Is social media a crystal ball?

NBC news wrote an article called, “social media predicts unemployment spike,” in which they discuss the value in consumer sentiment derived from social media. In this article, software firm SAS and a United Nation’s data initiative UN Global Pulse looked at online discussions in the United States and Ireland over a two-year period and found increased social media talk about things such as postponing vacations or taking more mass transit predicted spikes in the unemployment rates in both countries.

There is an abundance of raw consumer sentiment floating around in the clouds of social media and the UN was able to segregate consumer sentiment online to predict, relatively accurately, an unemployment spike. In addition, the article talks about how Google’s tracking initiative, known as Google Flu Trends, tracks searches related to flu terms in real time in an effort to pinpoint rates of flu nationally.

Dissecting, categorizing and appropriately leveraging content in the social ecosystem is not new. In fact, hedge fund and financial research firms have been playing with social for years in an effort to predict movement in the stock market. As our society becomes increasingly transparent through the vehicle of social media, will someone be able to accurately predict the future? I believe it is only a matter of time before the research and financial investment pays dividends for organization betting on the ability to predict economic trends via social. I look at it like this; we are sitting on a goldmine, with the best, brightest and most capitalized individuals in the world working tirelessly to figure out how to access it. Once they access do, they will work equally as hard to monetize their discovery. This concept, in essence, has repeated itself in one form or for centuries and now with social, it is only a matter of time before our ability to predict the flu via social expand to our ability to predict the next terror threat, Apples next nose dive or the next 50bps dip in the dow.

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One thought on “Is social media a crystal ball?

  1. While I don’t know if social will ever be a crystal ball, it could have some influence for sure. Although social media can offer important insights, I don’t know that really high-stakes games like investing would ever become reliant on it because it’s simply too unreliable. In news reporting (my field), we’ve seen stories break and develop over social media, but we really never report on anything as seen on Twitter – as a respectable network, you are held accountable by viewers and therefore don’t wan to take that risk of reporting misinformation, even if that means being a little bit behind on the story. However there are some sites now that offer sentiment measurement – they don’t just track how many people are talking about you or your product, but also the sentiment associated with what they’re saying – it’s possible that if people are saying really negative things about your product, it might be an indicator that that product won’t last long – or vice versa.

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