Connect with us

Strategies

How your firm’s Tweets affect its value — both temporarily and permanently

Firm-generated tweets induce both permanent and temporary price impacts, which are linked to the tweet attributes of valence (i.e., positive and negative sentiment) and subject matter (i.e., consumer and competitor orientation).

Published

on

Photo by Souvik Banerjee from Unsplash.com

Researchers from University of Edinburgh and University of Maryland published a new paper in the Journal of Marketing that examines the impact of firm-generated social media content on firm stock price in real time.

The study, forthcoming in the Journal of Marketing, is titled “Measuring the Real-Time Stock Market Impact of Firm-Generated Content” and is authored by Ewelina Lacka, D. Eric Boyd, Gbenga Ibikunle, and P.K. Kannan.

Firms increasingly follow an ‘always on’ approach to social media marketing and post social media content multiple times during a day. For example, 92% of firms use their Twitter accounts more than once a day, with 42% of those tweeting 1 – 5 times a day and 19% tweeting 6 – 10 times a day. Although marketing managers engage heavily with this contemporary marketing practice, they are unable to demonstrate its immediate contribution to firm’s financial outcomes. 
 
This new research uses a combination of tweets disseminated by a sample of S&P 500 IT firms and ultra-high frequency trading data to examine the impact of firm-generated social media content on firm stock price in real time. The price impact estimation approach exploits the variance of sub-second level changes in stock price to capture the temporary and permanent stock price impacts of firm-generated tweets. Firms should aim for their firm-generated content to induce permanent price impact because it reflects information about the value of their firm. Temporary price impact can increase transaction costs for investors and the cost of capital acquisition for firms themselves because it reflects uncertainty about firm value. One could say, therefore, that permanent price impact is positive, while temporary price impact is undesirable, and potentially negative, especially if it leads to a higher firm cost of capital.

The researchers find that firm-generated tweets induce both permanent and temporary price impacts, which are linked to the tweet attributes of valence (i.e., positive and negative sentiment) and subject matter (i.e., consumer and competitor orientation).

Tweets reflecting negative or positive valence are consistently linked with a reduction in permanent price impact and an increase in temporary price impact as measured by the variance in stock price. Similar findings are obtained for tweets that only reflect a consumer or competitor orientation, although the impacts are smaller. Thus, both findings indicate that tweets reflecting only valence (positive or negative) or subject matter (consumer or competitor orientation) are associated with an increase in temporary price impact and a decrease in permanent price impact.

“Our results show the importance of interaction effects between tweet valence and subject matter in generating permanent price impact. The average negative and positive valence tweet when viewed through the lens of consumer or competitor orientation generates a permanent price impact, while a competitor-oriented tweet with a negative valence is likely to have the highest permanent price impact,” explains Lacka. From the perspectives of marketing practice and intraday social media marketing strategy design, this is a crucial finding because valence as a singular attribute is associated with decreasing permanent price impact. 
 
Boyd says “The implications of our study are clear. Investors in financial markets pay attention to firm-generated social media content and their ability to act on information at sub-second levels allows for instantaneous incorporation of social media content.” This is possible because of a new non-human breed of investor that now make most trade-by-trade decisions in financial markets—the so-called algorithmic traders or ‘algos.’ Algos scour many sources, including firms’ social media content such as tweets, for any indication of firm relevant information and act on it, often all within milliseconds. 
 
Marketing managers need to be aware of this when designing social media posts and campaigns. When social media posts contain what could be referred as “partial information” (i.e., only valence or subject matter), they lack the context that allows investors to make inferences about firm value. However, when, for example, tweet valence is set in the context of a specific subject (e.g., customer or competitor), it, on average, offers valid information that can be acted on by investors. “Our study shows that by carefully incorporating attributes, such as valence and subject matter, marketing managers can design social media content to generate varying degrees of permanent or temporary impact,” Ibikunle points out. 

In conclusion, these results suggest that firms should reflect valence and subject matter in their tweets if their aim is to improve the informativeness of their stocks with respect to firm value.

Kannan says that “By using permanent price impact as a metric to evaluate the long-term impact of tweets, social media managers can design campaigns that have an enduring impact on firm stock price, which should be a desirable outcome for firms.”

Not all intraday tweets will, nor should they, induce permanent impact on a firm’s stock price. Some tweets are aimed at the creation of social media ‘buzz,’ which is similar to the temporary price impacts we examine in this study. Firms can achieve social media ‘buzz’ by disseminating tweets as we show that tweets, in general, mostly generate temporary price impacts. The researchers urge caution, however, because temporary price impacts are linked to larger transaction costs for investors and cost of capital for firms.

