I’ve always been fascinated by the connections between Wall Street and Madison Avenue, especially where market data is concerned. It’s one of the reasons why we created Real-Time Daily: to explore whether Madison Avenue could develop the same kind of rigorous market data that would enable our demand-side (advertisers and agencies) to trade more transparently and scientifically with its supply-wide counterparts (the media).
We’re still tinkering with the concept, and we’ve tried a few approaches, especially the RTB 500 and Ad Market Tracker. We have a few more in the works that we think will begin to organize explicit, rational data about the supply and demand of media trading in a way that is similar to financial industry trading.
I’m not sure everyone gets that yet, but I know we’re making some headway because some of the industry’s biggest players are taking me more seriously and beginning to “lean in,” and even riff about contributing. It’s an open table. Anyone can participate, including critics. Bring it on. All we do is publish information we get from other people. Increasingly, that information will take the form of data -- and whenever possible, real-time, actionable market data.
We’ve learned from working with Standard Media Index and talking to advertisers, agencies and media suppliers that there might be limits on how real-time we can make Madison Avenue’s data reporting. But that’s not going to stop us from trying to get it even more immediate, transparent and hopefully actionable. As always, I appreciate your feedback -- publicly in our “comments” fields, in guest columns or anyway you want. Or privately in any personal feedback you want to give me at email@example.com. And as I said, stay tuned in the next several weeks for some more interesting data-based market indices and composites.
But today’s column is really about another interesting intersection between Wall Street and Madison Avenue: The application of media industry data on financial industry trading. I was compelled to weigh in on this by yesterday’s deal between Bloomberg and Twitter, which basically licenses Twitter’s feeds in a way that’s relevant for financial traders.
It’s an interesting tie-up. Bloomberg’s terminals have become the standard bearer for data accessed and processed by financial traders, so for the financial data firm to incorporate Twitter into its systems must mean it is sanctioning it as “financial-grade,” or at the very least, “investment-grade” information.
I’m not a financial trader, so take this next point with a grain of salty trade journalism, but I don’t get it. It’s not that I don’t think there’s some value in parsing tweets for meaningful insights. It’s just that I question what the value is of adding it to the mix of the signal-to-noise ratio that traders really need to consider.
Don’t get me wrong, I know that hedge fund managers, for example, leverage all kinds of data that might seem extraneous to mere mortals, but they usually do it because they are beginning with some particular insight they are going after that can help them leverage -- or move -- markets. It seems to work, because hedge funds are still in business, and from what I hear, making pretty good returns for their investors. I imagine some of them are even scraping Twitter feeds to do that. But they’re starting with some insight in mind.
But my biggest concern isn’t the potential relevance of Twitter data. Used properly, I think anyone can glean insights from any big data set of human activity. My real concern is the potential influence Twitter data can have on financial markets. By that, I’m concerned about the tail potentially wagging the dog.
Bloomberg has been incorporating social media into its platform for several years now, and says it began integrating tweets as early as April 2013, the same week the U.S. Securities and Exchange Commission ruled companies could use social media posts to disclose material information. I get that, because it’s just another form of dissemination. But you don’t need to be a student of McLuhan to understand that every medium has its own effects on the way users experience the content coming through them. Bloomberg terminals have clearly had that effect on weight and meaning of the data financial traders process to make their investment decisions.
How will the data Bloomberg licensed from Twitter compound that? According to Wednesday’s announcement, Bloomberg will incorporate “financially-relevant news from Twitter for analysis, charting and sharing,” including:
A live feed of tweets relevant to financial professionals and all news searches.
Real-time alerts on the day's most important tweets curated by Bloomberg's editorial staff.
Social velocity monitoring to alert customers on spikes in Twitter activity about a company, commodities, foreign exchange, topics and regions.
Sentiment analytics for tweets about a company.
Curation and translation of non-English tweets.
I suppose it comes down to how traders will sort -- and weight -- that information for relevance. And to the extent that Bloomberg’s editorial staff and stock analysts can provide some context for it, that will be a good thing. But to the extent that traders begin reacting to raw, real-time Twitter trends, I think we might start to see some market distortions in which Twitter data drives markets, not informs them. That’s what I meant by the tail wagging the dog.And for what it’s worth, I think it is the same issue facing marketers, agencies, trading desks and the suppliers they trade with too.