Social Media and Small Cap Vs. Big Cap Stocks

Does Social Media have an impact on stock trades? A question we’ve been delving into and here we reveal an interesting finding in our work so far. Essentially, we have found that small public companies (with a market valuation under $100 Million) experience greater trade stability than those with higher valuations, Big Caps or Seniors. At least in Canada and the United States, when having a higher presence in the social mediasphere.

We monitored 6 juniors and 6 seniors in the U.S. and Canada on the NYSE and TSX over a 4 month period, so we had some pre-meltdown data. Although we’ll say up front that due to the sudden volatility over the past 30 or so days, there is some cause for trepidation in these initial findings. To be sure, we will expand this monitoring since we need to compare different sectors as well, since we only monitored commodities.

What we found however, was the the Small Cap companies who used blogs or engaged with bloggers and other forms of Social Media enjoyed less overall volatility over the past 30 days (20% less in fact.) The larger, more established companies were not engaged in Social Media and only used traditional media channels to communicate their messages. We also note that the Small Caps had a significantly larger number (by 40%) of retail investors who tend to hold only for short periods and are not “builders” when it comes to investing.

Our initial conclusion is that Small Caps have a larger following of retail day traders, who are also very talkative on Bull Boards, Forums and Newsgroups and who share prolifically any amount of information no matter how small it is. So if you’re a Small Cap, you might find Social Media to be a valuable way of engaging your retail traders for your investor relations.

(Author: G. Crouch, Managing Partner)

Text Vs. Video in Social Media

The past couple of years has seen much discussion surrounding the rise of video. Reading the writings (note we say “reading”) of pundits and analysts alike, it would seem the keyboard is fading to a faint memory. Then there are those that hail the doom of good grammar, spelling and creative writing. So, which is better? Text or video? We set out a few weeks ago to explore this question, not in any extensive detail, but using our mediasphere360 tool and plumbing the brains of our team.

Essentially text is very much alive and well with no signs of slowing. In fact, the use of text is growing, we argue, more so than video. We see the reason for text as being predominant over video as a mix of issues, mostly that there are bigger barriers to video than text. More technology is required for video; camera, editing software, the right PC and the knowledge to make truly effective use of these tools. We also noted some key changes in the use of text, noted below in this article.

As monitored blogs we found that using estimations by eMarketer, Gartner and Forrester (all respectable research houses) we see there are roughly 60 Million text-based blogs. Then there are the microblogs like Twitter, Plurk and identi.ca, all text driven. Add in the increasing use of SMS to blogs,  microblogs and participatory services, you have about 60% more text than video. In our research of monitoring daily blog entries we found that there is on average over the past 4 weeks a ratio of 3:1 for text over video blogs. Additionally, underlying the use of video on video sharing sites is that user comments are 95% text based even when video commentary is an option.

It is still easier and faster to produce text-based content than it is video. Additionally, we find that video when shot personally using a Webcam on a PC tends to be more “personal” and a quick survey found that users were less comfortable putting their “face” out there versus writing a blog entry in text. The other factor was that with a Webcam mounted on a PC or in a laptop creativity has limits; the person must operate within a restricted field of the cameras range. So to really make video interesting, you need a camera operator to create more movement, since this is how broadcast television and movies have trained us to view video productions.

We believe that video will continue to be very strong, and predict that video and text will grow closer together in the coming years. The ability for Smart Phones to have higher quality video, quick in-device editing and lower cost uploading will impact the increased use of video as well; but these technologies need to develop and become easier to use.

The changes we have noted in text are interesting as well. This article/blog post actually exceeds the average blog post by a few hundred words. We found that of 10,000 blog entries (we though “n” should be about n=10,000 as a minimum representative number) the average entry was 150 words or 3 paragraphs. We found only 30% had poor grammar and found 70% had spelling mistakes. We found a common use of contractions as increasingly popular (i.e. LOL, IMHO etc.) which we think is carried over from mobile device usage and microblogging. We’ll post more on these findings later.

So why does this matter? On the one hand it is a signal to how we are evolving our communicating styles and preferences as a society, and on the other hand it can be a good guide when developing a Social Media strategy to determine a good mix of video and text and where to place effort.

(Author: G. Crouch, Managing Partner)

The Ecology of Twitter

What’s the cost (i.e. time) of following someone on Twitter? What is their “grade” and just how popular are they and how many people have blocked them or not followed them and well, who cares? Is it relevant at all? More than anything, these questions may point to some growing trends in Social Media usage and services. The ecology that Twitter has spurned begs some interesting questions and sparks some thoughts on the evolution of Social Media.

Why do we need to understand this evolution? Because understanding the evolving Social Web is critical to understanding global economic shifts, consumer spending and saving and political changes. The Social Web is the enabling technology  that will have an impact on our society even greater than the first Social Media tool – the printing press; which lead to the Christian Reformation. I point out Twitter simply as a reference point, and this topic could go very long and very deep.

