Tuesday, October 25, 2011

When social media strikes Part 3: Netflix in FLAMES....

After Netflix announced first to raise prices and then create Qwikster they saw a massive drop in their stock price.  We are talking about over 100% drop from its high of ~290 to around 104 in just three months.  A few days after the announcement to kill Qwikster, I wrote a fairly comprehensive blog post analyzing how the change in net sentiment seemed to correlate with the drop in Netflix stock price.

Click here for a link to the blogpost

Yesterday Netflix announced its earnings.  The news was positive in that they beat estimates...

"From a financial perspective, Netflix did better than analysts expected in the July-September period.
The company earned $62.5 million, or $1.16, per share, in the third quarter. That compared to income of $38 million, or 70 cents per share, at the same time last year.  The performance topped the average earnings estimate of 96 cents per share among analysts polled by FactSet. Netflix's revenue climbed 49 percent from the same time last year to nearly $822 million -- about $9 million above analyst estimates."

What is amazing is the other "consumer part" of their news really hurt them.

"The company, which is based in Los Gatos, ended September with 23.8 million U.S. subscribers, down about 800,000 from June. Netflix had predicted it would lose about 600,000 U.S. subscribers in a forecast released last month.Management expects to gain U.S. subscribers in the current quarter, although Netflix didn't set a specific target. But a substantial number of Netflix's customers are expected to choose between renting DVDs through the mail, or streaming Internet video, instead of paying for both services."

And while this loss of customers will translate into lost sales, which is financial, they did beat estimates.  And being that they gave no guidance of how their subscribers will increase, one can see strategically how their concept works.  They are trying (as they have overtly stated) to increase the rate of revenue so they can provide a better more comprehensive selection of movies (as licensing fees are higher for better content).  Everyone would agree, their execution has been flawed and the shock their poor roll out has caused is the root of their issues.  But the jury is still out on how their transition will ultimately go.  Is their CEO still ahead of the curve?  I would argue again...the risk the Netflix faces is now based on their brand perception which continues to weaken every week.  Even if they do have the best selection, will the sour taste in their consumers' mouths taste be so bad they can't come back as the service improves.  I would suspect even if it does, they have serious work to do on their brand image with consumers because their slow return to Netflix as their service improves could prove catalytic as they miss numbers because of this "consumer effect". 

What does this mean?  Angry and untrusting consumers who are waiting for the next price increase will be delayed in their return no matter how great Netflix is.  As they delay, Netflix doesn't hit its numbers and the financial sector questions their business and so on.  The consumer uptick in subscription might never recover if it doesn't improve things soon.  I am not a Netflix subscriber (late adopter I guess) and the difference in price from 10 to 16 dollars seems pretty reasonable to me.  I pay gobs of money for Comcast, and I hate it, but I am still a little lazy to create a multi-product package for my TV that can save you money overall.  We will see.

On to the analysis.  I have updated and extended my "coverage' of the Netflix brand collapse.  When we last left off, I covered and analyzed Netflix as of October 17th, 2011.  I looked at the full year, the period before the price hike announcement and the period after the price hike announcement.  We saw some major changes in how consumer perceived this brand and even saw some qualitative correlation to the stock price changes that suggest some predictive link between the change in sentiment versus the change in stock price.

Again...the blogpost link for part one is here ====>  Netflix Part 1

Let's look at the net sentiment over time chart since October 1st.  This will encompass both the earnings announcement AND the announcement to kill Qwikster.

We see from the analysis that the net sentiment for Netflix is actually climbing after the announcement and the spike around the announcement didn't hurt the brand in anyway and actually seemed to help.  But in the last few days, we can see the effect of the announcement.  The net sentiment dropped from about 50 to -8.  A major drop.  Below are some closer looks at the sentiment charts zoomed in for the last few days.

We see the net sentiment going down dramatically yesterday and even more this morning.  The top chart goes through yesterday and the bottom includes what has been collected thus far today.  This is a major drop in the net sentiment.  And it dropped as the day wore on yesterday as the announcement came out.  The announcement came out at 1:05PM pacific time towards the end of the Wall Street Day.

But if we look at the changes in the data for the last 3 months (which includes the price hike announcement) versus the last 3 days, the results are quite telling. 

