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Can social media success really have an impact on share price?

Contrary to expectation, markets are very emotional places…and individual share prices are often influenced by sentiment as much as the fundamentals. Every IR and PR professional knows this and they know the power that 3rd parties like the financial press have to drive sentiment.

Many believe that social media can have a similar impact but there’s not been much hard data to support that view.

However as reported, our recent Social Media and the City study DID find some pretty interesting links between strong social media performance as measured by PRINT™ and positive share price movements.

The detail is in the study but, for the statistically challenged (like me) the scattergraph below shows the correlation between the PRINT™ Receptiveness score at the beginning of November and the monthly change in share price to 28 November. These were all statistically significant (r > 0.207, N = 100, p < 0.05). This effectively means that if one variable were to rise or fall, chances are that the other would too. The p bit means there is at least a 95% probability that this relationship is not happening by chance – a level at which studies in the social sciences are generally accepted to be true.

On the basis of these initial findings we think someone should fund a longer, more detailed study to determine whether or not this represents a real and consistent lead indicator.

We’re open to offers!

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Two thirds of FTSE100 companies failing at social media

We had a feeling all was not well in corporate use of social media…

Our new Social Media in the City report, published today in association with the PRCA, shows that the majority of the FTSE100 are failing to engage effectively with social networks. As a result they may be at a competitive disadvantage by not connecting well with corporate stakeholders. Our research also suggests a link between social media performance and share price movement.

There are some creditably strong FTSE 100 performers, including companies from surprising sectors, but it seems that most still do not regard social media and networks as important for corporate communications. This is despite the fact that social media are used by a variety of stakeholders, by commentators and by mainstream media.

Research highlights and lowlights

  • Our study has found statistically significant correlations between social media performance and subsequent daily share price movement; higher social media performance scores associated with positive changes in share price
  • Two-thirds of FTSE 100 companies perform below average on main social media networks
  • Shell, AstraZeneca and Sainsbury lead new ranking of best-performing companies
  • Best performers come from some surprising sectors, e.g. mining firm Vedanta and computer chip maker ARM Holdings both appear in the top 10
  • The highest performing FTSE sector is pharmaceuticals & biotechnology, followed by oil & gas producers and retailers
  • Only 20% of FTSE 100 companies are actively using LinkedIn company pages to engage

The research was conducted in November this year. We used our quantitative PRINT™ performance measurement system to assess the corporate social media profiles of all FTSE 100 listed companies. Performance scores were derived for each social media network and combined to create an overall Social Performance Index (SPI).

The SPI leadership group is unexpectedly diverse. While the top 20 includes four of the FTSE 100’s six retail companies, this group also includes non-consumer facing brands like mining firm Vedanta, computer chip-manufacturer ARM Holdings and BAE Systems. Only one bank, Barclays, makes the top 20 group.

There are some surprising sector laggards. The Insurance sector as a whole, for example, scores well below the FTSE 100 average and only one company, Aviva, even makes the SPI top 30.

Most FTSE 100 companies (95%) have LinkedIn company pages, attracting a combined 2.6 million followers. However, less than a quarter of the FTSE 100 list any of their products or services on company pages, which are usually not actively managed – only 20% posted a status update in the 30 days prior to the study.

Is social media performance a lead indicator for share price movement?

Previous Sociagility studies have shown similarly close correlations between PRINT™ scores and measures of brand value and growth, as well as market share.

This study shows a statistically significant correlation between the SPI score and market capitalisation. It also shows statistically significant correlations between PRINT™ Receptiveness attribute scores at the beginning of November and share price movements during the rest of the month (r>0.207, N=100, p<0.05), indicating a 95% probability that this is not happening by chance. Higher social media performance scores were associated with positive changes in share price.

Health warning: correlation is NOT the same as causation… However, we think these results are interesting and at least give in-house corporate comms teams a strong argument to get the resources they need to up their game.

Different strategies … or none?

