Although, I don’t always agree that the “The customer is always right” in the marketplace, in the stock market-place they may just be right pretty much all the time. Social Media networks like Facebook and Twitter have always provided an outlet for their users’ opinions. Having a financially leaning eye take a peek at these opinions in a broad sense can be a major indicator of how the market will trend. A 2010 study in the Cornell University Library found that “collective mood states derived from large-scale Twitter feeds” predicted swings on the Dow Jones Industrial Average with 86.7 percent accuracy. More recently, in the summer of 2011, The Atlantic Wire reported a hedge fund with London-based Derwent Capital Markets beat the market by tallying and categorizing keywords found on Twitter such as “alert,” “happy” and “vital”.

The CEO of the Social market analytics firm WiseWindow, Sid Mohasseb said, “The farther you get from the consumer, the more questionable the data becomes. Yet within the consumer realm, sentiment analysis does a good job of predicting both stock prices and sales trends.” According to an analysis performed by advanced analytics consulting firm Emerald Logic, factoring in WiseWindow data on top of a simple momentum trading program boosted returns by over 30% on an annualized basis for GM, Ford, and Southwest Airlines.

Marking a trend in individual stocks using Social Media is still rocky terrain to navigate. However there is little doubt that soon there will be a way to see a path through the chatter. Blogs, Facebook, Flickr, Twitter, Message Boards, YouTube, etc. about consumer goods and services will lead to predicting swings in individual stock prices based on practical indirect sentiment analysis.

Trading & Risk Technology blogger Neil McGovern said, “Stocks can go up 5 percent or 10 percent [in a] day, which … can often be because of rumors in the market. This [technology] seems to make sense to people in the markets as a way to be able to tap into those rumors and help their short-term trading strategies.”

Peter Van Kleef, managing director at Starnberg, Germany-based consultancy Lakeview Capital Market Services noted that even if the monitoring technology hasn’t quite arrived for trading it can be applied to social media for risk management. By locating a problem while it is still in its bud state the ‘kaboom’ bloom can be avoided.

In any event, social media monitoring mentality currently has its place within the individual scale. It is a becoming a common business strategy for companies to track themselves. Online image management is accomplished in real time through outlets like Facebook, blogs, and discussion groups.

Hopping across the pond we go to the London Stock Exchange which last month called in a Social Media monitoring firm when it became the subject of much online talk following the Occupy London Protests.

Still in London, there is The Group, an online corporate communications agency that has been monitoring and ranking FTSE 100 companies on their use of the main social media channels every six months since 2009. The agency produces the FTSE 100 Social Media Index by ranking the companies on their use of blogs, Facebook, Twitter and YouTube for corporate reputation purposes.

Here are the top 25ish of this list:

1 Carnival Travel & Leisure

2 Burberry Group Retail

3 BP Oil & Gas

4 Marks & Spencer Retail

5 ARM Holdings Tech, Media & Telecoms

6 Royal Dutch Shell Oil & gas

7 Reckitt Benckiser Consumer Goods

8 Aviva* Insurance

9 Unilever Consumer goods

10 InterContinental Hotels Group* Travel & Leisure

11 BAE Systems Industrials

12 WPP Group Tech, Media & Telecoms

13 Vodafone Tech, Media & Telecoms

=14 Standard Chartered Bank Banking

=14 BT Group Tech, Media & Telecoms

16 GlaxoSmithKline Healthcare

17 Pearson Tech, Media & Telecoms

18 Rio Tinto Group Basic Materials

=19 Next Retail

=19 HSBC Banking

21 Barclays* Banking

22 Centrica* Utilities

23 United Utilities Utilities

=24 AstraZeneca Healthcare

=24 Severn Trent Utilities

Taking a closer look at three of these top contenders as to how they got their ranking:

CARNIVAL

The cruise company took top position because of its high number of followers, high volume of content and following good practice across the channels. Although this report was conducted before the recent Costa Concordia accident, The Group analized its social media response to the crisis. So far, Facebook has been the most active channel for discussion of the accident. The Costa site and social media channels have been widely used and the Carnival Cruise Lines social media channels have also played a role, but Carnival’s corporate site is not playing a significant role.

BP

The oil company has reached the top ten through a combination of a high number of followers and good practice across all three of its channels. BP was the only company that scored full marks for good practice in all channels. The company has focused on its social media communications since the Deepwater Horizon disaster in 2010. ‘Overall BP’s channels look more professional and well designed than most other companies. Its use of apps and customization also stands out. BP would make a good template for other companies to follow if they were looking to set up or improve their social media presence,’ says Cathal Smyth, MD of The Group.

Reckitt Benckiser

The company uses social media for graduate recruitment and to promote itself as an employer. It has created a game on Facebook to introduce users to what it would be like to work at the company. To win, players need to use their sales and marketing skills to outperform rivals and become company president. The game provides Reckitt Benckiser with a way of promoting the values it seeks in employees. ‘Graduate audiences have grown up with the internet and social media and are more likely to participate in it and to have higher expectations of company communications through these channels,’ says The Group report.

OF the FTSE 100 FIRMS …

- 61 have an active Twitter channel (up from 56 in June 2011)

- 53 have an active YouTube channel (up from 44 in June 2011)

- 39 have an active Facebook account (up from 38 in June 2011)

- 16 have a corporate blog (up from 12 in June 2011)

The Group rankings and rundowns has content obtained from Kate Magee’s article in PR Week on the FTSE Social Media Index.

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