Snap sees shares jump after beating Q3 expectations
Last week, Snap saw its share price from $28 to just shy of $34 per share (a nearly 20% increase) in after-hours trading, after beating analyst expectations on both revenue and earnings per share for Q3. The company delivered $679m in reported revenue, smashing Wall Street’s expectations of $555m; which represents 52% year-over-year growth. User growth was up 4% to 249m daily active users from the 238m reported at the end of last quarter, marking an 18% year-over-year increase.
Instagram lets brands create ads with Product Tags from scratch
Businesses can now create Instagram ads with Product Tags on photo, video and carousel ads from scratch in the platform’s Ads Manager, which Instagram first began testing back in September 2019. In addition to the new ad format, Instagram has also introduced new shopping engagement custom audiences and shopping lookalike audiences, enabling brands to reach potential shoppers with similar interests to their existing customers or those who have already shown interest in their products.
Facebook’s content Oversight Board is now open for business
Nearly two years after the idea was first put forward by CEO Mark Zuckerberg, Facebook’s independent Oversight Board is ready to start taking cases. From now on, whenever a user’s content is removed they will be able to appeal their case to the Oversight Board, which will make an independent and binding decision on matters they choose to review. Board decisions will be issued and implemented within 90 days of Facebook’s final decision on a case.
WhatsApp pledges to boost investments in business features
WhatsApp has said it will be focusing future investment on three key areas for businesses on its platform: shopping, Facebook hosting services and business sales; and has also pledged to make it easier for businesses to integrate new features from WhatsApp into their existing e-commerce and customer solutions systems. The announcement comes as WhatsApp says over 175m people now message WhatsApp Business accounts every day.
Facebook Dating launches in Europe
Long after it’s originally planned Valentine’s Day release date, Facebook has finally launched Facebook Dating – its Tinder competitor – to users across Europe. Facebook Dating is now offered in over 50 countries, including France, Germany, Ireland, Italy, Portugal, Sweden, Norway, Spain and the United Kingdom.
TikTok updates notifications for when content is removed
TikTok has rolled out a new notification system for cases where content violates its policies. Under the new system, which has now rolled out globally, creators will see exactly which policy a video has violated when it’s removed and be able to appeal the decision. In cases where content is flagged for being related to self-harm or suicide, a second notification will also pop up, directing the creator of that content to expert resources.
Twitter changes retweet function ahead of US election
Ahead of the US presidential election on November 3rd, Twitter has altered how users retweet and share content on the platform, in a move to prevent abuse and slow the spread of misinformation. From now until the election is over, when users attempt to retweet content, Twitter will pull up the Quote Tweet composer, prompting them to write something about the tweet before they share it.
Facebook adds two new options to the News Feed
Facebook has confirmed two new options for people to browse content in their News Feed, Most Recent and Favorites – which are being rolled out globally on Android and iOS. Most Recent will provide the same content users would normally see in their News Feed, but in reverse chronological order, bringing them the newest post first; while Favorites will enable people to designate up to 30 friends and pages that will appear higher in News Feed and be highlighted with a badge.
Based on feedback from our community, we’re providing easier entry points for News Feed alternatives, such as Most Recent and Favorites, giving people more ways to browse their content. https://t.co/gZtDt51dXa
After months of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there’s another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed.
You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse.
The financial crisis of 2008 was about home mortgages. Hundreds of billions of dollars in loans to home buyers were repackaged into securities called collateralized debt obligations, known as CDOs. In theory, CDOs were intended to shift risk away from banks, which lend money to home buyers. In practice, the same banks that issued home loans also bet heavily on CDOs, often using complex techniques hidden from investors and regulators. When the housing market took a hit, these banks were doubly affected. In late 2007, banks began disclosing tens of billions of dollars of subprime-CDO losses. The next year, Lehman Brothers went under, taking the economy with it.