This study suggests that under-performing companies are incurring a reputational disadvantage internationally compared with competitor companies that engage with social media successfully. Yet social media performance really matters for corporate brands: it is a competitive issue and this should be of concern to the whole C-suite, and to investors.

Specific company plans to improve social media performance must of course depend on an individual approach, taking into account a host of factors we cannot know about. We have made no attempt to investigate or understand individual company strategies. But major differences in performance do emerge purely from the data. In some cases these are clearly driven by a deliberate strategy – in others, apparently, by the absence of one.

We understand that, for many corporate communicators in more traditional companies, the #1 priority is brand defence and that social media may seem risky but as Francis Ingham, Director-General of the PRCA says: “It is a far greater risk to let social media policy simply stagnate.”

We’ll be focussing on different aspects of our findings in the coming days. Meanwhile, if you’d like to download a copy of the full report, you can find it at http://www.sociagility.com/ftse.

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R/GA ‘Most Social’ Digital Agency

Some say that in order to credibly advise others about social media, marketing agencies need to be participating first hand. So this week, the Sociagility Social Performance Index looks at the social media performance of 25 leading digital agencies. We’ve compared them all to see which ones are using social media best to engage and interact.

Our findings show that The Interpublic Group’s R/GA tops the social charts with the strongest awareness and engagement scores and an SPI of 455 against the average of 100, driven primarily by its Twitter account. WPP’s AKQA takes second place, with the highest popularity, interaction and trust scores according to our methodology. An honourable mention goes to independent agency Essence, Chime’s VCCP and WPP’s G2 Joshua who deliver above average engagement scores, despite lower than average levels of awareness..

Just six of the 25 agencies included in this study recorded a Social Performance Index (SPI) score above the average, with overall leaders R/GA and AKQA outperforming the rest of the group by a considerable margin. Other leaders include SapientNitro, iProspect and TBG Digital.

Awareness Quotient (AQ) and Engagement Quotient (EQ) scores show that whilst many of these agencies appear to be demonstrating an ability to build popularity, they are less successful when it comes to interacting and engaging with their communities. Only Essence, G2 Joshua and Kitcatt Nohr Digitas show a delta sufficient to suggest that they are punching well above their weight.

Considering the services these agencies provide, one particular surprise is that only two-thirds appear to be using all of the most popular social media channels (with fewer still providing visible links from their home pages).

At the bottom of the table, a number of agencies clearly have some way to go in order to compete effectively with the leaders.

What do you think – are the agencies best at being social always the best at doing social for their clients?

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Ecotricity tops Social Performance Index of energy suppliers

Recent pre-Winter price hikes of over 10% in the UK have put the spotlight on electricity and gas suppliers – and put pressure on their relationships with customers. So for this week’s Sociagility Social Performance Index we have focused on the 26 energy companies serving Britain, according to Which?, comparing them all to see which ones are using social media best to engage and interact.

Our findings show that it’s one of the lesser known brands, Ecotricity, that tops the social charts with the strongest engagement score and an SPI almost five times the average. British Gas commands the highest awareness levels and Scottish Power was the most receptive brand over the week.

Just eight of the 26 companies recorded a Social Performance Index (SPI) score above the average, with overall leaders Ecotricity and British Gas outperforming the rest of the group by a considerable margin. When it comes to Awareness Quotient (AQ) and Engagement Quotient (EQ) scores* however, the two brands show strength in different areas with British Gas having greater awareness (as one might expect) but the lesser known Ecotricity achieving higher engagement.

There is a further contrast a little lower down the ranking. Scottish Power – with a higher EQ than AQ score – is punching above its weight, whereas nPower – with a lower EQ than AQ score – is perhaps relying too heavily on its heavyweight status, with comparatively lower levels of engagement.

At the bottom of the table, a number of brands are struggling to differentiate, despite using all four social media channels analysed. LoCO2 has perhaps the biggest task on its hands if it is to improve its social media performance.

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