Can buzz about brands on social media really influence share prices?

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In an article published online today, Andrew Walmsley, talks about some of the studies which indicate that social media is a lead indicator of share-price performance.

Walmsley notes that as players of the stock market are always seeking a lead on rivals and a signs of things to come,  it’s no surprise that social media monitoring has been seized upon as a potential forecasting tool - people who ‘like’ a brand, become a fan, discuss it in forums, tweet or blog about it are expressing their interest or approval in dozens of ways.

Walmsley then goes on to describe 3 examples of where there appears to be  a statistically significant relationship  between the stock price and the buzz that’s been monitored:

1. Altman Vilandrie

US based management consulting group Altman Vilandrie conducted a proof-of-concept study in the US, looking at the iPhone 4 antenna problem in 2010. Though only a preliminary study, they found social media to be a good proxy for consumer sentiment as it acted as a lead indicator both for the stock-price decline and news sentiment. It was also more reliable than online news sources, which lagged behind and were sometimes sensationalist in tone.

2. Pace University and Famecount

Pace University in New York collaborated with Famecount, the social analytics company, in a study to examine the relationship between the stock prices of Coca-Cola, Starbucks and Nike and the number of fans they had in social media. All three brands were shown to display a significant correlation and a relationship that worked on a 10- to 30-day lag of stock price to social media, making it a useful predictive tool.

3. Sntmnt.com

A start-up stock market and trend analysis company called Sntmnt.com, based in the Netherlands, is applying machine learning to pick out the correlations between 10,000 buzz sources and the stock prices of 25 funds on the Amsterdam exchange. Early results from the beta stage claim 56% accuracy in its predictions.

What is interesting about these studies, as Walmsley points out,  is that if the market starts to believe that buzz is a predictor of stock performance, then whether this is real or not ceases to matter; buzz spikes will start to be reflected by jumps in stock prices as traders begin to follow the metrics.

Obviously we shouldn’t take anything as read just yet as these studies are still in the early days of examining the influence of social media on share prices, but it will be interesting to see if anything more develops over the coming months.

6 areas where social media can be used in the insurance customer value chain

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Image courtesy of Ernst & Young

In a recent report,  Ernst and Young lookedspecifically at how social media be used in the insurance customer value chain.

Here’s a summary of the findings, with some of our own thoughts:

1. Research products

Customers are using dedicated price comparison sites in order to research insurance products. They’re also asking questions, through social media, to their connections and friends, seeking advice on things like the best car insurance company, or where to get the best deal.

Our suggestion: Insurance companies should use social media monitoring to listen to these conversation and find out what’s being said about their products. This will help to assess both the positive and negative perceptions behind the products and how this influences the research stage of the customer value chain. If they’re not being talked about perhaps this is an indicator that marketing and promotional activites need to be reassessd.

It may also be appropriate for some brands to establish Twitter and Facebook profiles in order to respond to the requests through social networks for more information about where to get the best car insurance etc. However this should be assessed on a brand by brand, interaction by interaction basis as some customers may resent hearing back directly from a brand and will see it as a hard sell.

2. Obtain quotes

Some insurers are using new technology, like iphone apps, to generate, buy and renew insurance quotes. An online research company targeting advisers has developed the country’s first app for life insurance quotes.

Our suggestion: Mobile device use is on the increase and insurers would do well to think about how they can enable their current and prospective customers to access price and data information  on the go. This could be particularly valuable for travel and car insurance companies.

3. Policy buying

According to Ernst and Young’s industry research, 90% of customers say peer recommendations are the most credible form of advertising.

Our suggestion: Reviews and recommendations from “people like me” play an integral part in the customer decision making process. A good review by an influential blogger, or a comment by a social media influencer who appeals to the consumer audience can be more valuable than thousands of pounds worth of advertising. By interacting and engaging with influencers, brands can build up their presence and appeal to their target audience.

4. Service policy

Social media allows insurers to interact and communicate with customers, and vice versa. This helps the insurer learn more about their customer’s needs and helps them educate about the best policies, the benefits of their current policies etc.

Our suggestion: Insurance companies need to assess the best way for engaging with their market and audience. The best way to do this is to come up with a social media management plan and a content strategy that is personalised, useful, relevant and targeted.

5. Lodge claim

Many insurers are building and piloting new applications to capitalise on the prevalence of mobile and app based communication to deliver information to claims handlers and policy holders. They’re also offering self-service portals where claims can be lodged quickly and effectively.

Our suggestion: Social media can help to disseminate useful information that could help to reduce claims. For example, travel insurers could provide useful advice about keeping valuables safe in hostile environments or extreme weather conditions. Claim handlers could also mine Facebook, Twitter and other social networks to assess the legitimacy of claims based on the data, comments and conversations of the claimant.

6. Renewal/Terminate policy

Customers mostly turn to websites to fulfill their renewal and termination needs, thus the same potential exists for insurers to use social media as a means to improve renewal numbers.

Our suggestion: One of the main benefits of social media is the potential to gather valuable CRM data. For the insurance industry this could be information like  renewal dates, policy types etc. If this information is gathered then engagement could revolve around not only acquiring new customers, but targeting them before their renewal date to encourage them to renew the policy, or change to a different one, rather than terminate.

