To the untrained eye, fluctuations in stock prices seem to happen by chance and without a direct correlation. But, while the stock market is undoubtedly complex, there are multiple and well-defined forces influencing these changes. 

Learning to visualize these forces – including trends, momentum, and macroeconomic factors – can tell you a lot about how a certain stock’s price will evolve. 

But do digital marketing trends also influence stock prices? To some extent, yes – and here’s what you need to know to predict upcoming fluctuations. 

Predicting Stock Market Activity Through Digital Marketing: Is It Possible?

The rise of emerging technologies like deep learning and AI is radically transforming the Adtech and digital marketing industry. But new technologies are also connecting the industry to other sectors – including finance and stock market investing. 

Indeed, thanks to today’s advanced systems and unprecedented availability of data and analytics, digital marketing trends can be used to better understand the public’s interest and sentiment. 

This, in turn, might translate into spikes and drops in certain stocks’ prices. After all, today, retail investors account for over 25% of the stock market’s trading volume!

Here are some of the tools to use to understand the impact of some digital marketing trends on the stock market. 

Google Search Terms Trends

The idea that digital marketing and fluctuations in the stock market might be linked isn’t new. For example, a 2010 study found a correlation between queries submitted to Google and stock trading’s weekly changes. 

Thanks to more advanced analytical tools, today it is possible to use Google Trends to visualize what actions large groups of traders are about to take on the stock market before they actually buy or sell their shares. This makes it easier for traders to foresee the movements of large volumes of shares and know if a stock is about to drop or spike in price. 

Social Media Sentiment

Studies conducted in 2020 and 2021 have explored the connection between social media sentiment and short-term stock market price changes. 

What’s more, using deep learning systems, traders have been able to foresee the crash and rebound of the stock market during the pandemic-induced economic crisis of 2020. 

By reviewing social media trending content and hashtags, it’s possible to highlight retail investors’ recurring patterns and actions (also due to “herding behavior”) and identify sectors of the market that are most likely to emerge or drop in price. 

User-Generated Content

A 2013 study conducted on 15 brands has shown that user-generated content is much more than Internet chatter. 

Indeed, thanks to the unprecedented reach of social media, tools like Google My Business, and online reviews, UGC can influence a product’s sales and the brand’s income and profits, thus affecting the company’s reputation and stock price. 

  • Pro-tip – the same study has found that negative UGC like poor online reviews has a much more profound effect on the company’s stock prices than positive content. 

Investing in the Stock Market: 3 Tips To Minimize Risk

No matter whether you are a first-time retail investor or an experienced trader: investing in the stock market comes with its fair share of financial risks. You can minimize the risk by:

  • Choosing a user-friendly platform like the SoFi trading app to protect your investment and benefit from easy-to-understand graphs and predictions
  • Diversifying your portfolio to maximize profits while reducing risk
  • Partnering with an expert broker or fund manager to make your due diligence more effective

Undoubtedly, looking at digital marketing trends can offer you insights into how some stocks’ prices might change in the short term, but this method isn’t flawless or risk-free – and it almost certainly won’t make you rich!

If you are not an expert trader, you shouldn’t underestimate the risk that might come from such an alternative trend prediction strategy. To keep your assets safe, look beyond just digital marketing trends and use more traditional analytics and forecasts to obtain a more comprehensive picture of what might happen to a certain stock price.