The federal government stepped in to rescue the other big banks and forestall a panic. The intervention worked—though its success did not seem assured at the time—and the system righted itself. Of course, many Americans suffered as a result of the crash, losing homes, jobs, and wealth. An already troubling gap between America’s haves and have-nots grew wider still. Yet by March 2009, the economy was on the upswing, and the longest bull market in history had begun.
To prevent the next crisis, Congress in 2010 passed the Dodd-Frank Act. Under the new rules, banks were supposed to borrow less, make fewer long-shot bets, and be more transparent about their holdings. The Federal Reserve began conducting “stress tests” to keep the banks in line. Congress also tried to reform the credit-rating agencies, which were widely blamed for enabling the meltdown by giving high marks to dubious CDOs, many of which were larded with subprime loans given to unqualified borrowers. Over the course of the crisis, more than 13,000 CDO investments that were rated AAA—the highest possible rating—defaulted.
The reforms were well intentioned, but, as we’ll see, they haven’t kept the banks from falling back into old, bad habits. After the housing crisis, subprime CDOs naturally fell out of favor. Demand shifted to a similar—and similarly risky—instrument, one that even has a similar name: the CLO, or collateralized loan obligation. A CLO walks and talks like a CDO, but in place of loans made to home buyers are loans made to businesses—specifically, troubled businesses. CLOs bundle together so-called leveraged loans, the subprime mortgages of the corporate world. These are loans made to companies that have maxed out their borrowing and can no longer sell bonds directly to investors or qualify for a traditional bank loan. There are more than $1 trillion worth of leveraged loans currently outstanding. The majority are held in CLOs.
I was part of the group that structured and sold CDOs and CLOs at Morgan Stanley in the 1990s. The two securities are remarkably alike. Like a CDO, a CLO has multiple layers, which are sold separately. The bottom layer is the riskiest, the top the safest. If just a few of the loans in a CLO default, the bottom layer will suffer a loss and the other layers will remain safe. If the defaults increase, the bottom layer will lose even more, and the pain will start to work its way up the layers. The top layer, however, remains protected: It loses money only after the lower layers have been wiped out.
Unless you work in finance, you probably haven’t heard of CLOs, but according to many estimates, the CLO market is bigger than the subprime-mortgage CDO market was in its heyday. The Bank for International Settlements, which helps central banks pursue financial stability, has estimated the overall size of the CDO market in 2007 at $640 billion; it estimated the overall size of the CLO market in 2018 at $750 billion. More than $130 billion worth of CLOs have been created since then, some even in recent months. Just as easy mortgages fueled economic growth in the 2000s, cheap corporate debt has done so in the past decade, and many companies have binged on it.
Despite their obvious resemblance to the villain of the last crash, CLOs have been praised by Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin for moving the risk of leveraged loans outside the banking system. Like former Fed Chair Alan Greenspan, who downplayed the risks posed by subprime mortgages, Powell and Mnuchin have downplayed any trouble CLOs could pose for banks, arguing that the risk is contained within the CLOs themselves.
These sanguine views are hard to square with reality. The Bank for International Settlements estimates that, across the globe, banks held at least $250 billion worth of CLOs at the end of 2018. Last July, one month after Powell declared in a press conference that “the risk isn’t in the banks,” two economists from the Federal Reserve reported that U.S. depository institutions and their holding companies owned more than $110 billion worth of CLOs issued out of the Cayman Islands alone. A more complete picture is hard to come by, in part because banks have been inconsistent about reporting their CLO holdings. The Financial Stability Board, which monitors the global financial system, warned in December that 14 percent of CLOs—more than $100 billion worth—are unaccounted for.
I have a checking account and a home mortgage with Wells Fargo; I decided to see how heavily invested my bank is in CLOs. I had to dig deep into the footnotes of the bank’s most recent annual report, all the way to page 144. Listed there are its “available for sale” accounts. These are investments a bank plans to sell at some point, though not necessarily right away. The list contains the categories of safe assets you might expect: U.S. Treasury bonds, municipal bonds, and so on. Nestled among them is an item called “collateralized loan and other obligations”—CLOs. I ran my finger across the page to see the total for these investments, investments that Powell and Mnuchin have asserted are “outside the banking system.”
