The Facebook Stock Index
We all have "Liked" something on Facebook (FB). Whether it's your favorite TV show or car company, it appears companies are trying to catch the train of the social media machine. Does stock performance have any correlation to the popularity of a brand on Facebook? Some even doubt it would make hardly a difference in the company's growth and earnings. "What about fake accounts that 'Like' products?" they would say. This is a somewhat valid and decreasing argument. But what about someone who "Likes" Ford (F) or Chevy (GM)? Isn't the point of investing long-term gains? Studies have proven that loyal customers are much of an organization's consumers.
"Like" This!
The "currency" of the social media site Facebook has become the "Likes" that a page has acquired. If your Keurig from Green Mountain (GMCR) is your savior every morning, or you can't live without your Discover (DFS) card's cash-back, you'll probably give them your "Like" on Facebook. Making a new friend or courting a new girl/boyfriend? See what their Likes are. Very soon you will know what kind of music they like, what TV shows they watch, their eating habits, and even their religious and political stance. You can learn more information this way then reading a credit report, and it's free for everyone to see.
Become More Interconnected
Company's come more interconnected within the social media community by creating ties that guide visitors to and from multiple sites with the social media world.
Coke already has many promotional strategies such as the Olympic Games, NASCAR, Live Nation (LYV), and many others. They take advantage of these existing partnerships on social media sites to strength traffic and exposure, and this leads to an increase in customer's for both Coke and it's chosen partners.
Increase Exposure to Future and Current Promotions
The implement of a more active social media presence will let prospective customers more aware of the current promotions that are running, and create anticipation and excitement for future promotions. Promotions may even be social media specific, such as like or sharing the love of Coke through photos to win a year supply of coke.
Games can also be created that promote the sharing of a brand with friends and the general social community.
How many of you know what Farmville (ZNGA) is? Everyone.
Untapped Consumers
Many companies advertise primarily on television and printed media. What about the large amount of consumer's that do not watch a lot of TV or read magazines? One of the few remaining ways to reach these consumers is through social media. Games, printable coupons, and scholarships are just a few ways to reach the digital media audience. The list below is the most "Liked" brands on Facebook.
Increase ROI of marketing and find new niches.
Facebook, Twitter, and LinkedIn (LNKD) has the ability to find out the demographics of visitors to the respective social media site. Age, sex, occupation, college education, income, zip code, and much more information is readily available. Manually retrieving this information would cost the company a vast amount of time and energy, making the ROI of social media great indeed.
The demographic information retrieved may even be used for the distribution of future promotions. Example: 25% of Southern Iowa drinks Coke, but 65% of Northern Iowa drinks Coke. Assuming demographics and population are equal, there is a great opportunity to increase consumers in Southern Iowa and yield a higher ROI by concentrating more advertisements in this area.
Un-candid Feedback
Getting the true feelings of consumers can be difficult and expensive. On Facebook, the consumer can simply comment. This comment may be on a new product, a current promotion, or even on a competitors post such as Pepsi (PEP). Are fans and likes increasing more for Pepsi then for Coke (KO)? With some data analysis, the company can find out if it is due to bad publicity of Coke, current promotions, or goodwill efforts.
Happy consumers breed happy consumers. And angry consumers breed even more angry consumers…
Gone are the days that a company can ignore bad publicity and wait for it to simply go away. Social Media is an opportunity to find the unhappy customers and make them brand advocates once again, especially before an anti-Coke video is re-tweeted by millions, greatly to the joy of Pepsi.
Ø Google "soft drink." First result is Wikipedia. If you click on the page, the first image is none other than coke in Coke's trademark glass. The internet already loves Coke. Maybe it's time to return the favor.
An example of Facebook "Likes"
As of 11/30/2012 at 8:39PM
Coke: 55,670,201 likes
Pepsi: 9,180,029 likes
Ratio: 6.06:1
03/15/2013 at 7:44PM
Coke: 61,226,438 likes
Pepsi: 9,576,134 likes
Ratio: 6.39:1
Difference between 11/30/2012 and 03/15/2013
Coke: 5,556,237 likes
Pepsi: 396,105 likes
Ratio: 14.03:1
At the current rate, for every "Like" Pepsi receives, Coke has received 14 Likes over the same period. At this rate, I would expect the stock of Coke to outperform the stock of Pepsi, as loyal consumer equal paying customers.
Below is a list of the most liked Brands on Facebook.
