Social media

When hackers took over the Twitter account of Associated Press in April, they triggered a sell-off that wiped billions of dollars off the value of global stock markets.

The anonymous saboteurs sent a bogus tweet from AP’s main account to its 1.9m followers, saying: “Breaking: Two Explosions in the White House and Barack Obama is injured.” Markets rebounded as people realised the tweet was fake, but the incident was one of the most dramatic demonstrations yet of the influence that social media wields over business and finance.

From London to Delhi, people are spending an increasing amount of time on social media platforms such as Twitter, LinkedIn and Facebook, which has 1.1bn monthly active users, half of whom use the site every day.

In China, where foreign social networks are blocked, homegrown platforms such as Sina Weibo are flourishing. A survey by consultancy McKinsey last summer found that nine in 10 Chinese internet users had visited a social media site during the past six months, compared with 67 per cent in the US.

Companies have been quick to follow their customers on to social media platforms, attracted by the ability to engage directly with their audiences and at a lower cost than through traditional media such as television and newspapers.

Coca-Cola has 65m “likes” on Facebook and about 800,000 followers on Twitter. The ease of sharing content on these platforms means a well-judged post has the potential to “go viral” and reach a vast audience.

However, social media campaigns can go wrong. McDonald’s last year launched a Twitter campaign that asked customers to share their experiences dining at the fast food chain. But it backfired when people used it to highlight their horror stories.

Despite the occasional mis-step, brands are continuing to pour money into social media. The $10bn valuation that investors have placed on Twitter is testament to that.

Facebook, which has a market capitalisation of $64bn, has a massive database of consumer information but is only starting to make money from that through advertising.

Robert Cookson