The excitement following Twitter's (NYSE:TWTR) recent analyst day, the first of its kind for the tweet master, has long since faded. Its stock price jumped over 7% on Twitter CEO Dick Costolo's news that he has a plan to address on-going concerns with slowing user growth and lack of engagement. Unfortunately for Twitter shareholders, the analyst day fanfare was short-lived, and its stock price is just about where it was prior to the "big event."
There may be some light ahead for Twitter, however. According to a recent study, Twitter is the end all, cure all for marketing departments wanting to cash in on the holiday shopping season. Like its elder, social media king Facebook (NASDAQ: FB), Twitter was already expected to light up the holidays with ad revenues as retailers open their coffers to lure customers. But it turns out consumers can hardly make a buying decision without first consulting Twitter: If you believe Twitter, that is.
Data is data -- or is it?
Digital research firm DB5 completed a study recently in which 2,100 Twitter users over the age of 13 were surveyed to get a sense for what, if any, role Twitter plays in making holiday buying decisions. Twitter could only hope for better results than last year, when another research outfit conducted a similar poll. In 2013, Twitter was well down the list of influencers when it came to holiday shopping, finishing well behind Facebook, among others.
In fact, a mere 13% of users over the age of 13 said Twitter had any impact on their buying decisions last year. While that's not horrible from a marketing perspective, online search and the aforementioned Facebook put those results to shame. And when it comes time to open the wallet, marketers base their decisions of where to spend on response results.
Which brings us to this year's data. As per DB5's survey results, an astounding 54% of respondents over 13 years old are motivated to buy based on a promotion they saw on Twitter: 54%! The same number of Twitter users, 54%, "consult" Twitter while wandering the aisles of a brick-and-mortar retailer.
And there's more. A whopping 52% of the over 13 Twitter-using crowd learned about a product while tweeting, and later opted to buy said item. Perhaps even more impressive, which is saying something considering the impact Twitter apparently has on shoppers over the age of 13, is it has become the "new holiday shopping list" for 39% of the 2,100 users surveyed. Clearly, investors can expect Twitter to hit Q4 earnings out of the figurative ballpark, right?
There's just one problem
Before investors run out and buy into Twitter ahead of the holidays, there's one more thing: Twitter commissioned the DB5 study. Now, there's certainly nothing problematic with Twitter, or any other company for that matter, sponsoring a user study -- Facebook and a host of other's do it, that's par for the course. But let's put the DB5-Twitter survey numbers into perspective.
In 2014's Q1, as per an independent study, Twitter led the way in paid advertising response rates, even ahead of Facebook, converting 3.9% of its ads to sales. For marketing gurus, a nearly 4% conversion rate is a phenomenal return on investment, as was Facebook's 3.1%. Granted, there is certainly a distinction between conversion rates -- ads that directly result in a sale -- and an ad "motivating" a user to purchase, as is the case with the DB5-Twitter study.
But a more than 4-fold increase in the impact Twitter has on buying decisions during the holiday shopping season year over year, as the most recent study indicates? That's a stretch, to say the least. Twitter is certainly better positioned this year than in 2013 to capitalize on the holiday shopping season, but these recent numbers are over-the-top.
With 284 million monthly average users compared to just 232 million this time last year, Twitter can offer its advertisers a broader audience, and presumably with another year's worth of user data, should be better at targeting the right ad, to the right user, at the right time -- ala Facebook. But don't bet on the results of Twitter's recent study if you're considering making an investment decision. If the data was close to reality, Twitter might actually be worth its sky-high valuation.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.