Note:  In my last post, I ended on 10/17/11.  Our data is a 12 month rolling history, so I have updated the numbers (mostly for the 12 month ratios) to reflect the most up to date changes.  Last 3 months tracks from the announcement to today (so a little bit longer than 3 months)

Over the last 12 months the ratio of positive sentiment was 2.78.  This means for for every 2.78 positive expressions of sentiment (regardless of intensity) there was only 1 negative expression.  In the last three months that ratio dropped to 1.86.  This is a 33% percent decrease in the ratio of positive to negative expressions of emotion.  And when looking at the  LAST 3 days?  That ratio has dropped below 1 to 0.85 or another 50% decrease again.  Netflix in the last three days is in a situation where the number of negative expression of emotion actually outweigh the positives.  The normal ratio in social media tends to be higher than 1 overall.  People tend to express more positive sentiment online then negative.  This is an amazing social media development.

How does this all link to the stock price?

Again, I have created some curves that trend change in sentiment to change in stock price.  They are below. 

You will again see that the stock trends over the last 30 days seem to follow the change of sentiment.  The sentiment drop yesterday could easily predict the drop today.  It just continues to show that change in sentiment seems to correlate with stock price.  Netflix didn't just throw gasoline on the fire...the fire ran up their arm and they are in flames. 

Did they damage their brand?  Let's look more closely.  I have created a brand passion index on the brand with some key dates.  See below

Look what happened to the brand passion in the last 30 days.  It actually improved versus the time period of 7/10/11 to 10/10/11.  In fact, the last 30 days includes all the negatives we are talking about today.  But what is troubling is the bubble created with the data from the last 3 days.  Look how low the brand has sunk using only this data.  This is really poor.  If we zoom in on the likes and dislikes for the last 30 days and the last 3 days, we will see some thing very troubling.

Let's look at the last 30 days. 

You will see that over the last 30 days there is little change from the last 3 months.  People are talking about the price hike, the death of qwikster, and that they are leaving.  What should be looked at more specifically is the two pieces of pie lose subsriber and lose customer. Over the last 30 days the percentage of people falling into these categories is 34%.  We do see the stock mentioned at 5%.   In general you are seeing what you would expect.  Consumers are not happy with Netflix moves since their poor moves after July 11th, 2011.

Let's look at the last 3 days.  What we see is pretty frightening...

The likes over the last 3 days are the usual banter about Netflix.  People like the service.  They think it is a great product.  These are the normal chatter about what people like about Netflix.  There is nothing that interesting based on other slices I have seen around what people like.  There was a huge uptick happiness around killing qwikster, but otherwise mundane likes...

If we move to the dislikes, however, we see more changes even versus the last 30 days.  Now we are seeing even stronger language around the Netflix brand.  60% now refers to either lose more customers or lose subscribers.  We know this is mostly due to the announcement, but remember this chart looks at expression of emotion.  People are expressing opinions about these two facets and regardless, it continues to grow.  Another very telling piece of data that has grown is we are now seeing expressions around the brand itself.  Lose subscriber and Lose customers are about the product.  Now we see lose luster and destroy brand faster as two groupings.  In fact, these two groups make up 14% of the data.  People are starting to express direct emotions towards the Netflix brand itself.

The hierarchy of Netflix downfall has followed the following trail...

1.  They didn't like the "product" price hike
2.  They didn't like the "product" complexity (qwikster)
3.  People expressing they don't want to buy the "product" has increased to 60% from 30%.
4.  People are directly expressing emotions about the "brand" itself.

This means that Netflix may have jumped the shark.  Could they rebound? Sure, great products create great demand, but they have surely opened themselves up from a brand perspective.  People don't trust the brand now and it will be telling to watch whether or not this grows with time.  Getting people to trust Netflix is going to take $$$ and resources, because the brand is now damaged.  It is uncertain how much, but there is evidence that it is damaged.

The ratios and trends from the last 3 days onward need to be monitored to see if this trend reverses itself.  If it continues, what once was a great idea could go the way of the dinosaurs into the land of what not to do case studies.

The jury is now out on netflix and you need to figure out a way to put out the fire that is is now engulfing your brand's body.   I would say in the infamous words of that old dick van dyke educational video on fire prevention it is time to "stop, drop and roll".

