DEBATE: As UBS factors in Instagram influence, should investors value a brand’s social media presence?

As UBS factors in Instagram influence, should investors value a brand’s social media presence?

YES, says Rashid Ajami, founder of Connectt.

Social media engagement has changed dramatically in recent years, moving from a more traditional form of display advertising that is pushed directly into people’s newsfeeds towards a more considered strategy where brands engage in real-time interactions with a dedicated following.

As marketers increasingly look to create their own communities, platforms like Instagram have evolved to become effective sales tools.

Investors researching brands understand that the abundance of content from consumers on social channels is an honest and compelling measure of the strength of a business.

For companies looking for growth online, the challenge largely revolves around how oversaturated social platforms have become.

Brands need to get increasingly creative when it comes to growing an audience online, which inevitably requires time and investment, so it’s fantastic to see the investor community recognise the value of this vital marketing channel.

Read more: Market influencer: City brokers head to social media to boost brand growth

NO, says Fergus Hay, chief executive of Leagas Delaney.

Is the most well-known person at a party also the most successful? We should just ask Boris Johnson.

Social media certainly plays an effective role in the sales funnel. It’s very effective in customer care, product discovery, and driving ecommerce.

But measuring only for fame is misleading. The volume of social media followers does not necessarily convert into sales and long-term value.

Assuming that the number of followers listed is true (sadly a huge assumption), it only really gives an indication of media spend effectiveness, and potentially recognition (hello Boris). It also doesn’t give an indication of the irrational preference a consumer has for a brand that persuades them to buy something non-essential, and pay more for it.

All brands desire growth, and to achieve this they need unfair advantage against their competition.

Measuring the irrational preference among consumers for a brand would give you a more useful long-term picture of their commercial value.

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