Brand | "Likes" | Company |
Coca-Cola | 61,120,185 | Coca-Cola Co. |
Disney | 42,835,730 | Walt Disney Co. |
Red Bull | 36,784,861 | (Private Company) |
Converse | 35,613,220 | Nike Inc. |
Starbucks | 34,006,673 | Starbucks Corp. |
Oreo | 32,355,544 | Mondelez Inc |
PlayStation | 30,963,908 | Sony Corp. |
McDonald's | 27,624,207 | McDonald's Corp. |
Walmart | 27,529,070 | Wal-Mart Stores Inc. |
iTunes | 25,510,837 | Apple Inc. |
BlackBerry | 25,340,637 | Research In Motion Ltd |
Skittles | 24,824,860 | (Private Company) |
Pringles | 22,958,184 | Procter & Gamble Co. |
Samsung Mobile USA | 22,726,165 | Samsung Electronics Co. Ltd. |
Victoria's Secret | 21,813,067 | Limited Brands, Inc. |
Target | 21,721,204 | Target Corporation |
Monster Energy | 21,290,555 | Monster Beverage Corp |
Subway | 21,091,488 | (Private Company) |
Xbox | 20,930,711 | Microsoft Corp. |
adidas Originals | 19,275,476 | adidas AG ADS |
Intel | 17,768,692 | Intel Corp. |
Ferrero Rocher | 17,554,658 | (Private Company) |
Amazon.com | 17,325,824 | Amazon.com Inc. |
Nutella | 17,180,993 | (Private Company) |
Levi's | 17,001,334 | (Private Company) |
Nike Football | 16,991,016 | Nike Inc. |
ZARA | 16,561,704 | Inditex S.A. |
Samsung Mobile | 16,143,602 | Samsung Electronics Co. Ltd. |
Disneyland | 16,110,530 | Walt Disney Co. |
Windows Live Messenger | 15,997,662 | Microsoft Corp. |
Kit Kat | 15,015,843 | Hershey Co. |
Google Chrome | 14,899,260 | Google Inc. |
Burberry | 14,892,923 | Burberry Group |
Dr Pepper | 14,670,295 | Dr Pepper Snapple Group Inc. |
Mozilla Firefox | 14,180,486 | (Private Company) |
H&M | 13,987,524 | H&M Hennes & Mauritz |
Dove | 13,252,600 | Unilever |
Louis Vuitton | 12,965,406 | LVMH Moet Hennessy Louis Vuitton |
BMW | 12,945,625 | Bayerische Motoren Werke |
Tata Docomo | 12,906,744 | (Not listed on US Exchanges) |
Victoria's Secret Pink | 12,826,864 | Limited Brands, Inc. |
Disney Pixar | 12,567,085 | Walt Disney Co. |
Nike | 12,386,953 | Nike Inc. |
Sprite | 12,321,891 | Coca-Cola Co. |
Starburst | 12,037,117 | (Private Company) |
Walt Disney World | 12,002,462 | Walt Disney Co. |
Heineken | 11,849,988 | Heineken N.V. |
Windows | 11,818,009 | Microsoft Corp. |
Dior | 11,497,519 | Christian Dior S.A. |
Lacoste | 11,215,531 | (Private Company) |
I will be tracking this custom made Facebook Index. The weighting that I chose was by the number of Facebook likes, not equal weighting like I normally allocate portfolios. The weighting by Market-Cap encourages of "buying high and selling low." I do not believe this is the case with the "Like" weighting of a "Facebook Index." Could Facebook "Likes" be a different way to measure a company's Sustainable Growth Rate?
Rank | Company | Ticker | "Likes" | Weight |
1 | Walt Disney Co. | 83,515,807 | 10.18% | |
2 | Coca-Cola Co. | KO | 73,442,076 | 8.95% |
3 | Nike Inc. | 64,991,189 | 7.92% | |
4 | Microsoft Corp. | 48,746,382 | 5.94% | |
5 | Samsung Electronics Co. Ltd. | SSNLF | 38,869,767 | 4.74% |
6 | Limited Brands, Inc. | 34,639,931 | 4.22% | |
7 | Starbucks Corp. | 34,006,673 | 4.15% | |
8 | Mondelez Inc. | 32,355,544 | 3.94% | |
9 | Sony Corp. | 30,963,908 | 3.77% | |
10 | McDonald's Corp. | 27,624,207 | 3.37% | |
11 | Wal-Mart Stores Inc. | 27,529,070 | 3.36% | |
12 | Apple Inc. | 25,510,837 | 3.11% | |
13 | BlackBerry | 25,340,637 | 3.09% | |
14 | Procter & Gamble Co. | 22,958,184 | 2.80% | |
15 | Target Corporation | 21,721,204 | 2.65% | |
16 | Monster Beverage Corp | 21,290,555 | 2.60% | |
17 | adidas AG ADS | ADDYY | 19,275,476 | 2.35% |
18 | Intel Corp. | 17,768,692 | 2.17% | |
19 | Amazon.com Inc. | 17,325,824 | 2.11% | |
20 | Inditex S.A. | IDEXY | 16,561,704 | 2.02% |
21 | Hershey Co. | 15,015,843 | 1.83% | |
22 | Google Inc. | 14,899,260 | 1.82% | |
23 | Burberry Group | BBRYF | 14,892,923 | 1.82% |
24 | Dr Pepper Snapple Group Inc. | 14,670,295 | 1.79% | |
25 | H&M Hennes & Mauritz | HNNMY | 13,987,524 | 1.70% |
26 | Unilever | 13,252,600 | 1.62% | |
27 | LVMH Moet Hennessy Louis Vuitton | LVMUY | 12,965,406 | 1.58% |
28 | Bayerische Motoren Werke | BAMXF | 12,945,625 | 1.58% |
29 | Heineken N.V. | HINKF | 11,849,988 | 1.44% |
30 | Christian Dior S.A. | CHDRF | 11,497,519 | 1.40% |
820,414,650 | 100.000% |