The total is $29.7 billion. It is a massive number. And it is inside the bank.
Since 2008, bankshave kept more capital on hand to protect against a downturn, and their balance sheets are less leveraged now than they were in 2007. And not every bank has loaded up on CLOs. But in December, the Financial Stability Board estimated that, for the 30 “global systemically important banks,” the average exposure to leveraged loans and CLOs was roughly 60 percent of capital on hand. Citigroup reported $20 billion worth of CLOs as of March 31; JPMorgan Chase reported $35 billion (along with an unrealized loss on CLOs of $2 billion). A couple of midsize banks—Banc of California, Stifel Financial—have CLOs totaling more than 100 percent of their capital. If the leveraged-loan market imploded, their liabilities could quickly become greater than their assets.
How can these banks justify gambling so much money on what looks like such a risky bet? Defenders of CLOs say they aren’t, in fact, a gamble—on the contrary, they are as sure a thing as you can hope for. That’s because the banks mostly own the least risky, top layer of CLOs. Since the mid-1990s, the highest annual default rate on leveraged loans was about 10 percent, during the previous financial crisis. If 10 percent of a CLO’s loans default, the bottom layers will suffer, but if you own the top layer, you might not even notice. Three times as many loans could default and you’d still be protected, because the lower layers would bear the loss. The securities are structured such that investors with a high tolerance for risk, like hedge funds and private-equity firms, buy the bottom layers hoping to win the lottery. The big banks settle for smaller returns and the security of the top layer. As of this writing, no AAA‑rated layer of a CLO has ever lost principal.
But that AAA rating is deceiving. The credit-rating agencies grade CLOs and their underlying debt separately. You might assume that a CLO must contain AAA debt if its top layer is rated AAA. Far from it. Remember: CLOs are made up of loans to businesses that are already in trouble.
So what sort of debt do you find in a CLO? Fitch Ratings has estimated that as of April, more than 67 percent of the 1,745 borrowers in its leveraged-loan database had a B rating. That might not sound bad, but B-rated debt is lousy debt. According to the rating agencies’ definitions, a B-rated borrower’s ability to repay a loan is likely to be impaired in adverse business or economic conditions. In other words, two-thirds of those leveraged loans are likely to lose money in economic conditions like the ones we’re presently experiencing. According to Fitch, 15 percent of companies with leveraged loans are rated lower still, at CCC or below. These borrowers are on the cusp of default.
So while the banks restrict their CLO investments mostly to AAA‑rated layers, what they really own is exposure to tens of billions of dollars of high-risk debt. In those highly rated CLOs, you won’t find a single loan rated AAA, AA, or even A.
How can the credit-rating agencies get away with this? The answer is “default correlation,” a measure of the likelihood of loans defaulting at the same time. The main reason CLOs have been so safe is the same reason CDOs seemed safe before 2008. Back then, the underlying loans were risky too, and everyone knew that some of them would default. But it seemed unlikely that many of them would default at the same time. The loans were spread across the entire country and among many lenders. Real-estate markets were thought to be local, not national, and the factors that typically lead people to default on their home loans—job loss, divorce, poor health—don’t all move in the same direction at the same time. Then housing prices fell 30 percent across the board and defaults skyrocketed.
For CLOs, the rating agencies determine the grades of the various layers by assessing both the risks of the leveraged loans and their default correlation. Even during a recession, different sectors of the economy, such as entertainment, health care, and retail, don’t necessarily move in lockstep. In theory, CLOs are constructed in such a way as to minimize the chances that all of the loans will be affected by a single event or chain of events. The rating agencies award high ratings to those layers that seem sufficiently diversified across industry and geography.
