This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Unproven Social Media Stocks Winning Election 2012

Stocks in this article: FB P GOOG YHOO TWX CBS

Pandora chief executive Joe Kennedy hinted as much in the company's second quarter earnings on Aug. 29, noting that after a modest impact on earnings over the summer, he expects a greater third quarter earnings benefit from campaign ads. Kennedy cautioned political spending is unlikely to be a key earnings driver in the near-term, but acknowledged it could reveal the network's relevance to advertisers.

"It's not an insignificant amount, but it's not a huge amount either," Kennedy said of an earnings boost. "The fact that we enable the ability to target geographically and demographically is highly attractive to political advertisers just as it is to virtually every other form of advertising," Kennedy told analysts.

Among the hurdles are whether social networks can prove that their data, user feedback and easily targeted audiences are a differentiating factor from traditional broadcast. The mobile presence of Facebook, Pandora and Twitter give them location-based advertising vehicles coveted by political campaigns trying to win battleground states or congressional districts, which may be borne out this election and prove relevant to corporate advertisers.

"Every two years you have some fairly large election season in terms of ad spending. The general trend I would expect is for social media to be in the limelight," says Martin Pyykkonen, a senior research analyst at Wedge Partners. In rough and tumble politics, Pyykkonen highlights Twitter as best positioned to draw campaign ad dollars because users consume policy substance on the 140 million user social network. In contrast, politics can be awkward subject mater on Facebook, which is less "newsy" and more of a way to keep in touch with friends and family, adds Pyykkonen.

Pachter of Wedbush also highlights privately-held Twitter as the platform best positioned to capture political ad dollars. Recent Obama and Romney-promoted tweets filtering through Twitter streams may be an indication that the platform can bridge paid-politics with social networking, without alienating users. Twitter's recently rolled out "promoted tweets" -- where a campaign or company sends out a tweet to selected users -- earns Twitter between $2.50 to $4.00 in revenue per new follower to the promoted tweet, according to Pachter's estimates.

Election season may also grab the attention of corporate advertisers. For instance, Pyykkonen says Facebook needs to prove to advertisers it can deliver packaged ad solutions. Google, he says, proved its mettle early on with successful packages for the likes of Procter & Gamble and Heineken that made its appeal to corporate accounts apparent.

In a review of second quarter earnings, Nomura analyst Brian Nowak noted that sponsored pages on Facebook drove revenue per user growth. "Sponsored stories are a small but rapidly growing part of FB's business... This is encouraging as it implies sponsored stories would represent 9% of total ad revenue in the third quarter," wrote Nowak in a note to clients.

If social networks can demonstrate consumers acting on "likes" and "tweets" of ads, Pachter of Wedbush says Twitter and Facebook could eventually implement a charge to corporations with, for example, 1 million likes or followers, creating predictable revenue without disturbing ordinary users.

Earlier in September, Twitter chief executive Dick Costolo told Charlie Rose that the platform is now a must for candidates in the heat of an election. "It's no longer the case that the campaign can analyze tonight's debates, go out and poll, and then issue a press release tomorrow. They have to do that right away because people are on Twitter reacting to it as it happens," said Costolo.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs