News Data as a Source of Business Intelligence

Data-driven decision-making is a powerful capability for modern businesses, but they must navigate a complex news matrix to extract genuine, actionable intelligence

Data-driven decision-making is a powerful capability for modern businesses, but they must navigate a complex news matrix to extract genuine, actionable intelligence.

In a world teeming with data, every byte tells a story, and every story drives a decision. However, the deluge of data in the modern news ecosystem makes it more important than ever that businesses can discern credible information from the unreliable and ensure the news data they rely on for critical decisions is accurate, relevant, and timely. 

The modern enterprise must navigate this intricate landscape with a discerning eye, embracing the wealth of information while safeguarding against misinformation and rapidly changing narratives.

The ability to effectively traverse this dynamic ecosystem is crucial for optimizing the value derived from news data in strategic planning and investment decisions. We asked 200 leaders in data, analytics, and innovation in Europe and the United States about how the news and data derived from it drive decisions and create value in their organizations. This report presents our findings and offers analysis from leading data and analytics professionals in the financial field.

“As an economist, news is everything,” says Lu Chen, Director and Senior Economist at Moody’s. “I focus on the macro economy, the stock market, and the bond market, and how that’s influencing each asset class. News data is critical for the job I’m doing.” 

The Changing Role of Traditional News Sources 

In an era where information is abundant and diverse, traditional news sources play a critical role. They provide verifiable and trusted insights and anchor business decision-making.

However, the traditional news ecosystem has undergone a seismic shift in the era of 24-hour news cycles and pervasive social media platforms. This transformation presents both opportunities and challenges for businesses seeking trustworthy news data to guide decision-making and investments.

The explosion of information sources, while providing a wider array of perspectives and realtime updates, also muddies the informational waters. Despite the proliferation of news on social media, our research suggests that professional news sources still have a key role to play in delivering trusted news to businesses.

97% and 96% of respondents respectively turn to professional and consumer media sources for trusted information. These figures underscore the pivotal role of professional journalists across various platforms, from trade publications to online and print mediums, in delivering credible and valuable news data for diverse organizational needs.

Despite the dominance of traditional media sources, dataderived sources are also relied upon by 85% of respondents, highlighting the importance of quantitative data in complementing news data for comprehensive insights.

Our findings paint a picture of caution towards social media and aggregators/vendors not in the news business, with only 50% and 47% of respondents respectively considering them as sources for news data. 
This reflects prevailing concerns regarding the credibility, accuracy, and reliability of news data from these platforms, indicating a more discerning and selective approach toward their utilization for organizational information needs.

“Official media is becoming more emotional. More people are relying on social media as a source of news,” says Alex Golbin, Chief Data Officer at financial services firm Hudson Bay Capital. “I think there is a nontrivial impact of news, broadly defined as official news and social media news, on stock price volatility of companies.”

Overall, the findings emphasize the enduring value of professional and established media sources in providing reliable news data, while signaling the need for enhanced credibility and trustworthiness in emerging and non-traditional news platforms to bolster their standing in the organizational news data landscape. 

Balancing Data-derived Insights and The News 

In the realm of decision-making within organizations, a substantial 64% of respondents assert the equal importance of both news data and quantitative data. This finding underscores the balanced approach adopted by many organizations in leveraging diverse data types to inform critical decisions, such as investment choices or risk modeling.

Despite this, 23% of organizations emphasize the use of news data primarily to provide context to quantitative data, reflecting its complementary role in enhancing data-driven insights.

However, a deep dive into perceptions surrounding news sources reveals intriguing insights. Almost half (48% when combining ‘strongly agree’ and ‘somewhat agree’) predict that traditional news brands will see a diminished role in breaking news stories in the future, highlighting a shifting landscape in news consumption.

Our research also reveals deeply mixed feelings among data and analytics leaders about whether social media outlets should be regarded as reliable sources for business news. 39% selected either ‘strongly agree’ or ‘somewhat ‘agree’, 28% selected neither agree nor disagree, and 33% selected either ‘somewhat disagree’ or ‘strongly disagree’.

“The boundary between official news and social media news is becoming less pronounced,” says Golbin. “It’s hard to explain the stock price volatility with traditional financial math only. There is always a significant residual ‘unexplained’ factor, which one can attribute to the effect of speculation, disinformation and misinformation in social media.

Ideally, we could quantify that residual as an additional risk factor, so that people can put it into their risk model and measure the exposure of their portfolio to it.”

It’s clear that while social media is increasingly used to consume news, not all information contained in it can be considered reliable. In the absence of trust, it is incumbent on the reader to independently verify information before relying on it.

Notably, brand recognition emerges as a leading factor in establishing trust, with an overwhelming 85% affirming a higher level of trust in news data sourced from recognizable news brands. This highlights the enduring importance of brand reputation and credibility in the news arena. 

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You can explore this topic and many others in more detail at CDAO Chicago 2024 taking place on August 7-8, 2024. Check out the full line-up of world leading speakers here.