Facebook branded content: focus on friends of fans not fans themselves?

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A recent research paper conducted by comScore and Facebook shows that the reach of branded content among friends of fans significantly exceeds the reach among fans themselves.

The two potential audiences for branded content on Facebook are:
1. Fans of brands on Facebook (ie, those who have explicitly “liked” a brand).
2. Friends of these fans.

While those who have explicitly “liked” a brand are the easiest to reach with social media brand impressions, friends of those fans also constitute an important incremental audience. In fact, according to the research, they typically represent a much larger set of consumers - 34 times larger, on average, for the top 100 brand pages.

So when a brand is focused on acquiring and engaging fans it should also keep in mind that exposure among friends of fans can often surpasses reach among fans itself.

Now, these findings aren’t exactly rocket science, but it could help marketers to evaluate the earned media impact they get from their Facebook investment.

Other key findings of the report include:

  • Facebook is the dominant social networking site with an audience of approximately 160 million U.S. visitors each month and accounts for 90 percent of all time spent on social networking sites.
  • Facebook users spend more than a quarter of their time on the site consuming and interacting with the Facebook Newsfeed, and this activity represents 4 percent of all time spent online in the U.S. The Newsfeed is also the primary location where branded content is consumed.
  • Facebook users are 40-150 times more likely to consume branded content in the Newsfeed section of Facebook rather than in branded fanpage.
  • In the case of some brands, Facebook Fans may have different aggregate demographic and behavioral profiles than typical brand purchasers, indicating that social media may require different approaches to marketing strategy.
  • The “Value of a Fan” can be assessed in three primary ways: increasing the depth of engagement and loyalty among Fans, generating incremental purchase behavior, and leveraging the ability to influence Friends of Fans.

Image courtesy of comScore

Google+: A social networking site or the future of search engine marketing?

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So Google has launched its first foray into social networking with the launch of Google+. Or has it?

This may be somewhat of a conspiracy theory, but a few of us here at FreshNetworks were questioning whether Google+ is about social networking at all, or if it’s about something else…namely, changing the future of search engine marketing (SEM).

Think about point number 2 of Google’s “10 things” manifesto:

‘It’s best to do one thing really, really well. We do search. With one of the world‘s largest research groups focused exclusively on solving search problems, we know what we do well, and how we could do it better.’

So perhaps Google+ is about improving their ‘one thing’ which,  in the words of Google’s co-founder Larry Page, is to make search engines “understand exactly what you mean and give back exactly what you want.”

Think about this. Now, when you’re logged in to Google+ and you search for something in Google, the results you get are often different than if you weren’t logged in to Google+. If someone from your ‘Circles’ (connections) has shared a link the relates to your search term then the content they have shared comes up higher in the results, sometimes even at the top of the pile.

Potentially, in the future, this could mean that the more popular pages from within your Circles could outrank those pages that are better optimised in the traditional sense of the word. This is probably why companies, like Plussem, have started targeting Google’s +1 feature and you can now pay companies to “+1″ your website.

What’s more, think about the ‘Sparks’ function in Google. When you search for content within Sparks it returns results that are relevant to an interest you’ve selected. Moving forward, this feed could also return content that people in your Circles have liked at a higher page result. Or it could be used in the way that Google is currently used where the top content is sponsored content, enticing brands and businesses to get involved.

Obviously Google has yet to release where it’s going with Google+. Perhaps Google+  is not about moving SEM forward, or claiming back more of the search engine market from other rivals as some people think.  And if Google want to get brands involved  with Google+, which all the signs suggest they do, then it will be much more than just about search marketing.

So it’s still too early to tell what Google’s plans are but it looks as though Google+ could potentially impact social and search in a big way.

Brand campaigns on Facebook grow by 104%

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Digital advertising agency TBG Digital examined 200 billion impressions across 167 clients advertising on Facebook in 21 countries to produce its Q2 2011 Global Facebook Advertising Report.

Here are some of the key findings:

Facebook brand campaign general statistics

  • Brand campaigns on Facebook grew by 104% between Q1 2011 and Q2 2011.
  • There was a 435% improvement in campaign conversion rates when targeting existing fans.

Sector breakdown

  • The Retail got the most Click Through Rates (CTR) and grew to 36% of total impressions in Q2 2011. The growth of the retail sector was fuelled by positive feedback from consumers as expressedby the highest CTR among all sectors.
  • The second fastest growing sector was Finance, driven by credit card campaigns.
  • The numbers of impressions inthe Jobs & Education sector also grew rapidly - however this growth was seen mostly in the USA.

Price Trends

  • The Cost per Thousand Impressions rose by 45% across 4 markets between Q2 2010 and Q2 2011.
  • The Cost per Click rose by 74% across 4 markets between Q2 2010 and Q2 2011.
  • Using ‘Sponsored Stories’ ads in Facebook campaigns decreases Cost per Acquisition by 32%.

UK brand campaign market trends

  • The UK market is slower in adopting brand campaigns than the USA, possibly due to the high emphasis on Return on Investment/Offsite Campaigns (ROI) -  only 3% of impressions were aimed at fan acquisition in Q2 2011.