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DOI: 10.1177/0894439312448037
2013 31: 229 originally published online 26 June 2012 Social Science Computer Review
Arthur J. O'Connor
Media Fan Counts and Brand Company Stock Prices
The Power of Popularity : An Empirical Study of the Relationship Between Social

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Report and Communication
The Power of Popularity:
An Empirical Study of the
Relationship Between Social
Media Fan Counts and Brand
Company Stock Prices
Arthur J. OConnor
1
Abstract
This pioneering study explores the convergence of social economic behavior in our new,
hyperconnected world. In statistical tests, the correlation of Facebook brand page fan counts of the
30 most popular consumer brands and their respective brand company stock prices were found to
be statistically significant, despite the general upward trend for fan counts and radically different
stock price performances over a 12-month period. The results suggest that the social media popu-
larity itself, as a construct for consumer following or public interest, may serve as some type of beha-
vioral indicator of brand affinity, customer loyalty, or brand performance.
Keywords
social media, behavioral finance, social economics, economic sociology, brand tribalism
Introduction
Brand fan counts represent the number of consumers who join brand sites created by consumers
themselves, or more often, are sponsored by consumer brand companies on social media networks.
Consumers become fans
1
to read and post comments on the site, join loyalty programs, browse
product information, and/or make purchases online (online social commerce).
If celebrity-like popularity increases economic opportunities for businesses (Rindova, Pollock,
& Hayward, 2006), if consumers engage in online relationships with brands much as they form
relationships with other people (Esch, Langner, Schmitt, & Geus, 2006), and if consumers feel that
brands are part of them and that they are part of the brands (brand tribalism, Taute, Sierra, &
Heiser, 2010), could fan counts of the most popular brands on social media networks, as a con-
struct for consumer following, signal concurrent changes in brand performance and/or valuations
of brand company stocks?
1
Pace University, New York, NY, USA
Corresponding Author:
Arthur J. OConnor, Pace University, 41 W. 82nd St., New York, NY 10024, USA.
Email: arthurjoconnor@gmail.com
Social Science Computer Review
31(2) 229-235
The Author(s) 2012
Reprints and permission:
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DOI: 10.1177/0894439312448037
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In an exploration of the growing convergence of social economic behavior of consumers
in our new, hyperconnected world, this cross-disciplinary study explores the statistical relationship
between the running daily total brand fan counts of 30 of the most popular brands on Facebook, the
largest and perhaps most established social network (whereas Twitter has about 200 million users
worldwide, Facebook has about 680 million users
2
)as a construct for consumer followingwith the
closing daily stock prices of the consumer product companies that own these brandsas an indicator
of social economic behavior. Unlike previous research that analyzed user-generated content or mea-
sured user activity for discerning consumer or investor mood/sentiment (most recently, Bollen, Mao,
& Zeng, 2010), this nontheoretical study uniquely explores what popularity itself, or the daily number
of brand fan counts, can reveal about social economic behavior.
Conceptual Framework and Model
The conceptual framework proposes that, given the inherent power of popularity to foster social con-
formity, enhanced by the opinion-influencing capacity of social media, daily fan counts for consu-
mers following the most popular brands are associated with the stock prices of the consumer brand
companies that own these brands, as shown in Figure 1.
The conceptual model further proposes that, given the more static nature of brand fan counts
(relative to stock prices), the running daily total of fan counts either outpace or lag market values
of stocks, creating timing differences by which their relationship or regression coefficient to prices
may be positive or negative, but within a bounded range. The model also postulates that the fan
countstock price relationship is stronger for the most popular brands associated with smaller ticket
and/or everyday impulse purchases, than that for the most popular brands associated with larger
ticket, less frequent, and/or complex buying decisions.
Theoretical Development
If the economic benefits from popularity as a form of social capital accrue to individuals (Glaser,
Laibson, & Sacerdote, 2002), this study asks, could brand social media popularity accrue to the
Model Dynamic: Positive/Negative Correlations
Given the more static and imprecise nature of fan counts, social media popularity
either outpaces or lags intrinsic values of stock prices, thus fan count to stock
price relationships maybe either positively or negatively correlated
Predictor Variable: Fan Counts
Number of consumers following the
Criterion
Variable: Brand
Company
most popular brands on social
media networks
Stock Prices
Model Dynamic: Strength of Effect
Correlation is stronger with small ticket/impulse
purchase brands than for brands involving large-ticket
items or more complex buying decisions
Control Variable: Market Volatility
Exogenous or systemic (market-specific)
factors affecting company stock prices
items or more complex
Figure 1. Conceptual model of the relationship of social media popularity with performance.
230 Social Science Computer Review 31(2)
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economic benefit of consumer brand companies? That is, if popularity is a form of social influ-
ence, status, and/or power (Blau, 1964), could brand affinity or consumer following signal social
economic behavior and brand performance? Could brand popularity or social following become a
social norm by which peer pressure drives broader consumer adoption and/or conformity in buying
behavior?