I couldn't find the actual spot...but he did lots of them

Dick Van Dyke the detector

Friday, October 14, 2011

Obama - President in Peril?? Part 2

I am going to follow up my previous post yesterday with the goal of answering another question.  If President Obama's Brand Passion is so low and he lives in "danger zone", how does he compare to the "front-runners"?

This is always a great question.  And one I figured I would tackle to give more context to the President's position in social media.  Just to level set for those who didn't read my previous blog post (here is a link if you want to), I have re-posted the charts below.

These charts help give a relative view comparing brands.  The first compares the President's Brand Passion (see previous post) over time.  The second focuses on giving a comparative view of how the Barack Obama brand compares to a variety of disparate brands.  The goal is to help "see" how President Obama benchmarks with other types of brands. 

Today, I wanted to follow to ask the following...if President Obama's brand sits in a very negative sentiment place only a mixed amount of passion, what does this mean about his re-election?

Rather than look at the entire field, I created a Brand Passion Index focused only on the top three Republican front runners (Herman Cain, Rick Perry, and Mitt Romney) to see how he directly compares to his challenge upcoming in 2012.  I also included Hillary Clinton just for the fun of it.  I also threw in Chris Christie to see what people believe they lost with him not running for President.

Below is the Election 2012 Brand Passion Index.  Let's take a look...

To me...this is interesting.  Yesterday, I called my post A President in Peril.  While this is certainly true, if we look at the field we do see some interesting things.  For one, President Obama has much significantly higher level of buzz than anyone else.  The  only one who comes close is Mitt Romney.  Everyone else is really small potatoes from a traffic standpoint.  Below is a buzz comparison of those on the chart above...

You can quickly see that the President has a significantly greater amount of buzz that the field.  This gives you some additional context.  It also tells you that he will be trying to steer a much rougher river if he wants to "change" how people feel about him.  I would go as far to say as there are forces at work that must organically improve (housing, economy, unemployment anyone) to move such a loud voice in the right direction.  On the other hand, the Republican field can still shape its voice.  This is where the danger lies.  The story is not told by them yet.  They can create their message and we can watch how it takes hold.

As for the BPI, I believe what is the most interesting part of this analysis today is that no one is really that great.  While the other candidates do have better sentiment, their passion is pretty weak.  Let's look at Mitt Romney.  What we hear about him is what we see on the BPI.  He isn't very inspiring and is slowly marching his way to mediocre candidacy.  The flavor of the week Herman Cain.  He fairs the best and actually creeps into positive sentiment territory, but again the passion is low.  Chris Christie, the savior of the Republican field.  Not really.  He has way lower buzz (which means the story is yet to be told) but he is pretty similar to Obama.  In essence, no one really has the upper hand.  Everyone is in a wait and see mode with this field.  Even Hilary Clinton (while better than Obama) is not significant either.  But like her Republican counterparts she has a decent amount of buzz that could be shaped over time as well.

We have a President who is mired in negativity (which we can look at next) and a field of republicans that doesn't inspire anyone.  To really understand the nuance, we will have to dig deeper.

Much deeper.  Coming to you from the sanctity of my computer as a one man gang who is analyzing the 2012 race in under 4 hours so far...until next time...

Oh yeah,  the beauty of social media is you can do it yourself and "get up to speed on a topic" very quickly and easily and in any direction.

Thursday, October 13, 2011

Barack Obama - A President in Peril

We know corporations are still thinking hard and heavy about whether they should even consider social media.  That being said, we also know that politicians are probably obsessed with it.  From a cultural perspective (meaning political management), I am curious how effectively they will use social media in the upcoming election.

The last election saw the viral marketing of candidates explode.  They used Facebook to rally the message.  They used online infrastructure to garner donations at an amazing pace (well at least president Obama did).  And over the last 4 years, the media has USED social media to PUSH their message.  The question remains...how will they PULL in this election to not only influence, but to understand what is being said about them so they can speed their interaction cycle to new heights.

I question their efforts.  I believe one of the real problems when it comes to the application of social media to business or any topic is the outright arrogance of those who "think" they understand how to do it.  I would argue as an evangelist of the topic, I probably fit the bill.  In fact, I am the first to admit that I usually make it up as I go.  And when you are pioneer, it is a hard road to hoe.