BizNews

Women more likely to choose wine with feminine labels

The more strongly the participants identified with other women, a phenomenon called “in-group identification,” the greater this effect was. A feminine label also influenced their expectation that they would like the wine better.

Published

on

To appeal to the majority of consumers, winemakers may want to pay as much attention to what’s on the bottle as what’s in it.

A three-part experimental study led by Washington State University researchers found that women were more inclined to purchase wine that had labels with feminine gender cues. The more strongly the participants identified with other women, a phenomenon called “in-group identification,” the greater this effect was. A feminine label also influenced their expectation that they would like the wine better.

With women representing 59% of U.S. wine consumers, the male-dominated field of winemaking might want to pay attention to the perceptions of this understudied group, said Ruiying Cai, lead author of the paper in the International Journal of Hospitality Management.  

“When you look at the market segments, women are actually purchasing a lot of wine. They are a large group,” said Cai, an assistant professor with WSU’s Carson College of Business. “We found that feminine cues speak to women consumers. They have more favorable attitudes toward the label and the wine itself. They were also expecting their overall sensory experience to be better, and they were more likely to purchase the wine.”

Gender cues often rely on stereotypes, and in initial tests for this research, a group of 90 women rated wine labels as more masculine when they featured rugged animals like wolves and stags as well as portraits of men. They designated labels as feminine that had cute animals, flowers and female portraits. Labels with castles and bunches of grapes were seen as neutral.

In two online experiments, a total of 324 women were shown fictitious wines with labels designed with these gendered cues. The participants showed higher intention to buy wines with a feminine label, such as a woman holding flowers, as opposed to a wine with a masculine label, such as a bulldog in a spiked collar. When asked about the expected sensory experience, they rated their liking of every sensory aspect higher, including the color, taste, aroma and aftertaste.

The participant’s level of wine expertise moderated their taste expectations but surprisingly, not their purchase intentions.

“Whether they were knowledgeable or less knowledgeable about wine, when they saw those feminine cues, they had a higher intention to buy the wine. The gender cue influence was so strong, it trumped the effect of that knowledge,” said co-author Christina Chi, a professor at WSU’s Carson College of Business.

A third experiment with another set of 138 women involved a taste test—also with a surprising finding. Researchers gave bottles of the same red wine with one of the gendered labels. More women who tasted the feminine-labeled wine ranked it higher in fruit flavors such as red current and blueberry than those who tasted the same wine with a masculine-cued label—and despite the fact those flavors were not dominant components in that particular wine. Women connected more mineral flavors with the masculine-labelled wine.

However, the participants who tasted the feminine-labelled wine reported liking it less than the women who tasted the masculine-labelled wines. The authors said this could be a result of the incongruence between the expected flavor influenced by the feminine label and the actual taste of the wine sample, which had a medium body, tannin and alcohol level.

Few studies have focused on the perceptions of women wine consumers in a field where 82% of the winemakers are men. That lack of perspective is very apparent on wine aisles, said Chi, noting that many vintners seem to favor masculine imagery like stallions, bulls and roosters–and one brand even features a prisoner in a jail cell.

“When designing the labels, winemakers should involve more women in the process, and it’s highly advisable to pilot test the labels among consumers for gender cues,” she said.

In addition to Cai and Chi, co-authors on this study include recent WSU graduate Demi Deng now at Auburn University and Robert Harrington of WSU.

Continue Reading

Strategies

Tips that businesses should consider during the holiday shopping season

Highlight your strengths—whether it’s one-of-a-kind products, exceptional offerings, or a strong local connection. Design your holiday strategy around what sets you apart and amplify these messages through social media and your marketing materials.

Published

on

As the holiday shopping season approaches, small businesses are gearing up for one of the busiest times of the year, from Black Friday to Small Business Saturday and beyond. 

SCORE, America’s largest network of volunteer, expert business mentors, offers entrepreneurs practical advice to make the most of the season.

Plan for the Holiday Rush

Reflect on last year’s performance. Did you meet your sales goals? Use your previous data to forecast sales, set promotional strategies and manage staffing needs to provide for outstanding customer care.

“It’s about more than just sales; it’s a powerful opportunity to connect with your community, attract new customers and reinforce relationships with loyal ones,” explains SCORE mentor Lizz Smoak.

If you plan on extending store hours during the holidays, communicate these updates with your team early so you are prepared to handle increased sales traffic. Ensure that employees are aware of the holiday schedule and have submitted any time-off requests to avoid last-minute scheduling conflicts. 

