Friday, March 24, 2017

Google Searches Seen as Luxury Investors' Must-Have Tool in Fashion

This Business of Fashion article, which references research from investment analysis firm Macquarie, outlines the correlation between Google searches for company's products and the company's stock performance. They cite examples from Gucci and Salvatore Ferragamo, one positive and one negative, whereby search results foreshadowed the uptick in Gucci's shares and the fall in Ferragamo's. Ultimately, as the Macquarie analysts point out, Google trends can be a useful indicator for a brand's "temperature" - they will become more useful and reliable as more consumers purchase luxury items online.

This is an interesting perspective on the usefulness of Google Trends, not just for advertisers, but also for investors. Moreover, it makes logical sense: as Millennials mature and increase their purchasing power, they are accustomed to researching products (luxury or otherwise) online extensively before making a purchase, especially large purchase, such as a new Hermes Birkin handbag. The overriding assumption to this investment theory, however, is that these searches result in conversion. As we have learned in class, there are plenty of teenagers searching for information and media related to luxury cars online, but that does not mean that they're potential customers.

Furthermore, there is potential for deception. If Cartier, for example, has a very appealing ad campaign, which results in more Google searches for the ad content, it may not lead to more sales or increased revenue for the company. If an investor were to purchase shares in Cartier solely based on Google search trends, she may be misled to think that searchers are all potential customers. In reality, investors will look at more data before making such a decision, and the Google search data offers yet another interesting data point.

It begs the question if Google now has another target customer: investors. Google may want to think about not only engaging with a company's marketing departments, but also their investor relations departments. 

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