The razor's edge of the election 2012 will be the candidate who not only figures out how to have other PUSH their message but truly make up new APPLICATIONS of capturing and measuring THE CROWD.  What suite of social media tools will be put in the campaign's toolbox to garner the speed of insight edge they need.  And in my limited time working in the world of computer engineers, I am often astounded at how quickly they degrade to technology discussions and move away from the importance of how things apply to the user.  Like many said about Steve Jobs, his success was based on his maniacal passion about thinking like a consumer.  He also had the stones to literally OBSOLETE products at the expense of his own.  Genius.

Let's turn back to politics.  Rather that do the full analysis of an entire topic, I figured I would go slower this time.  Piece by Piece.  I figured as a passionate supporter of the president and person who would love to help his re-election, I decided to begin to dimensionalize first him and then his opponents.  Call it a play book by which I watch and understand what is going on.

Today, I am starting at the top.  Like my previous post, I am going to take a look at the passion for the President.  How does he fair over the last year?  How does he fair if we break it down month by month?  How does he compare to the front runners he is currently facing?  Below are some of the answers.

Again...I turn to the Brand Passion Index as a high level view.  The video of this chart is linked here:  Brand Passion Index Explanation Video.

Below are two charts.  They are both month by month view of the President's "brand passion".  The gives a contextual view of where he sits in the 4 box grid.  The second is a closer view of his month by month Brand Passion and the total for the last 12 months (10/13/10 to 10/13/11).

What does this all mean???

Essentially, these two charts are telling us that President Obama is dare I say, stagnant with his consumer base.  Of course, many folks out there don't like the President, but what is most troubling is the stagnant pattern we see here.  Overall, Barack Obama has a fairly negative level of sentiment (emotion).  From a passion perspective, while they feel negatively, the intensity of this emotion is somewhere between "dislike" and "hate".  This isn't the greatest place to live on a brand passion index.  From a positive/negative perspective this is a disaster.  From an intensity perspective, the President can salvage things.  But clearly he has work to do.  

The second chart in my mind is more gloomy.  If we look at how people feel about him month by month we will see that it doesn't get much better.  He does float around a bit, and in certain months rises to the occasion, but overall he is mired in a swamp of negative sentiment and average passion.  It's kind of like, I guess I might vote for him, but I definitely don't feel great about it right now. 

You can see a few bright spots on chart 2.  The first one is January 2011.  This is when we gave the state of the union address.  I remember it being well received and if we look at the chart it was one of his best months.  He pushes towards daylight on the BPI.  The second month is May.  This was clearly good political mojo for him.  He got Bin Laden and the people rejoiced.

And while this picture isn't great, let's give it some context.  Below is another BPI, which I mixed up a bunch.  I put a whole bunch of different "brands" on it.  I chose retail, consumer products, electronics and other people to give you an idea of where President Obama sits in relation to these other brands.

 You will see just how negative the sentiment is for the President.  For crying out loud, no one likes Walmart and his sentiment (or position on the y-axis) is much much lower.  There is almost nothing said positively about him on relative basis.  On the plus side, the amount people that hate Walmart is higher because it is much further over on the right.  That being said, President Obama's bubble is really really big.  There are a lot of people saying negative things about him.  And while you might say how can that many people say so much...it must be volume, in steps the iPhone.  It has even more buzz, but has a much better sentiment and passion than the President.  So essentially it is possible to have a better position on the Brand Passion Index with that much buzz.  And the Kardashians?  The USA loves celebrities.  They do better than the President.

I think the President is doing an admirable job.  He inherited a bad economy.  God knows he has tried, but to win this election he must awaken the sleeping giant that is his following.  If he doesn't it will be hard for his election team to PUSH any message amidst a sea of negativity.  I hope they are listening...because I am going to work on understanding...because as I have said many times...I just want to help.

The question I have now...is how does he compare to the front runners in the campaign???
Tune in tomorrow to find out...

Not sure what time, but same crazy channel...

C2B How social media is flipping who has control...

I have always made it a point to admit when someone comes up with a term or idea that is just simply great and/or poignant.  In this case, the concept of C2B, a term I have started hearing lately is just that...elegant.

What is C2B?  This is he opposite of B2C where the consumer is driving the business and not the other way around.  In some of my posts, I have made it a point to focus on what I call the social media speed of insight.  This is essentially the hypothesis (and looks like reality) that if companies do no take the time to understand the sentiment and insights embedded in THE CROWD they can be affected by it. 

