Video killed the radio star, and the internet killed the newspaper industry. Rolling 24-hour tv news holed it below the waterline, but the growth of social media proved the ￼iceberg that sank it. Circulation is declining at a rate of around 3% every six months, and some estimate it will fall to only around 6.4 million by 2017, with many titles folding or moving online only.
Breaking stories are today spread around the world within a matter of seconds, propelled by millions of users spread over disparate nations. Information that a decade ago might have taken an hour or more to reach news desks, and longer still to be edited and packaged for an audience, is now available almost immediately.
For those who work within the financial services industry, where speed can count for everything, social media has proved both a blessing and a curse. Traders can watch streams of data crossing their screens that enables them to make vital high-value decisions on behalf of their clients, but that split-second advantage always depends on the credibility of the source, which has led to several serious problems.
A recent study found that Twitter is considered the least trustworthy social media platform by web users, behind corporate postings Facebook, independent blogs and community forums. Understandably so perhaps, since it is also the fastest. And that velocity is enhanced further still when you consider the numbers of people who now connect over mobile devices. Companies can communicate with millions of followers near-instantly.
For finance professionals, another site, StockTwits, where investors and traders meet to share information, can also be considered one of the most important, and to-date reliable, tools in the box.
The state of the market in words and pictures
Share the social media in trading and finance infographic
Impact of social velocity
Justine Sacco, a new York-based Communications Director made a spectacularly ill-judged Tweet shortly before boarding a flight to Cape Town. By the time she landed 11 hours later, outrage had spread virally around the world, she was a trending topic on Twitter, and shortly afterwards she predictably lost her job.
When the Twitter account of the Associated Press was hacked in April 2013, a false claim about an attack on the White House caused huge reverberations on global stock markets. Billions of dollars were wiped off the S&P in a matter of minutes, dramatically shaking the credibility of Twitter as an information hub for traders.
In 2011, a devastating tornado hit the town of Joplin, Missouri. A Facebook page set up hours later provides a model example of the power of social media in disaster recovery. A team of volunteers gathered and shared information about affected areas; relief and support organisations; missing persons and donations. By the end of the first day the page had thousands of fans and huge numbers of post views.
In a disturbing foreshadowing of the AP incident, a fake Tweet about the Syrian president being assassinated caused immediate fluctuations in oil markets before it could be contradicted. The culprit claimed his actions served to highlight the unreliability of social media.
The Kenyan emergency services are underfunded and under-resourced. Instead, the Kenyan Red Cross runs a social media centre, which casts around the web for information people are sharing about emergencies, and sends out public safety bulletins to followers 24 hours a day. It’s an innovative, and extremely effective use of social media that has been used to coordinate emergency responses with the help of ordinary Kenyans on their mobile phones.
As the velocity of social media activity speeds up, there is an opportunity for traders to take advantage, by using a social dashboard to analyse past trends, see real-time engagement and predict future trends. But in this case, context not content is king. The TOMRW Index allows for segregation of reaction, so it is the measurement of positive and negative feedback, as opposed to amount of noise activities are stirring.