Using social media data to analyze market trends

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Using social media data to analyze market trends

Market trend analysis is an indispensable tool for companies these days. Social media gives analysts access to data that might otherwise be tough to collect. Rapidly changing business conditions require deep insight, and a market trend analysis report is a critical tool. Aside from future-proofing businesses, trend analysis reports also help companies tune into current dynamics and create better products or services.

There are many tools and data sources trend analysts use to prepare a market analysis report. However, social media data offers the most fertile ground. Today there are over 4.5 billion social media users worldwide. That’s over half the world’s population accessing social media and interacting with content.

Social media data is even more valuable because of the high costs of generating original research from scratch. In essence, social media platforms offer all the data companies need, and cost-effectively. Here are three major insights that market trend analysts can derive from social media data.

Consumer Preferences

Every business lives and dies with its customers, and assessing consumer preferences is a tough task. While existing customers often make their intentions clear with their purchase patterns over time, market trends often shift and push potential future customers away from a brand’s messaging.

“Usually, the first signs of a shift (in market trends) show themselves through social media or engagement metrics,” writes SimilarWeb’s Daniel Schneider in a recent post on market trend analysis. “This crucial rise or fall in traffic, engagement, or variation in demographics is what reveals your competitive advantage.” In this context, competitive advantage refers to a company or brand’s position in the market and its appeal to consumers, relative to how its competitors are perceived in “the conversation.”

Social media engagement data offers a wealth of insight in this regard. For instance, high-level data such as the number of comments or likes, and engagement per hashtag, provide companies insight into which topics niche consumers are interested in. Monitoring the trends in these metrics also reveals broader market shifts.

A company’s engagement rate trend and conversion ratios offer insight into marketing effectiveness over time. In the same way that a decreasing sales conversion rate over time points to a possible disconnect with consumers, so too does a falling follower or subscriber count.

Thanks to rising social awareness, companies are expected to take stands on important issues these days. Monitoring the usage of hashtags related to these issues, keeping an eye on trending topics, and tracking engagement metrics on content that addresses these issues helps companies easily tune into the current market climate.

When compared to conducting surveys or polls, there’s no doubt that social media data removes biases and presents user opinions in a useful manner.

Seasonal Trends

Many industries are subject to seasonal trends, and market analysts need to figure them out. The consequences of predicting an incorrect trend can be catastrophic, thanks to production and procurement schedules tied to seasonal demand. 

A market trend analysis that mines social media demographic data will uncover seasonal trends at multiple levels. At a high level, trend analysts can figure out who their customers are and what their tendencies look like. Platforms such as Facebook’s Ad Manager provide a wealth of information, right down to the type of devices the user prefers and even their political leanings.

Analysts can dig deeper into these data and uncover specific data points that help them segment their customer audience. For instance, customers older than 50 might prefer a product during fall, but a younger audience might prefer it during spring. By providing demographic data, trend analysts can help their companies meet demand intelligently.

Market trend reports informed by such data help companies anticipate trends that might develop in the future. As strategic business advisor Bernard Marr points out, “By practicing market analysis, you can stay on top of which trends are having the most influence and which direction your market is headed — before any major changes take place — leaving you well placed to surpass your competition.”

Social media data provides companies an easy way to access data that points to major trend changes. Demographic data allows companies to isolate audiences who might form a future customer base and figure out their preferences in advance. In turn, this helps them create production schedules that match that audience’s seasonal preferences.

Market Dynamics

The market a business operates in is subject to a variety of forces. Chief among these is competitor activity. Disruptive products introduced by competitors can seriously harm a company’s earning ability. A famous example of this is Apple eliminating the likes of Palm and Blackberry within a few years after the release of the iPhone.

Monitoring a brand’s social share of voice and comparing that to its competition helps trend analysts figure out who’s occupying the top of users’ minds in the market. Analysts can also correlate these trends to sales volumes and connect product improvements, marketing strategies, and discover broad market trends. These data also help companies build lasting relationships with their customers.

Given the fast pace with which consumer preferences change these days, traditional data-gathering techniques will leave companies playing catch-up. “Because so much of the world is sharing its opinions on every subject at all hours of the day, trends and markets can shift quickly,” says Meltwater’s Mike Simpson. “It is not just the customer of next year or next month that organizations need to consider — but the customer of the next day.”

Whether it’s trends in engagement, demographics, or competitor data, social media data helps analysts gain perspective on how the market is headed.

A Full Picture

Social media platforms offer a treasure trove of user data. Market trend analysts can mine these data continuously to connect business performance and consumer behavior. Social media gives companies a real-time, cost-effective look into their customers’ minds compared to traditional data-gathering methods.

Author: Ralph Tkatchuk

Source: Dataconomy