SAN FRANCISCO: Social media plays a very limited role in the decisions and recommendations of institutional investors and analysts, according to a new online survey from Brunswick Group.
The corporate and financial relations firm polled nearly 500 institutional investors and sell-side analysts in the US and Europe, and found that only 4% ranked “new media” as the top influencer when making investment decisions or recommendations. New media was defined as blogs, message boards, and social networking sites like Facebook as well as Twitter.
However, 58% of respondents stated that they believe new media will become increasingly important in helping them make investment decisions. Investors and analysts based in the US, as well as those focused on the technology sector, were particularly optimistic about new media's future role.
New media ranked well below “information direct from companies,” which was chosen as the most influential source of information when making investment decisions or recommendations, at 55%. That was followed by primary market research (24%), real-time subscription services (22%), analyst research (10%) and online business media (5%). Print media ranked lowest (3%).
“The power and influence of new media among many constituencies is unquestioned, but it has yet to have a profound impact on the investment community,” Amanda Duckworth, a partner in Brunswick's San Francisco office, said in a statement. “Companies should be encouraged that the majority of investors and analysts look to them for the information that has the greatest influence on their investment decisions and recommendations.”
That isn't to say that social media should be ignored: Respondents investigated an issue related to their work after reading information in a blog (47%), message board (39%) and social networking site (10%). Yet only 20% of respondents actually made an investment decision or recommendation after sourcing information from a blog, 14% from a message board, and 4% from social networking sites.
Sixty-seven percent of respondents believed that the information found on social networking sites was not reliable, while 45% did not find the information typically provided to be of value. The survey also indicates that the investment community may also be slow to embrace social networking sites—22% of respondents said they had yet to sign up to a social networking site.
The survey, distributed to several thousand buy-side investors and sell-side analysts, garnered 455 responses. Those responses were nearly evenly split among the two groups, as well as those based in the US and Europe.