When they are affected, it is the situation when the consumer (C) are driving the (B).  I have talked about it.  I have thought about it.  I have never put a term to it.  Bravo!  And as a scientist, it is ALWAYS the case that when an issue in science becomes big enough it gets it own unique term.  Well social media is on the way to having its own version...C2B. 

The question remains...who will be the biggest players in C2B.

What parts of the market need the infrastructure, service or products to make it live.  I have written about THE CROWD and MY CROWD.  These are two beast that need taming.  Their are elements to taming them.  There is the demographics, influence, sentiment, interaction between and many other things that need to be built for C2B to become something tangible and real.

As C2B grows the question what is going to happen to B2C?

How will the flow of information affect how B2C runs and for that matter B2B?

These are things to ponder for sure...

Hopefully, as part of C2B you can help me think about it....

Wednesday, October 12, 2011

When Social Media Strikes - Netflix Gasoline on the Fire

A while back I wrote a long post giving a theoretical look at what happens when social media strikes?  Essentially this means that the consumers of the blogosphere speak and how it can get out of control on a company really quickly...

You can read the post here When Social Media Strikes Post

Today, in light of the recent events at NetFlix (well actually over the past several months), I figured I would back track and analyze how social media struck Netflix and what mistakes they have been making by thinking their strategy can run faster than the social media speed of insight.  

Here goes...

"On July 12, 2011 Netflix announced that it would separate the current subscription plans into two separate plans: one covering the instant streaming and the other DVD rental.[35] The cost for streaming would be $7.99 while DVD rental would start at the same price." (http://en.wikipedia.org/wiki/Netflix).

Netflix added Insult to injury when...

"On September 18, 2011, Netflix CEO and Co-Founder Reed Hastings said in a Netflix blog post that the DVD section of Netflix would be split off and renamed Qwikster, and stated that the only major change would be separate websites for the services.[43] The new service was to carry video games for an additional charge, whereas Netflix did not.[44] Netflix subscribers who wanted DVDs by mail would have had to use a separate website to access Qwikster." (http://en.wikipedia.org/wiki/Netflix). 

This event or some would say "strategic business choice" has lead to a major upheaval of what has been a very innovative brand over the past 5-10 years.  They single-handedly changed how people rent movies and literally killed the on ground movie rental store.  Blockbuster and Hollywood video were basically decimated and Netflix has been a leader in both the mail-order movie business as well as the streaming business. 

If you look at the historic stock price of Netflix you will see nothing but upside.  It has grown since it first hit the market from about $5 a share to its peak at $286.93 on July 11th.  This is exactly the day before Netflix announced its now infamous price hike and then later in September split in how it would serve its consumers.  Since that decision the stock has dropped to $108.66 in less than 3 months.  They say you can take years to build a relationship but seconds to destroy. Evidence would suggest this is the case at Netflix. 

So doing an analysis of social media would seem redundant.  All the information sits in that stock chart right?  It is...but how could Netflix have avoided its pain or at least reacted more quickly during this crisis to rescue some of its brand equity.  In my experience, most brand equity is tracked using survey over longer periods of time.  In fact, my current experiences have taught me that most companies are looking for ways to increase the speed by which they track their brand's health.

Below is an analysis I performed on Netflix.  I started today and put about 5 hours into the work you will see below.  I did this alone, with no help.  In fact, I had knee surgery 5 days ago and decided to use our solution at NetBase to do this work to show how a single person at home at their desktop can analyze a problem like the one Netflix is having.

First, I looked at the overall buzz, sentiment and passion for Netflix over the past 12 months.  To do so I used high precision sound bites are shown below.  High precision is determined using natural language processing to get sound bites that are 80-90% accurate.  As a scientist, having good accurate data is the key to doing strong analysis. You can read on how NetBase measures its accuracy here. NETBASE WEBSITE WHITE PAPER.

You will see there is a great deal of buzz (over 4,000,000 soundbites) over the last year and that Netflix has a very strong net sentiment and passion intensity.  The definitions are listed in the slide below...

Looking closer, you can definitively see in the social media data that all was quiet on the social media front for Netflix over the past 12 months.  At least, until they made their announcement on July 12th.

