Accessibility. Online annual reports are accessible anywhere one has an Internet connection. Mobile devices, like smart phones, iPads and tablets are playing an increasing role in content consumption. These devices are made for interactivity, and HTML reports are quite adaptable for screen size. Some do question the actual viability of content-heavy annual reports with the small screens of many smart phones. Best practices call for the extensive use of audio, animation and video, versus long pages of text and data.

• Multi-media. The HTML annual report allows a company to tell its story and communicate key messages through a combination of words, images, video and audio.

• Search engine optimization (SEO). The phenomenon of the Internet is the ability for an organization to be found by the thousands and from just about anywhere. A digital annual report has a better opportunity for successful search engine optimization than a PDF report or flip book.

What financial reporting mode is best for your organization?

Publicly traded companies’ annual reports

In my opinion, publicly traded companies need to take a hard look at the HTML annual report. You’re competing for institutional and retail investor’s attention, and you need to be current with Internet technology as adapted to the annual report. You may want or need to keep a print layout version, too. There certainly is a place for the tangible document in communicating your company’s challenges, strategies and financial results.

Nonprofit organizations’ annual reports

Nonprofits don’t have to produce an annual report, but many feel compelled to communicate how they have progressed in meeting their missions and how they have stewarded their resources.  Nonprofit annual reports generally do not disclose detailed financial data, but do include a financial highlights section. An HTML nonprofit annual report, and the likely increased expenses, may be construed as an unnecessary cost. However, those costs may be justified in how the use of multi-media can tell the compelling stories of the nonprofit.

Private companies’ annual reports

Private companies are just that, private, and tend to shy away from revealing what they consider to be internal information. So, creating an online resource with private information is generally inappropriate. We do see some large, private companies provide snippets of financial data, such as overall revenue, number of new locations, number of locations closed, etc. Private companies with employee stock plans need to share certain information to those employees, but typically prefer print communications that is selectively shared. I have seen private companies create documents called annual review, which contain some financials and often include stories and visuals of their products and services in action.

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