Taking a look at what one might call Twitology (or spin-off apps leveraging Twitter that form a transaction economy of information) we can see that Twitter, the service  pundits only a year ago pondered it’s worth on, has now grown an ecology just like the iPod, only in the Social Web, with no apparent monetization plan. So what is the ecology of Twitter?

Without compiling a whole list (some of which can be found here) in this entry, suffice to say we’ve counted over 30 different spin-off applications that feed off of Twitter. Other microblogs like Plurk and Identi.ca have not seen this kind of uptake spin-off. Clearly Twitter has become a phenomenon. Services range from seeing your own and others ranking, feeds to Smart Phones, tracking topics, graphing trends and sentiment ranking. Whole conversations take place with Twitterers using the “#” sign followed by a letter/number sequence which can be followed in real-time or later.

We see this as an indicator of how we’re still learning a new set of communication skills. We marvel at the stories of Twitter on saving lives or as a terrorist tool and a social safety net. These are all small and early indicators that Twitter and similar tools are playing a role in an evolving style of community the world hasn’t quite seen before. So it’s not the technology – that is just an enabler – it’s how we’re using that technology in our daily lives and how services like Twitter will hekp us shift how we organize and foment change locally, regionally and globally.

How do you think Twitter will evolve?

(Author: G. Crouch, Managing Partner)

Who’s Analysing Who?

There are over 80 (at least) Social Media analysis tools on the market, perhaps closer to 150 worldwide. About 95% are focused on marketing and PR usage. So that’s agencies and companies monitoring  Social and Traditional Media for buzzwords, trends and reputation management. Such monitoring is becoming increasingly valued by businesses and governments – some call this Big Brother.

But even as participants we’re watching each other as well. Take Twitter Grader for example. People seeing where they “rank” in terms of popularity with Twitter. Plurk awards Karma Points based on your participation. Then there’s tools like MyBlogLog from Yahoo! Friendfeed gives you Stats and Posterous tells you quickly how many people have viewed your posts. You can put a widget on your blog for RSS feeds so others can see how many get your posts via RSS (whether they read them or not seems to be irrelevant.) I’m sure there are others I’ve left out.

So we’re all watching each other. We’re looking at each other to determine how popular a blogger or microblogger is. Blogger and social media researcher Dan Zaralla discussed this to some degree in a recent blog post calling it Social Proof – essentially proof of who you are and the “value” of your content. We call this Social Value with our clients.

So why all this analysing? Does it matter? The why is easy for businesses and government; to understand what’s being said to make better marketing, PR and HR decisions on their reputation and brand efforts. For consumers or individuals, as Dan points out, it’s Social Proof that others think you know what you’re talking about, that you’re relevant to the topics at hand. This is a form of social acceptance behaviour, validated through the number of tools that quantify participants. Essentially this two-way monitoring is akin to how we behave socially in school, at work or at parties and other social functions. I’m sure much more can be covered on this topic, but for business and participants in Social Media, it shows how the Social Web is evolving and developing peer recognition, and there are implications.

(Author: Giles Crouch, Managing Partner)

The Limit of Corporate Relations in Social Media

Consumers and buyers increasingly want companies to engage them in Social Media. Our experience has shown (and others too have noted this) that when we’re relly angry at a service or product we tell our friends and colleagues and not always the company we’re angry at. We might call the company’s customer service, but is it perhaps that we don’t really feel we’re getting the resolution or response we want?

Humans are inherently social and as marketers know; when you’re unhappy with a product you’ll tell 11 people. When you’re happy you’ll tell 3 people. Odd how that works. When it comes to Social Media however, we have the potential to reach thousands or even millions, whether we’re happy or angry.

How can a company effectively respond to millions or even just thousands of people? The key factor here is the Power Law Curve. A-List bloggers are also victims of this curve. We’ve monitored Chris Brogan’s increasing popularity (rightly so) with Social Media blogging and his challenges of answering all the Twitter comments and emails. Gary Vaynerchuck has commented a number of times on his blog on attempting to handle the volume of comments and requests he receives. Both try very hard, but they face the same issues as a large or even small company – you can only respond to so many people at a time.

Once you have a large audience with many people commenting and discussing, you become a “Broadcaster” since you are now communicating one to many. The laws of one-to-few or one-to-one change radically. Yet your audience or customers “expect” a personal response. So far, no Social Media tools really exist to enable that to happen, and likely never will. Since well, we’re all different and truly one-to-one requires an intimacy time just wouldn’t permit.

Is this a failing of Social Media? Is it really “Social Media” when you can no longer have a one-to-few “conversation” anymore? Not necessarily, since others can and do, take on the conversation from the original author or company, becoming advocates or enablers. The nature of the conversation changes, but it remains “social” and within a media. Splitting hairs? Perhaps.

A company cannot be everything to everyone and cannot possibly respond personally to all customers. This is true of small companies as well (unless they have very few clients.) This is where PR pro’s can play a key role, and anyone who can better tailor their responses. We doubt consumers or fans will think about this now or in the future, but having this perspective and accepting this reality can help in creating better responses.

(Badger Author: Giles Crouch)