#SMWLDN liveblog: Social Media & The Markets: Information Worth Sharing?

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I’m liveblogging the lunchtime event at #SMWLDN’s business hub – looking at social media’s impact on the financial markets. Speaking left to right are Robert Harles, Global Head of Social Media, Bloomberg; Allan Schoenberg, Executive Director, CME Group, Hussein Kanji, Partner, Hoxton Ventures and Jonathan MacDonald, Co-Founder, This Fluid World. Debate is chaired by Craig Welch, Head of Marketing EMEA, Bloomberg.

CW: Think back to the 30 April when AP’s Twitter account was hacked; how video consumption is increasing exponentially, 50 Cent caused a buying surge to his company by tweeting a request to invest. The first question: has social media become a really valid news source, replacing more traditional sources? Let’s start with Alan:

AS: No doubt social media making an impact. But of course you can’t rely on just one source of information. It makes complete sense as one of many channels.

JM: The context is socialisation of industry as a whole: not just social media or the markets. [Ordinary] people can be website owners, content producers, even creators of banks. Nexon in Japan was the largest ever IPO, and they have no product. This is happening anyway, you’ve got to take a stand. Remember United Breaks Guitars? Big impact and big money. It’s real and it’s here.

HK: The job of the financial markets is processing information as quickly as possible. I dont think we’re going to see an exponential rise. I think the exponential rise has happened in the last decade. Social media can increase the volatility of securities – you see spikes happen very quickly but if information is found to be false, you see prices crash equally quickly.

RH: You have to find some ease in being in a state of unease. You have to know how to recover quickly. The markets have always been like this. Someone could make a gaff in the middle of a shareholders meeting. Now we just have more sources. When something takes off via social media it’s a way for a small number of people to have a very large stage.

CW: There’s a paradox in that on one hand firms realise they can gain a lot of insight, but on the other hand they have no plans to try and harness social media.

HK: This is the nature of technology – it was the same when the PC came along. It takes some time for these things to become mainstream.

JM: There’s a disconnect between the expectations marketers have of social media and the way consumers are actually using it. Social media is an earnable media. The reality is, we’re in the third industry revolution. This is a paradigm shift. By this time next year, there’ll be more digital connected devices than humans. Now is nothing. Today it’s chickenfeed. Today is the slowest pace of change we’ll ever experience.

HK: It’s usually niche, fringe groups that figure this sort of stuff out.

RH: When you first come into an organisation, people say there was no way we’re going to do this stuff. But it’s like an infection: small groups coming together, having something they could point to that actually works. These trigger all the other opportunities. Now it’s ‘of course we have social media, of course we have email – why wouldn’t we have these things’?

JM: Things have changed so much since 2000 (gives music industry example). The Financial Times had a whole article on why banks and financial services shouldn’t use social media. Today Kickstarter’s on fire, Etsy’s on fire. Bitcoin looks set to go that way. Companies are rising and falling so far.

HK: Everything’s being arbitraged away. Look at Twitter now. Being second is no longer necessarily a safe place to be.

CW: How about big data?

AS: It’s a bit of a myth that financial firms aren’t using social media: everyone is looking at it.

RH: It’s not about big data. It’s about good data. On the Bloomberg terminal, we have 300 thousand people, all very likeminded, sharing stuff every day. It’s not important to have the largest social network – that’s already done. It’s important to have a good one.

CW: At the end of the day, you’re going to start getting trusted voices.

RH: I might have thousands of people following me but that doesn’t mean I have a relationship. It’s all about building trust.

JM: The gaslight companies when electricy came along said there’s no pipelines for this so we’ll be ok. The whole context shifts. I think the next thing will be an agility of mindset. As the Chinese proverb goes, when the winds of change are blowing, you either build a shelter or build a windmill. I think the majority of FTSE have an absolute aversion to change.

CH: In this world we have preponderance of evidence. It’s more creative.

CW: So, which companies out there are doing social media well?

AS: Fedex and HP: there’s a level of openness and transparency there. If you’re publicly traded, there’s news and information you need to get out. In terms of ongoing dialogues, it’s pretty disruptive. I don’t think anyone is really there.

JM: If you swap the word social media for human involvement, there are a few: Lego, HP, Muji – the Japanese company. They’re dealing in a currency of trust and belief. They’re building windmills – the harder the wind blows, the better it is. MacDonald’s, Skittles, British Airways – they’re all building shelters. And you can see those shelters shaking. You don’t want to work out a social media strategy, you want to work out why people don’t like you.

HK: Exactly. Apple don’t have a Twitter account, but if you go into a store, you get treated really well. They don’t need social media.

RH: Companies over last 100 years have become monolithic. Social media has power to take these companies and reconnect them with their customers. We no longer own our brands. We’re the conglomeration of what our customers and others think of us.

JM: You have a binary choice: either try to do what everyone else is doing, or do what YOU believe in. Apple understand how people use technology more than anyone – and Google understand how to organise the world’s information. Doesn’t matter how cool your hashtag is, or how flashy your Twitter account. We’re well past those days.

CW: What does the retail investor stand to gain from social media?

HK: In the early days of the PC, you had to write your own code. It’s a little like that with social media and the financial markets. The retail investor guy gets deluded by information, and then trades on sentiment. The analysts and institutional investors still have more ability to make money. They can make sense of it.

CW: How about financial advisors? The biggest challenge is the one to many relationships. Jonathan, you mentioned the human factor…?

JM: The world of interaction is very easy to game. Apparently Bob Marley has just released an album. So he’s not dead. But he is dead. If you look at Weavers – they can create an audience for you. The audience isn’t real people, but it is real, because you can market to it. Even humanity is gainable now.

Question from audience: What was the tipping point for social media, for Bloomberg specifically?

CW: When you think about the Bloomberg terminal, in terms of instant messaging, we were one of the first.

RH: The Bloomberg brand didn’t happen by accident. When social media started evolving, anyone could pretend to be anything. When I started at Bloomberg there was a realisation that the train was about to leave the station. I had to take a Hippocratic oath. We accepted that there were going to be some mistakes. We had to be clear about what we wanted to do – and we decided to focus on building the human relationships.

CW: At the end of the day, this company is a community. We’re very thoughtful in terms of how we engage. Right now we’re fully engaged.

Question: In the short term, do you think the platforms that will work are those that offer arbitrage?

HK: There’e a limited time period where you look at a platform and say is this credible? By the time it becomes credible, everyone else is investing in it. So there’s the problem.

CW: Well we’re running over so we have to wrap up but thanks to all the panellists and thanks to everyone for listening.

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