Banks do not publicly report which CLOs they hold, so we can’t know precisely which leveraged loans a given institution might be exposed to. But all you have to do is look at a list of leveraged borrowers to see the potential for trouble. Among the dozens of companies Fitch added to its list of “loans of concern” in April were AMC Entertainment, Bob’s Discount Furniture, California Pizza Kitchen, the Container Store, Lands’ End, Men’s Wearhouse, and Party City. These are all companies hard hit by the sort of belt-tightening that accompanies a conventional downturn.
We are not in the midst of a conventional downturn. The two companies with the largest amount of outstanding debt on Fitch’s April list were Envision Healthcare, a medical-staffing company that, among other things, helps hospitals administer emergency-room care, and Intelsat, which provides satellite broadband access. Also added to the list was Hoffmaster, which makes products used by restaurants to package food for takeout. Companies you might have expected to weather the present economic storm are among those suffering most acutely as consumers not only tighten their belts, but also redefine what they consider necessary.
Even before the pandemic struck, the credit-rating agencies may have been underestimating how vulnerable unrelated industries could be to the same economic forces. A 2017 article by John Griffin, of the University of Texas, and Jordan Nickerson, of Boston College, demonstrated that the default-correlation assumptions used to create a group of 136 CLOs should have been three to four times higher than they were, and the miscalculations resulted in much higher ratings than were warranted. “I’ve been concerned about AAA CLOs failing in the next crisis for several years,” Griffin told me in May. “This crisis is more horrifying than I anticipated.”
Under current conditions, the outlook for leveraged loans in a range of industries is truly grim. Companies such as AMC (nearly $2 billion of debt spread across 224 CLOs) and Party City ($719 million of debt in 183 CLOs) were in dire straits before social distancing. Now moviegoing and party-throwing are paused indefinitely—and may never come back to their pre-pandemic levels.
The prices of AAA-rated CLO layers tumbled in March, before the Federal Reserve announced that its additional $2.3 trillion of lending would include loans to CLOs. (The program is controversial: Is the Fed really willing to prop up CLOs when so many previously healthy small businesses are struggling to pay their debts? As of mid-May, no such loans had been made.) Far from scaring off the big banks, the tumble inspired several of them to buy low: Citigroup acquired $2 billion of AAA CLOs during the dip, which it flipped for a $100 million profit when prices bounced back. Other banks, including Bank of America, reportedly bought lower layers of CLOs in May for about 20 cents on the dollar.
Meanwhile, loan defaults are already happening. There were more in April than ever before. Several experts told me they expect more record-breaking months this summer. It will only get worse from there.
If leveraged-loan defaults continue, how badly could they damage the larger economy? What, precisely, is the worst-case scenario?
For the moment, the financial system seems relatively stable. Banks can still pay their debts and pass their regulatory capital tests. But recall that the previous crash took more than a year to unfold. The present is analogous not to the fall of 2008, when the U.S. was in full-blown crisis, but to the summer of 2007, when some securities were going underwater but no one yet knew what the upshot would be.
What I’m about to describe is necessarily speculative, but it is rooted in the experience of the previous crash and in what we know about current bank holdings. The purpose of laying out this worst-case scenario isn’t to say that it will necessarily come to pass. The purpose is to show that it could. That alone should scare us all—and inform the way we think about the next year and beyond.
Later this summer, leveraged-loan defaults will increase significantly as the economic effects of the pandemic fully register. Bankruptcy courts will very likely buckle under the weight of new filings. (During a two-week period in May, J.Crew, Neiman Marcus, and J. C. Penney all filed for bankruptcy.) We already know that a significant majority of the loans in CLOs have weak covenants that offer investors only minimal legal protection; in industry parlance, they are “cov lite.” The holders of leveraged loans will thus be fortunate to get pennies on the dollar as companies default—nothing close to the 70 cents that has been standard in the past.
