By Ben Hollom

Can social media boost your company´s stock prices? Apparently, it can, according to a new study from BazaarVoice, which looked into the effect of word-of-mouth on various media on 13 brands and their stock prices.

The study was based on data from 26 million tweets, 8,000 radio and TV mentions, over 18 months of Google query data and 270,000 user generated reviews for the brands and compared that against 17 months of stock data. What researchers found was that positive Twitter mentions resulted in higher stock prices, although negative reviews did not affect stock prices.

There are two important conclusions that can be drawn from the research. Firstly, customers and investors are more influenced by positive feedback than by negative reviews and secondly, Twitter is no longer a marginal social website for sharing your smart thoughts but has become a force that can influence markets, Search Engine Watch commented.

A more detailed look into the data provided by tweets revealed that 12% of all brand mentions contain a product recommendation and one in five of those are rated at four stars at least. These figures sound even more impressive if placed within the context of the huge growth of Twitter as a platform. Between 2010 and 2011 the average time users spent on Twitter increased by 20% and grew a further 19.7% over the following 12 months. In addition, the average page views per visit soared by 58.7% from 2011 to 2012.

Ben Hollom

February 20, 2013