The Power of a Single Factor
While it may be more intuitive that variables based on the tone of the user-generated content to
measure mood or intent, and/or frequency of postings to measure user activity and/or consumer
engagement would have greater explanatory power in predicting behavior than simple measures
of popularity, or sheer number of followers, studies using very sophisticated content analysis tools
to measure investor sentiment have found a single or consolidated variable to be the lone statistically
significant predictor of outcomes. In a 2010 study (Bollen et al., 2010) the tone of tweets, analyzed
by using two mood tracing tools from large-scale Twitter feeds, were found, in one instance, to accu-
rately predict the direction of the stock market in the days that followed. The study used (among
other techniques) an algorithm developed by Google, the Google-Profile of Mood States, which
measures six mood levelshappiness, kindness, alertness, sureness, vitality, and calmnessof
user-generated on the Internet. From its analysis of 9.7 million tweets posted over 10 months in
2008 by 2.7 million twitter users, the results showed that only one mood (calmness) was predictive,
with a 87.5% accuracy whether the market would close up or down between 2 and 6 days after a
calmness reading was logged on Twitter. Similarly, in an analysis of the media coverage effect
on investor sentiment and behavior, Tetlock (2007) used the General Inquirer (GI) quantitative con-
tent analysis program to analyze the words for each day of the Abreast of the Market column in
the Wall Street Journal over a 16-year period from 1984 to 1999. Despite the robustness of the GI
tool, with 77 predetermined sentiment categories from the Harvard psychosocial dictionary, changes
in a single pessimism factora consolidation of all 77 categories related to pessimistic words in
the newspaper columnwas found to predict statistically significant and economically meaningful
changes in the distribution of daily U.S. stock returns and volume.
Hypotheses and Methodology
The research proposes that as social media behavior online becomes increasingly intertwined and
reflective of social economic behavior in the real world, brand fan counts for the most popular brands
serve as a directionally mixed, imprecise but reliable indicator of their respective brand company stock
price performance.
Hypothesis 1
The primary and main hypothesis is that fan counts for brands with the greatest social media follow
reliably but loosely correlate with their respective brand company stock prices within a bounded
range by either outpacing (negatively correlated) or lagging (positively correlated) market values.
Regression coefficients for the market index are also expected to be both positive and negative, but
within a far smaller range, a function of tracking error between the systemic market effects on
the 30 brand company stock prices and those of the broader index used in the study (Dow Jones
Industrial Average).
Hypothesis 1: Consumer following of the most popular brands is positively correlated with brand
company stock behavior.
OConnor 231
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To test the first and primary hypothesis, 30 individual Pearson product movement correlations of 30
brands with the greatest consumer following on Facebook were conducted over a 12-month plus 1
day period, from June 1, 2010, to June 1, 2011. In addition, 30 separate regressions of stock prices as
the dependent or criterion variable were conducted with the corresponding daily Facebook brand fan
countsas well as a market index as a control variable to capture the exogenous effects of equity
market volatility.
Hypothesis 2
To explore the strength of the association of social media popularity with social economic behavior
among types of popular brands and consumer decision making, the second hypothesis postulates that
the relationship is stronger for brands generally involving with small ticket or impulse purchases
versus brands associated with larger ticket, less frequent, and/or complex buying decisions.
Hypothesis 2: Consumer following of the most popular brands associated with small-ticket and/or
impulse buys is more strongly correlated with their respective brand company stock prices than
for brands associated with larger ticket, less frequent, and/or complex buying decisions.
For this analysis, the 30-brand sample will be divided into two groups, based on five sorting criteria,
as shown in Figure 2.
To normalize the data for the group analysis, fan counts, stock prices, and stock market variables
were indexed, and the total averages computed for the two groups over the 12-month period. The
results of the regression, along with the Pearson product movement correlation of the total average
indexed values with the two-tailed test for significance over the 366 observations for Groups 1 and 2,
were then compared.
The sample size was 366 observations (1 year plus 1 day), representing daily data from June 1,
2010, to June 1, 2011. To normalize and synchronize daily social media fan counts with daily stock
prices, the closing stock prices for nontrading days such as weekends and holiday were repeated over
these time periods to help comply with the fundamental requirement for time series studies that all
observations be taken at regularly spaced internals. For the measure of social media popularity, this
study used the fan counts of brands by Famecount.com. The list of the most popular brands on Fame-
count.com was adjusted to exclude brands owned by privately held companies. Daily stock price
Sorting Criteria:
Smaller vs. larger ticket items
Predominately B2C vs.
hybrid B2C/B2B brands or
business models
Impulse vs. planned or
scheduled buying behavior
R ti / d l Routine/every ay vs. less
frequent purchase decision
Short-term vs. longer-term
consumption cycle
232 Social Science Computer Review 31(2)
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data on the three brands and market index (Dow Jones Industrial Index) were sourced from Yahoo
finance. IBMs PASW Statistics GradPack 18 was used to perform the statistical analyses.
