Monthly Archives: July 2008

Too big to worry: Social Media As Panic-Control Mechanism In The Freddie Mac – Fannie Mae Crisis

                    

How Social Media facilitates socially-driven treat management dynamics

 

When the nation’s mortgage companies are “on the verge of collapse” [WSJ, July 13, 08]  that’s a big reason to get worried.

But while Social Media resonance on the crisis spiked tremendously (as one would expect) it doesn’t spell panic and doesn’t call for consumer emergency action (ignoring ongoing crisis-talk on the agenda-setting mass media).

1st2c monitored the consumer response to the crisis on Social Media, uncovering key insights on the dynamics of Social Media in facilitating threat management “by the people – for the people”.

 

12 Trillion reasons to worry

When the news hit the market the American publishes was pretty much pepped up to worry.

The media has been talking economic doom for a long time now.

Recession, depression, downturn, rocketing interest rates, hiking living costs, plummeting housing market are only few of the labels spelled out by news and commentaries.

It’s not surprising that these are hot topics in consumers dialog on Internet’s Social Media space.

 

But the Freddie Mac and Fannie Mae crisis was supposed to take the threat a notch higher. After all, these giants touch more than half of the nation’s $12 Trillion mortgages!

According to publications these banks may default on their huge debt, government guarantees will effectively double the public debt, and that their difficulties may damage economies worldwide since the securities of Fannie and Freddie are held by numerous overseas financial institutions, central banks and investors.

 

But public confidence may be even more undermined by immediate implications on individual consumers.

If the two banks are unable to borrow, they will not be able to buy mortgages from commercial lenders. In turn, that would make it more expensive and difficult, if not impossible, for home buyers to obtain credit, freezing the United States housing market (NYTimes, July 11, 2008).

 

It was only natural for consumers to see the unfolding event in terms of crisis.

In the age of the networked market it was only natural for consumers to share “intelligence” and minds, to seek peer advice and support and perhaps also to mobilize to act upon the crisis.

 

As 1st2c tracking system shows, the event did trigger a surge in volume of consumer conversations across Social Media platforms.

But was it panic talk?

 

What me worry?

Analysis of online dialog about the mortgage giant crisis discovered interesting insights:

·         Most of the talk was on THEM (the banks, government, fed) and not on ME

·         Much of the talk came from interest groups rather than “concerned citizen”

          Political activists (mainly non-republicans…)

          Financial and technology investors

          Financial mavens

          And interestingly also automobile fan communities….

·         Talk tended to focus on the immediate problem rather than on the broad economic implications

·         Talk on imminent crisis was scarce

·         Call for action was scarce

 

Too big to worry

A Bloomberg TV commentary from Jul 11 2008 quoted congressional leads from both parties saying that Freddie Mach and Fannie Mae are “too big for the government to let them fail” (YouTube).

This assumption, though sometimes challenged (“… and too big to be bailed out”), is the underlying sentiment among the networked public.

In many respects, Social Media played a balancing role to the mass media, in shaping public understanding and reaction to the mortgage bank crisis.

Social media did not simply play along with corporate media.

When consumers talked to other consumers they essentially helped frame the crisis as “not on our turf”. Consumer dialog identified the threat not on a personal level but a systemic level. The magnitude of threat was discussed in terms of passing the threshold of uncertainty about the imminence government intervention.

So while the media continued to preoccupy with whom and what can curb the threat, Social Media already echoed with a clearer notion of “beyond the worry threshold”.

Social Media as the peoples’ threat management mechanism

Market dynamics may change and future developments might alter public response to the unfolding economic developments. But this situation analysis does provide deeper insights into how Social Media helps shape public perceptions and behavior.

The Freddie Mac and Fannie Mae case study highlights the fact that Social Media is a socially-driven platform for identifying and meeting of unmet needs.

 

In this case, the need was for threat relevance understanding as aspect of threat management.

Experience shows that the Social Media helps people “calibrate” mindsets on a disregard-involvement-action continuum based on 3 key parameters:

·         Relevance

·         Immediacy

·         Gravity

In this case, consumer used Social Media to balance and control rather than stir and demonize.