Looking at Netflix over the past twelve months you can see from the chart above that Netflix's net sentiment was hovering at 50-60% for many months.  Our index's average is about 31.5%.  This shows how healthy a brand Netflix was in the time prior to the announcement.  A very strong brand will be between 60-80%.  As a benchmark politicians actually move into negative territory for the most part.  The chart also clearly shows how that sentiment changed in July when the price hikes were announced and subsequently dropped again when Qwikster was announced.  These chart demonstrate that you can clearly see the public's response to their business strategy.  Imagine if they had been watching the reaction more closely.  We hope they were, but knowing the buzz went up is only half the battle.  Getting accurate sentiment on your brand is more important that simply knowing that people are tlaking.  What is interesting is the net sentiment for Netflix seems to be going back up.  We all know (and what prompted this blog post) is that announcement to reverse the Qwikster decision but keep the price hike on October 10th (yesterday).  Below is a closer look at the net sentiment before and after the announcement (a blow up of what is above).  You will see how flat their sentiment is and what happened afterwards.

So social media can show us how people felt about their decisions and how it affected their brand versus before the decision.  Let's go a little deeper.  Below is a look at the social media buzz, sentiment and passion for Netflix before the announcement (October 11th, 2010 to July 10th, 2011) and after (July 11th, 2011 to October 11th, 2011).  If we begin to analyze the numbers a bit, it gets even more intriguing.

What is the quantitative effect of their decision?  You will the stats on their buzz, sentiment and passion before and after the announcements.  Firstly, if we look at the buzz as percentage of the total, we see that 33.2% of the buzz generated has occurred in the last 3 months (7/11/11 to 10/11/11). So there is a definite, uptick in buzz since they made this announcement.  So the buzz is up! But if you only know where and how much buzz their changes have generated, you are not looking deep enough.  In fact, if you think about this some more (at the buzz level only) you will only say that there is a moderate uptick in the buzz and might not understand the meaning of it or if it is positive or negative.

Because of natural language processing we can go deeper to look at both sentiment (the positive and negative expressions of emotion) and passion (which is the intensity of that emotion...love versus like, hate versus dislike) because not all sentiment is created equally.  To do this, I performed some very simple ratio analysis looking at the the number of positives/the number of negatives.  This will give us a rudimentary way to track changes in both sentiment and passion.  To make this meaningful in the context of the netflix announcement, I looked at the sentiment and passion data before and after.

Sentiment Ratio Analysis:  Before the announcement on July 12th, Netflix has a sentiment ratio of positive to negative of 3.57.  For every 1 negative expression of sentiment, Netflix received 3.57 positive expressions of sentiment.  After the announcement the ratio drop to 1.85 almost dividing by 2.  Essentially, in the last 3 months the number of negative expressions of emotion have doubled compared to the previous 9 months.  This is a major difference.

Passion Ratio Analysis:  If we perform the same calculations using the strong and weak emotion counts in the chart above we will see the same picture.  Prior to the announcement, the positive passion/negative passion ratio is 4.92.  At nearly 5 to 1, Netflix customers express positive passion for the brand.  After July 12th, this ratio drops to 2.29.  It drops in half.  In fact, in the case of passion it drops a bit more than half.  This again shows the dramatic fall of how people are feeling about the Netflix brand.

The question is why?  In doing meaningful social media analysis it is critical to go beyond buzz (which we have been able to do) to sentiment and passion.  The real value however, will come from understanding why.  Below are some automatically generated charts from our Insight WorkBench.  Again all data is using high precisions sound bites.  The first are the top 10 "likes" for the Netflix Brand.  The second is the top ten "dislikes" for the Netflix brand.   Our method for "clocking" this precision can be found in our white paper on the subject.  You can find it at the link on the NETBASE WEBSITE WHITE PAPER.

The why before the announcement...

 Prior to the announcement people speak about things one would expect.  They like streaming, the movies, and the service.  They call it the best thing.  As for dislikes, they also mention the movies and the service.  They also mention that it just isn't for them or the selection.  I would argue from a consumer perspective online, you can please everyone.  They do mention an outage that occurred, but it is not dominating the chatter.  Now let's look over the last three months.