Results
In the test of the first and primary hypothesis, Pearson product movement correlations of fan counts
of the 30 most popular consumer brands and their respective brand company stock prices from June
1, 2010, to June 1, 2011, 26 were found to be statistically significant in two-tailed tests at the .01
level. In 19 of the 30 regressions of brand fan counts and stock pricesalong with a market index
to capture exogenous stock market volatility to better isolate the effects of popularity on nonmarket
return (alpha)both predictor variables were found to be statistically significant, despite the general
upward bias of fan counts and radically different price performances over the 12-month period, with
Krispy Kreme Doughnuts soaring 133.43% and Aeropostal falling 33.25%. The overall market
index (Dow Jones Industrial Average) increased 22.61% during this period.
Consistent with the studys conceptual model that fan counts either lag or outpace the market
values of brand company stock prices, coefficients for both the predictor and the control variables
were both positive and negative in the 30 regressions, with fan count coefficients within a bounded
range of as much as +8 (absolute average 3.63 with s 4.28); coefficients of the market index
variables also had mixed but much smaller variances (absolute average 0.01 with s 0.03),
presumably due to tracking error (see Table 1).
In an examination of the strength of the effect (test of Hypothesis 2), correlation was found to be
stronger for the collective total average indexed values of 19 brands (Group 1) within the 30-brand
sample associated with small ticket and impulse purchases (Pearson product movement correlation
coefficient of 0.967; R
2
value of .935) than those for the remaining 11 brands (Group 2) that are asso-
ciated with larger-ticket items and more complex buying or decision-making processes (Pearson
correlation coefficient of .597; R
2
value of .356). For a more precise measure of the relationship
among the variables, regressions of the two brand groups total average indexed stock prices were
expressed and calculated as a function of total average indexed fan counts, along with a market index
to capture endogenous equity market volatility to better isolate the effects of social media popularity.
The analysis for Group 1 resulted in an even stronger R
2
value, with .971, or over 97% of the var-
iance in the dependent variable predicted by the independent variables, exceeding the R
2
for Group
2, which was .519, or less than 52%. The coefficient (or parameter estimate) for the total average fan
count variable for Group 1 suggests that each unit increase in the total average fan counts would
result in a .058 increase in the total average stock price, all things being equal. The coefficient
(or parameter estimate) for the total average fan count variable for Group 2 suggests that each unit
increase in the total average fan counts would result in a .075 decrease in the total average stock
price, all things being equal.
Limitations and Implications for Future Research
Main criticism of this preliminary study is that it is an inductive research study, starting with a raw
variable (fan counts) in search for a conceptual framework or application. There are countless lim-
itations of fan counts of the most popular brands as a proxy for consumer following or public inter-
est: daily fan counts simply represent the total number of people who have visited and indicated they
like a brand social media sitenot how frequent they visit the site, whether or how frequently they
post comments, or volume or tone of those comments, nor any sentiment analysis of the tone or
intensity (positive vs. negative) of user-generated content. There are also countless intrinsic limita-
tions of stock prices as a proxy indictor for brand loyalty or performance, as stock prices are a function
of an infinite number of micro/micro economic, systemic/specific quantitative and qualitative factors.
OConnor 233
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234
at Uni Babes-Bolyai on March 26, 2013 ssc.sagepub.com Downloaded from
Finally, the relatively high correlation between predicted and observed stock prices in the correlations
and regressions suggest linear strengthbut not necessarily appropriatenessof the models.
This is an early, preliminary study, with a small sample (n 30) and limited time frame (1 year),
exploring the potential of a new measure (fan counts). Future research should include semantic
analysis of user-generated content as well as more sophisticated statistical tests with a broader
sample to help establish direction of effect. While the results were inconclusivegiven the
studys many limitations, and that it focused on exploring the relationship of social media popu-
larity to stock prices, not the underlying mechanisms that drive themit is hoped that this pioneer-
ing study will inspire further investigation into the potential predictive or indicative value of fan
counts and/or social media popularity with social economic behavior.
Acknowledgment
Daniel Dearlove, founder of Famecount.coma website that tracks brands receiving the greatest number of
Facebook fans, the number of Twitter followers, and the number of YouTube viewswas instrumental in pro-
viding fan count data for this study.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of
this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
Notes
1. In June of 2010, Become a Fan on Facebook brand pages was changed to Like.
2. http://www.cbc.ca/news/yourcommunity/2011/06/facebook-or-twitter-which-are-you-using-more.html
References
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Glaser, E. L., Laibson, D., & Sacerdote, B. (2002). An economic approach to social capital. The Economic
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Taute, H. A., Sierra, J. J., & Heiser, R. S. (2010). Defining brand tribalism. Woodbury School of Business
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Tetlock, P. (2007). Giving content to investor sentiment: The role of media in the stock market. Journal of
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Author Biography
Arthur J. OConnor is risk management and information technology consultant serving the financial services
industry. He is currently enrolled in the executive doctoral of professional studies (DPS) program at the Lubin
School of Business at Pace University.
OConnor 235
at Uni Babes-Bolyai on March 26, 2013 ssc.sagepub.com Downloaded from