It would also be worthwhile for marketers to take note of the anthropological aspect of the dynamics of social influence to understand what social environments and mechanisms facilitate and energize the “Social ripple of influence”.

 

1st2c in a nutshell

1st2c (www.1st2c.com) is the home of Online Strategizing Research©.

1st2c specialized in the most comprehensive data-to-strategy methodology in the networked market.

1st2c monitors all major Social Media platforms and mines consumer dialog and interaction for actionable insights and opportunities.

1st2c works with Fortune 500 companies on adding new dimensions to overall marketing strategy and on monitoring and engaging the networked market.

 

 

Ofer Friedman

Chief Research & Client Officer

1st2c

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1st2c CGM case-study: Nintendo Wii and The Emergence of Social Commerce

Online commercial platforms such as ebay.com and amazon.com were popular commerce channels for holiday shoppers this Christmas. While the majority of consumers used these online commercial websites a new channel of online consumer commerce began to gain traction.

CGM and Consumer-to-Consumer Commerce

Online forums/message boards were used by consumers to buy and sale items during this Christmas holiday. This new form of commerce resembled in structure to peer-to-peer networks. Peer-to-peer networks in which have gained popularity for downloading music and movie files has influenced a new trend in consumer commerce.

Consumers from across the United States communicated via online forums/message boards in order to buy and sell goods and have created a new form of online consumer commerce, consumer-to-consumer networks. Similar to the p2p networks, each consumer either buying or selling represented a node in which together formed a social network of online consumer commerce.

The Wii Catalyst in Consumer-to-Consumer Commerce

The demand for the Nintendo Wii game console soared this holiday season. Retailers both online and off line were not able to match the consumer demand for this hot holiday item. We at 1st2c discovered that the consumer-to-consumer online network empowered consumers by offering them a additional platform to purchase the Wii gaming console. Via online forums/message boards people bought and sold Wii consoles without the assistance of traditional online commerce platforms such as ebay.com, walmart.com, and amazon.com.

In addition, consumer-to-consumer online commerce were in some instances the only channel for consumers to obtain a Wii console for this Christmas holiday due to the lack of availability of main stream online commerce platforms .

CGM Discussions of Wii Social Commerce Transactions

Using 1st2c‘s deep web monitoring technology we saw that consumer discussions of this secondary market was substantial and grew as the Christmas holiday approached.

wii-graph-2.png

Effects of Consumer-to-Consumer Commerce

This social commerce channel that developed increased the availability of the Wii to consumers during the holiday season. In addition, it increased the growth of secondary gaming console markets. Consumers that had the Wii game console previous to this holiday rush had the opportunity to sale via the consumer-to-consumer commerce channel and use the revenue to purchase another gaming console or software.

An example of this phenomena was observed by our research team in the consumer cell phone market. Consumers used the consumer-to-consumer channel through CGM platforms (ie forums/message boards) to sell their cell phone in order to purchase a new model via traditional retail channels. This form of commerce reduced the duration and financial barriers that consumers faced when deciding if to upgrade to a new cell phone.

The Future of Consume-to-Consumer Commerce
The emergence of consumer-to-consumer commerce via social channels (ie forums/message boards) poses some important questions regarding retail markets and marketing of consumer goods.

1. What can be learned from social commerce and adapted to retail commerce?

2. What consumer insights can be learned from social commerce?

3. How can marketing techniques adapt to the evolving social consumer generated media platforms such forums/message boards, blogs, videos and social networks?

We will continue to follow this CGM trend as it evolves in order to provide our clients with tools to maximize their marketing impact and ROI.

1st2c in a nutshell

1st2c (www.1st2c.com) is the home of online Online Strategizing Research© – the most comprehensive data-to-strategy methodology available for the networked market. Strategizing Research©’s insight and opportunity driven orientation creates a vivid picture of mindsets and behaviors of the networked marketplace and adds new dimensions to both online and offline strategies.

1st2c works with Fortune 500 companies on adding new dimensions to overall marketing strategy and on monitoring and engaging the networked market.

Ofer Friedman

Chief Research & Client Officer

1st2c

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