Why Traders Use Social Media: Speed & Amplification

Gnip’s asset and investment management clients are consistently impressed by two aspects of our social data that differentiate this data from their other sources: Speed & Amplification.

Speed

Speed relates to the ability of social media content to be ‘instant’; an ability fueled by millions of global users who can break news and sentiment more immediately than traditional media sources always can.

A prime example is news of the death of Osama Bin Laden. Keith Urbahn, the former chief of staff for Don Rumsefeld, is widely credited with the breaking that story… through Twitter!

After Keith’s tweet, multiple retweets quickly followed. Within 19 tweets on this subject, a company called DataMinr had identified this as an important and breaking story. DataMinr, a “global sensor network for emerging events and consumer signals,” then issued a signal to their clients, alerting them to this important piece of information.

How does this play into the ‘speed’ characteristic? Because it would be over 20 minutes before that story appeared on traditional news sites. Access to a data stream that can beat traditional media sources by over 20 minutes requires no explanation as to its value for traders and investors.

Amplification

Amplification speaks to the ability of social media as a ‘crowd-sourced megaphone.’ The propensity of users to like, share, and retweet content from other users gives those consuming social media data an extremely easy mechanism to measure what content is most important to the world – and compare that content against other content in real time.

A prime example is the passing of Steve Jobs. We wrote about Steve Jobs’ passing a few weeks ago – that post is here – but there’s an important item to revisit:

The impact he had on us made his death that much more profound and the reaction on Twitter was immediate and immense. Word spread rapidly, peaking at 50,000 Tweets per minute within 30 minutes. At that point, Tweets about Jobs accounted for almost 25% of all Tweets being sent globally.

Access to Gnip’s social media data stream allowed our clients to measure, in the moment, the amplification of this story to measure the importance the world placed on this piece of news. While I doubt any of us needed to see those numbers to know Steve’s passing was an important piece of news, that’s a clear example of how ‘amplification’ works.

Our clients use amplification as a measure to weigh the importance of breaking news, upcoming events, market and product announcements, etc. against other stories. By capturing a realtime snapshot of what the market considers important – and what it doesn’t – they’re able to add an important factor to their existing algorithms.

None of this is to suggest that either social media data speed or amplification should be a sole factor in investing. But when the Gnip social media data stream provides clients with an additional factor to help understand or predict market fluctuations, the value is obvious.

Steve Jobs – Rest in Peace

Steve Jobs was an innovator, entrepreneur and visionary leader who had an enormous impact on every one of us.  He brought warmth and humanity to the world of technology and in the process changed the entire the way we as humans interact with each other.  The path he blazed was quickly followed by others and even if you don’t own an Apple product, the computer/tablet/phone you are using is better because of him.

The impact he had on us made his death that much more profound and the reaction on Twitter was immediate and immense.  Word spread rapidly, peaking at 50,000 Tweets per minute within 30 minutes.  At that point, Tweets about Jobs accounted for almost 25% of all Tweets being sent globally.

 

Tweets per Minute
 

Looking at the content of those Tweets, you see expressions of sadness and loss, thanks for everything he did, and a celebration of his genius and talent.  All sentiments we felt here at Gnip.

Top Terms

Thank you for everything Steve.  The world is a poorer place without you.  Rest in peace.

Who Knew First: Steve Jobs or Aron Pinson?

While Steve Jobs’ resignation yesterday had investors anxiously watching how $AAPL fared in trading, we at Gnip were having fun watching a different ticker- the realtime Twitter feed.

As you can see from the graph below (these represent the number of “Steve Jobs” mentions per minute*), Twitter showed an incredible spike almost immediately. Apple-specific activity peaked 11 minutes after the news broke, showing how quickly the word spread. Honors for first tweet go to @AronPinson, who must have some blazing fast typing skills.

Once again, it’s incredible to see how social media is quickly becoming a trusted means of accessing and delivering realtime information.

*For more details on how we conducted this search across the millions of real-time tweets we have access to, contact us!