As the banks begin to feel the pain of these defaults, the public will learn that they were hardly the only institutions to bet big on CLOs. The insurance giant AIG—which had massive investments in CDOs in 2008—is now exposed to more than $9 billion in CLOs. U.S. life-insurance companies as a group in 2018 had an estimated one-fifth of their capital tied up in these same instruments. Pension funds, mutual funds, and exchange-traded funds (popular among retail investors) are also heavily invested in leveraged loans and CLOs.
The banks themselves may reveal that their CLO investments are larger than was previously understood. In fact, we’re already seeing this happen. On May 5, Wells Fargo disclosed $7.7 billion worth of CLOs in a different corner of its balance sheet than the $29.7 billion I’d found in its annual report. As defaults pile up, the Mnuchin-Powell view that leveraged loans can’t harm the financial system will be exposed as wishful thinking.
Thus far, I’ve focused on CLOs because they are the most troubling assets held by the banks. But they are also emblematic of other complex and artificial products that banks have stashed on—and off—their balance sheets. Later this year, banks may very well report quarterly losses that are much worse than anticipated. The details will include a dizzying array of transactions that will recall not only the housing crisis, but the Enron scandal of the early 2000s. Remember all those subsidiaries Enron created (many of them infamously named after Star Wars characters) to keep risky bets off the energy firm’s financial statements? The big banks use similar structures, called “variable interest entities”—companies established largely to hold off-the-books positions. Wells Fargo has more than $1 trillion of VIE assets, about which we currently know very little, because reporting requirements are opaque. But one popular investment held in VIEs is securities backed by commercial mortgages, such as loans to shopping malls and office parks—two categories of borrowers experiencing severe strain as a result of the pandemic.
The early losses from CLOs will not on their own erase the capital reserves required by Dodd-Frank. And some of the most irresponsible gambles from the last crisis—the speculative derivatives and credit-default swaps you may remember reading about in 2008—are less common today, experts told me. But the losses from CLOs, combined with losses from other troubled assets like those commercial-mortgage-backed securities, will lead to serious deficiencies in capital. Meanwhile, the same economic forces buffeting CLOs will hit other parts of the banks’ balance sheets hard; as the recession drags on, their traditional sources of revenue will also dry up. For some, the erosion of capital could approach the levels Lehman Brothers and Citigroup suffered in 2008. Banks with insufficient cash reserves will be forced to sell assets into a dour market, and the proceeds will be dismal. The prices of leveraged loans, and by extension CLOs, will spiral downward.
You can perhaps guess much of the rest: At some point, rumors will circulate that one major bank is near collapse. Overnight lending, which keeps the American economy running, will seize up. The Federal Reserve will try to arrange a bank bailout. All of that happened last time, too.
But this time, the bailout proposal will likely face stiffer opposition, from both parties. Since 2008, populists on the left and the right in American politics have grown suspicious of handouts to the big banks. Already irate that banks were inadequately punished for their malfeasance leading up to the last crash, critics will be outraged to learn that they so egregiously flouted the spirit of the post-2008 reforms. Some members of Congress will question whether the Federal Reserve has the authority to buy risky investments to prop up the financial sector, as it did in 2008. (Dodd-Frank limited the Fed’s ability to target specific companies, and precluded loans to failing or insolvent institutions.) Government officials will hold frantic meetings, but to no avail. The faltering bank will fail, with others lined up behind it.
And then, sometime in the next year, we will all stare into the financial abyss. At that point, we will be well beyond the scope of the previous recession, and we will have either exhausted the remedies that spared the system last time or found that they won’t work this time around. What then?
Until recently, atleast, the U.S. was rightly focused on finding ways to emerge from the coronavirus pandemic that prioritize the health of American citizens. And economic health cannot be restored until people feel safe going about their daily business. But health risks and economic risks must be considered together. In calculating the risks of reopening the economy, we must understand the true costs of remaining closed. At some point, they will become more than the country can bear.
The financial sector isn’t like other sectors. If it fails, fundamental aspects of modern life could fail with it. We could lose the ability to get loans to buy a house or a car, or to pay for college. Without reliable credit, many Americans might struggle to pay for their daily needs. This is why, in 2008, then–Treasury Secretary Henry Paulson went so far as to get down on one knee to beg Nancy Pelosi for her help sparing the system. He understood the alternative.