The dialogue has changed...in a big way.  From the likes perspective, we still see the same key words, but there is a big change.  Almost 20% of the people online are celebrating the death of qwikster.  In fact, it is at 20% and the announcement happened about 3 days ago.  This topic is statistically swamping the last 3 months of emotion for the Netflix brand.  On the dislikes side, you will see it is littered with people talking about the price hike, how they are leaving netflix and that the company is being greedy.  Again, the change is dramatic.  People really didn't like this decision.

Bringing into one view...

At NetBase, one form of analysis we often use what is called the Brand Passion Index.  Attached is a short video that explains the chart and how to think about it.  BRAND PASSION INDEX VIDEO LINK.  Essentially, this view of social media data takes all three types of measures into the tracking of brand health. It uses the buzz (size of bubble), the sentiment (positive and negative expression on the y-axis) versus the passion (intensity of the sentiment (like versus love, dislike versus hate) on the x-axis) to give you an overview comparison of a brand's health.  It can be created using competitors to see how your brand relates to theirs with consumers.  It can be created over time to see the shifts (which I will show below).  It can also be used to see how certain attributes contribute to the position of the brand.  In this case, you take a dataset focused on a brand (Netflix in this case) and use verbal context to "carve" out a smaller data set from the larger one. Below is such a chart for Netflix.

You will see on Netflix brand passion index several different bubbles.  You will see the whole year (complete brand look for Netflix) as the largest bubble.  Overall, people were reasonably bullish on the brand.  They show some intensity but the overall sentiment of that intensity is overall neutral.  If we break up the timing by which the data set is created (using before 10/11/10 to 7/11/11 and 7/12/11 to 10/10/11), we see a different picture.   Now we can see that prior to their announcement both the sentiment and the intensity of that sentiment is more positive.  This demonstrates that things were pretty good for Netflix.  When we look over the last three months we see a major downgrade of the brands overall brand passion.  But if we look at some pieces of the data, we can see the key attributes that are contributing.  The three smallest bubbles show subsets of the data.  They included searching on things like price, announcement and Qwikster in the context of Netflix.  In cases where key language was added to see how specific attributes affect Netflix, much of the negative chatter is due to these areas of discussion (as the pie charts above show).  We can now quantify and see what parts of the social media discussion are driving the negativity of Netflix.  This was done quickly and we only used the scalpel in a few areas, but with natural language processing you now have the ability to quantify what attributes of the social media data are causing either the pleasure or the pain.

So how could Netflix have taken action on all this....

Funny...I did a little thinking. How was this data predictive.  It is clear if they had been understanding what was going on as it was happening, they may have made course corrections.  But in the end it is about shareholder value.  I did some very rudimentary trend analysis by doing my best to put the net sentiment over time charts against the stock curves available on Yahoo!.  

Below are snapshots getting more focused in little by little...

You will see in each of the charts, the sentiment over time charts seem to show downward trends that occur prior to the drop in the stock price.  This gives a glimpse of how sentiment seems to preclude the response in the market place.  And how could Netflix taken action with this data.  They could have watched after the first announcement at how the sentiment for the brand never recovered to original levels.  They may have held off on the Qwikster announcement by watching if the sentiment improved and if the stock price began to recover.  It seems the decision to move foward with Qwikster was absolutely disastrous to their brand and stock price.  In fact, since the pull back on the Qwikster, it seems that the sentiment is improving.  If we look at the stock price today is has moved upward again since yesterday.  It has climbed so far today about 5 dollar to around 114 from 108 yesterday...

Maybe they will reverse the trend, maybe they won't, but one thing is clear...

When social media strikes and the company ignores the consumers...they do so at their own peril.

Monday, October 10, 2011

GRIT Report - A market researchers view of market research

I wanted to take a minute to give a shout out to Lenny Murphy, coordinator of the GRIT report.  This report is a survey of the market research community and its thoughts for the coming year.  It is a huge undertaking and actually included over 1000 responses this year.  The report is focused on taking a deep look at what the community believes is going to shape its own future. 

there is tons of good information here and I had the chance to contribute the social media look that was included in the final report.  It was a very fun time working with Lenny and the group.  They are a very dynamic group who is very passionate about the subject.  My main goal was to help them triangulate what the survey thought on certain subjects versus what was reality online.

Probably the biggest insight is one that is my job.  Many folks in the market research community feel that social media analytics and the resources to drive social media are one of the most important things to think about in the coming year.

I guess...change is coming and now those affecting are at the bus stop waiting to get on...

check it out.