Alt Data Moves Beyond Front Office
Alternative data is commonly perceived as the grist of trading desks, where real-time information on breaking events gives a leg up to quick-profit trades.
But more areas of the enterprise are leveraging Twitter and other social-media feeds that have emerged as the de facto modern-day newswire. The functions within the corporation may be different, but the underlying value proposition is the same — to benefit from having the most immediate information.
Take communications, for example, where information is currency and reputational risk must be minimized. Corp-comms professionals traffic in information, whether it be rationing it out to the media, developing it via the next marketing campaign, or countering it via damage control of negative publicity. In any capacity, they need to have the latest information on their company, their customers and their industry.
“Tweets can move markets, and for any communications professional to overlook the essential role of social media in the corporate communications, financial communications and investor relations galaxy would be a dereliction of duty,” said Anthony D’Angelo, Chair of the Public Relations Society of America.
“Social media channels are no longer new or alternative media, they’re mainstream,” said D’Angelo, who is also a public-relations professor at Syracuse University. “They may someday become — through some technology, usage pattern or strategy to be determined — the only stream.”
On May 30, the Federal Reserve proposed a plan to loosen the so-called Volcker Rule, a four-year old regulation that prohibits banks from engaging in proprietary trading or owning stakes in hedge funds or private-equity funds. Banks’ risk-taking was largely blamed for the global financial crisis of 2008-2009, and it remains a sensitive area; bank communications pros need to know all sides of the story to best craft their own message.
#Volcker Rule: #FederalReserve’s mtg on Wed.–expected changes will be harmonized b/w #regulators (@USOCC, @FDICgov, @SEC, @CFTC), be focused on bringing greater clarity/simplification to rule rather than opening a door for lge #banks to resurrect their past proprietary #trading.
— Julie DiMauro (@Julie_DiMauro) May 30, 2018
“Given the irresistible riches generated by proprietary trading, it is inevitable that weakening the Volcker Rule will result in banks again pushing the envelope, gaming the system and ramping up their dangerous trading.” (2/2)
— Better Markets (@BetterMarkets) May 30, 2018
Similar news developments happen across industries on a daily basis.
In late May, #BoycottABC trended on Twitter after the television network canceled “Roseanne” in response to a series of racist tweets by the hit show’s namesake. While much of the ensuing debate was political, it also included meaningful perspectives about the bottom line — which communications professionals are paid to protect.
TV executives have seen recently the power of advertising boycotts. In the middle of upfront negotiations, ABC just got in front of theirs
— Steven Perlberg (@perlberg) May 29, 2018
"Roseanne" generated $45 million in advertising for ABC this year and was projected to bring in as much as $60 million next season, according to Kantar Media.
— Gerry Smith (@gerryfsmith) May 29, 2018
“We’re seeing interest that’s broader than just purely finance use cases,” said Ed Oliver, Vice President, Finance Sales at Dataminr. “In finance, it’s about trading on real-time information during market hours. In public relations, corporate communications, and investor relations, the lens is a bit different.”
Oliver explained in communications functions, “real-time is about being on top of breaking news of an event so you can craft the right response and do the internal work you need to do.”
Twitter “is not just a niche information source” for front desks of financial firms, Oliver said. “This is information that other entities of the corporation are interested in. The versatility of the content is such that it’s very valuable for a hedge-fund manager or an oil trader, but there is also value for the enterprise side of a company or corporate environment.”
According to PRSA’s D’Angelo, a communications pro can leverage Twitter to engage in real-time message and audience monitoring; take advantage of the analytical tools to measure communication effects and feedback; gather competitive and marketplace intelligence; and establish relationships with the right social media influencers who can help amplify one’s message.
“The disadvantage of not doing so is for you to become irrelevant as a communications professional,” D’Angelo added.
Alternative data is no longer optional.
The vendor eyes research and analytics synergy from the purchase of the alt data firm.
AlgoTrader helps Swiss hedge fund Cryptonomics refine its trading strategies.
Need-to-know information often comes from off the radar.
MiFID II unbundling is prompting firms to integrate alternative data.