It is a distasteful fact that the present situation is so dire in part because the banks fell right back into bad behavior after the last crash—taking too many risks, hiding debt in complex instruments and off-balance-sheet entities, and generally exploiting loopholes in laws intended to rein in their greed. Sparing them for a second time this century will be that much harder.
If we muster the political will to do so—or if we avert the worst possible outcomes in this precarious time—it will be imperative for the U.S. government to impose reforms stringent enough to head off the next crisis. We’ve seen how banks respond to stern reprimands and modest reform. This time, regulators might need to dismantle the system as we know it. Banks should play a much simpler role in the new economy, making lending decisions themselves instead of farming them out to credit-rating agencies. They should steer clear of whatever newfangled security might replace the CLO. To prevent another crisis, we also need far more transparency, so we can see when banks give in to temptation. A bank shouldn’t be able to keep $1 trillion worth of assets off its books.
If we do manage to make it through the next year without waking up to a collapse, we must find ways to prevent the big banks from going all in on bets they can’t afford to lose. Their luck—and ours—will at some point run out.
This article appears in the July/August 2020 print edition with the headline “The Worst Worst Case.”
Shares in Moderna jumped as much as 5% in pre-market trading on Thursday after Anthony Fauci, the US’s leading infectious-disease expert, said he was optimistic about the company’s upcoming COVID-19 vaccine trial data.
The US drugmaker said on Wednesday that it has enough cases to begin the first interim analysis of its COVID-19 vaccine, called mRNA-1273.
30,000 people in the US were given Moderna’s vaccine, or a placebo — a shot of saline that has no effect.
“Moderna has seen a significant increase in the rate of case identification across sites in the last week,” the company said in a statement. “As a result, the company expects the first interim analysis will include substantially more than 53 cases, the targeted trigger point for the analysis.”
The company did not specify when the data on these cases would be submitted to an independent board for review, and said it remains blinded to whether participants received the vaccine or a placebo.
In the latest post in our global series examining socially-led research, We Are Social Sydney’s Head of Research & Insight Michael Batistich examines why connecting with your audience requires knowing who they are beyond superficial demographics, and how brands can get this right.
Knowing what your audience wants and expects from you as a brand is key to success. When physical touchpoints become less common within modern-day marketing, it is harder to understand your audience if you’re not interacting with them face-to-face.
But your audiences and potential audience do leave a lot of clues about who they are, what they think and how they behave on social media, and this information can be used to supplement existing information about your audience.
For us, audiences aren’t different demographics or generations – it’s about mindsets. There are lots of reasons why people don’t fit neatly into boxes / labels nowadays – disrupted generations (moving away from home, delaying life stages), more accepted fluidity and participation in different subcultures (facilitated by the internet and social media).
To connect authentically with consumers, brands need access to high-quality, meaningful audience insights. The brands that leverage audience insights, generated by data, have a deeper understanding of their target consumer and know how to implement strategies that resonate.
Why is it important for brands to know their audience?
We’ve broken down the five reasons why brands need to invest in social audience insights by exploring the Who, What, When, Where, and Why.
1.Know your current audience Connecting with your audience requires knowing who they are beyond superficial demographics. A deeper understanding of your audience helps you appreciate that there are real humans at the other end. What are their hopes and desires? What are their passions? What are their touchpoints? Without the right tools to uncover these audience insights, you’re not treating your audience the way they’d like to be treated.
2.Know what they want to engage with A big part of connecting with consumers is knowing what they pay attention to. What content and conversations do they care about? Knowing what content your audience loves will help you create content that adds value to their lives and earns their attention.
3.Know when to engage Knowing when customers want to hear from you can help your brand win or retain consumer preference. What are the micro-moments on the customer journey? What are the optimal times to schedule content based on your audience’s platform consumption? Brands need the tools to understand customer context and make decisions on how to engage in the moment.