Create an Experience for Customers

“Engagement is key when customer traffic spikes during the holiday season,” notes SCORE mentor Christy Jones. “Consider offering curated gift guides or exclusive bundles to simplify decision-making for your customers, especially as you compete against large retailers like Amazon.” Plan a special event or connect with other local businesses to promote shopping small.

Stand Out from the Crowd

Consider how you can make your store or service the preferred choice. “Small business owners should contact their existing customers and highlight their unique level of service,” advises SCORE mentor John Doyle.

Highlight your strengths—whether it’s one-of-a-kind products, exceptional offerings, or a strong local connection. Design your holiday strategy around what sets you apart and amplify these messages through social media and your marketing materials.

Be E-Commerce Friendly

As you roll out holiday promotions, make sure that your digital doorstep is ready, too. Confirm your hours, location and contact info are updated on your website, Google Business Profile and other local listings. Many customers will be shopping on their phones so be sure your website is optimized for mobile use and that your most popular products are easy to find. A smooth checkout process is vital for keeping customers happy and encouraging repeat purchases.

“Small Business Saturday offers a prime opportunity for small businesses to step into the spotlight,” said SCORE CEO Bridget Weston. “With a strategic approach, small businesses can leverage this season and see big returns.”

Continue Reading

BizNews

License to chill? Bond shows ‘regressive nostalgia’ can freeze a brand’s future

“In order to minimize the negative impact of regressive nostalgia, it is important that the brand does not pander to the nostalgia displayed by a minority of super-consumers. Brand stewards must not be swayed by these loud voices and become exclusionary.”  

Published

on

Super-spy James Bond is a prime example of ‘regressive nostalgia’ highlighting how certain consumer groups cling to idealised past versions of brands and resist attempts to move with the times, a new study reveals. 

Researchers examined the James Bond movie franchise – a cultural icon for over 70 years – and discovered that some ‘super-consumers’ react negatively to modern portrayals of the fictional British secret agent that reflect contemporary societal values.  

Whilst loyal to the brand, these consumers prefer traditional, more exclusionary, versions of Bond which most closely follow author Ian Fleming’s original 1950s and 1960s vision – characterised as an arrogant, misogynistic, and racist Imperial British male. 

Publishing their findings in International Journal of Research in Marketing, consumer behavior experts from the University of Birmingham and ESCP Business School, London note that regressive nostalgia is characterized by a preference for racial and cultural purity and heroic masculinity. The phenomenon harbors exclusionary and aggressive tendencies that pose significant threats to brands. 

The researchers have, therefore, produced a toolkit to help marketeers shield their brand’s contemporary positioning from the negative connotations associated with this form of nostalgia – allowing brands to evolve without alienating their core consumer base. 

Finola Kerrigan, Professor of Marketing at the University of Birmingham, commented: “The James Bond franchise is a perfect example of how ‘regressive nostalgia’ manifests. Whilst the brand has successfully adapted to changing times, a small but disproportionally vocal part of its fanbase is anchored in the past, highlighting the need for careful brand management. 

“These ‘super-consumers’ cling to Ian Fleming’s characterisation of Bond and the period during which the novels were written to justify their nostalgia. They actively resist attempts to modernise the franchise, dismissing as ‘woke nonsense’ recent movies such as ‘No Time to Die.” 

Chloe Preece, Professor of Marketing, ESCP Business School, London notes that these Super-consumers view Bond as a heroic, white, male icon providing a ‘safe space’ for those feeling threatened by contemporary discussion about creating a more inclusive society. The character’s ‘man-of-action’ persona allows this group of mostly male consumers to identify with the spy’s ‘heroic masculinity’ based on his ability to sleep with the ‘Bond girls’. 

While the study focuses on the Bond franchise, the researchers identify parallels with other groups’ appropriation of brand resources and associating them with anti-social causes. 

“Brands use nostalgia to connect with consumers – delighting and enchanting their customer base whilst connecting them to others – but this makes nostalgia potentially dangerous in drawing consumers to the past, when it creates a sense of loss combining a cherished past and a despised present,” said independent scholar Dr Daragh O’Reilly. 

“In order to minimize the negative impact of regressive nostalgia, it is important that the brand does not pander to the nostalgia displayed by a minority of super-consumers. Brand stewards must not be swayed by these loud voices and become exclusionary.”  

The researchers note that marketeers should be alert to the risk posed by regressive nostalgia and have devised toolkit comprising of a series of questions to help brand managers assess the level of threat.

Continue Reading
Advertisement
Advertisement

Like us on Facebook

Trending