4.Know where they want to engage Understanding where to show up at the right time to make a claim for your audience’s attention is critical. Why promote your content on Twitter if your ideal audience spends the majority of their time on TikTok? A campaign will only be effective if your audience can access your content with ease.
5.Know their ‘why’ Analysing conversation can help you understand the humans at the other end and the kind of relationship they want with your brand. Are they seeking entertainment, information or utility? Why are some people advocating for your brand, whilst others are detracting? When you understand what’s driving your audience you can better add value to the lives of your audience and your business.
How to do it
1.Owned audience profiling Using your brand account page analytics, we can identify your audience’s age, gender, location, industry, interests and pages that are likely to be relevant based on user affinity.
An owned audience profile allows you to answer important questions about your existing audience. Do our followers look like buyers of our category, or are we attracting non-buyers? What are our audience’s interests? Connecting with their passions will help capture attention and drive more conversions. What videos are watched by which age and gender cohort? Understanding which videos appeal to which segments will give the insight you need to double down on the cues driving impact.
We recently helped a premium cable channel measure its existing social audience versus category users (via GlobalWebIndex) to identify audience growth opportunities. The analysis highlighted that on Facebook the brand was not connecting with males 35+ / females 45+ and on Instagram the brand was missing 18-24s. These audiences were prioritised to attract more people to the brand.
2.Earned audience profiling Social media listening tools, platform audience insights and AI tools, such as IBM’s Watson, can provide typical demographics data, but also tribes segmented by interests, psychology makeup, people they engage with on social and the most influential people within those tribes.
An earned analysis answers questions into the people who are talking about your brand. What are the brand and category narratives? Being a good listener will help you talk to people about what they are interested in. Where are people talking? This will inform where to build your brand presence. What are the tribes, who is influential within and where are the overlaps. Understanding the tribe subcategories can help you create even more tailored content and campaigns.
When working with a luxury handbag maker, we analysed its social following and compared it to its offline audience. We did this by carrying out a network mapping exercise of its social channels – using tools powered by IBM Watson to split its social audiences into tribes based on a psychographic makeup, as well as the factors discussed above.
A “network map” clusters audiences and highlights influential tribes within the communities. Importantly, it looks at connections within the clusters as well as any connections that might straddle one or more groups. These tribes are key, as they can influence different segments and help information flow between the groups.
With the luxury handbag maker, we found a completely new audience they had not considered marketing to – a younger, vocal, hip hop obsessed group. We were able to broaden our targeting options and create new content pillars tailored to this audience in its social strategy.
3.Consumer survey-based profiling We overlay owned and earned audiences against audience survey data from tools such as GlobalWebIndex to build up a 360 degree view of the audience. Surveys offer a different perspective to the tribes – not only where they are on social media, but what they expect from brands, their outlook of life, as well as demographics, activities and media consumption.
Anonymous survey data can help answer questions that social data cannot illuminate. What is the size of our audience? What motivates our audience to buy our category? Where can I connect with my audience and on what platforms? With survey data like this that focuses on your own brand, you get a clear vision of exactly what your customers want from you, helping you to: target your marketing efforts, position the audience within culture, react to changes around your brand perception when it counts, and track the shifting mindsets of your audience.
In the past, we worked with a global fashion brand to identify insights into the global high fashion consumer with a focus on four key fashion markets. The insights into mindsets, motivations and touchpoints was used to inform global and local campaigns.
All this information can be used to identify new audiences to target, help refine targeting of existing audiences, develop the right content strategy for them, and maintain a healthy value exchange on social.
Finally, and importantly, all data we use is anonymized to protect user privacy. Understanding your audience is not about speaking to people one by one, or using data unethically to help your brand. It’s about giving everyone a value exchange – better content for the consumer, and a more effective campaign for the client.
If you’d like to find out more about how We Are Social’s research team can work with your brand, contact us on firstname.lastname@example.org
Gaming was often considered to be a solitary pastime by outsiders. It has traditionally suffered from the stereotype that it’s populated by middle-aged men, alone in their parents’ basements, or pasty teens who are reluctant to get off the sofa into the great outdoors.
However, according to our 2020 Global Digital Report, more than four in five internet users around the world play video games every month, which would equate to a global gaming community of more than 3.5 billion people, if that figure was applied to the total internet user population. Of these, 37% are female. It’s not just something for the boys.
And gaming has had a boost in popularity since Covid-19 shook the world. More than a third of internet users have been spending more time playing video games since the beginning of the pandemic. Amazon-owned Twitch, the big gun in game streaming, has been growing at a phenomenal rate since March and now has 22 million+ daily active users globally.
The motivation behind the rise in gaming during a time when we’re confined to solitary indoor lives seems obvious. The boredom factor means that people need something to fill their time. But there’s other significant aspects to gaming that have made it a lockdown success.
When the pandemic first hit, people felt the pressure to perform and be productive. We saw this displayed across social media feeds – from baking sourdough to DIY, people felt as though extra time at home should be put to “good use”. But after a while, this started to wear thin. Gaming is intensive productivity’s antithesis – a chance for people to switch off. Much like reading a good fiction novel, gaming allows people to get immersed in a world that’s not their own, much needed escapism from the pressure of real life.
But gaming has also become a place of community, somewhere people can maintain a sense of emotional connection to others. When I speak to my mum, she’s brimming with anecdotes of her time on Animal Crossing. It almost makes up for the limited socials she can have in the real world, for now.
My mum isn’t the only one. Discord, the app messaging platform aimed at gamers, has grown by about 50% since February, and has been downloaded a massive 74 million times since the beginning of August. Gamers want the ability not just to play games, but to chat, connect, build relationships and communities. The emergence of gaming features like Fortnite’s Party Royale mode point to a future in which people go to games to hang out first and foremost. As a recent Warc report stated, gaming is “becoming more social”.
While there’s been a lot of discussion about gaming as a potential space for brands to play in, this growing sense of community makes it an even trickier prospect. All communities have their own rules and marketers who don’t respect them can expect to be treated harshly. Understanding the way a gaming platform works, its tools and functionalities might be enough for a media buy, but for any creative campaign, you also need an understanding of the people within that community.
This is particularly important when looking to execute something cunning and creative in a gaming space. Travis Scott’s much talked about Fortnite concert was beautifully executed, but essentially a great media opportunity in a fresh space. Experimental, hack-style campaigns are more difficult to pull off – Burger King fell foul of Twitch users by hijacking streams with ad messages in exchange for small donations. It had failed to recognise that this went against the values of the community, where many users pay specifically to not see ads by subscribing to each streamer. While Burger King was smart in spotting an untapped opportunity to use Twitch’s tools in a clever way, it didn’t consider how the community would react.
There are examples of organisations that have managed to get it right. This year, due to the lack of real life Pride parades in various worldwide lockdowns, Global Pride took its annual parade to Animal Crossing. It recognised the growing sense of community that the game allows, and amplified it with great success.
The work that we do needs to speak to the people we’re trying to reach as a priority – it’s about an idea that works for the community, not making use of a particular tool or functionality. This is a lesson that is equally as applicable in the gaming space as it is on social media.
The culture on gaming platforms is led by the communities that exist there. Engaging correctly with these communities is key to finding success when you’re there.
17% brighter PC Amber, 10% brighter Lime and 4% brighter Royal Blue on LUXEON C, the LUXEON C and CZ LEDs are the preferred choices for architectural and entertainment lighting.
Today, Lumileds announced breakthrough flux delivery from the PC Amber, Lime and Royal Blue emitters in its LUXEON C and CZ Color Lines, the lighting industry’s broadest lines of color LEDs. The incredible 17% leap in flux of PC Amber in LUXEON C LEDs supports more efficient, safer, and easier to design lighting for first-respo…