I was glad I hadn’t worn heels—the floors of Buddy Media’s New York headquarters were carpeted in balloons. The company had recently celebrated its fourth anniversary, which had included morning mimosas and finger-paint graffiti that covered every inch of exposed glass. Even though its official mission statement includes orders to “laugh” and “celebrate,” the party had not included a clown, a magician or a baby donkey, as CEO Mike Lazerow promised on Twitter.
The past year has been good to Buddy Media. The company won a TechCrunch “Crunchie” for Best Enterprise software, on top of about a dozen other such distinctions. It made its first acquisition, opened two new offices (in San Francisco and Singapore), and more than doubled its headcount to 220. This August, it raised its largest round of funding: a $54 million Series D valuing the company at $500 million.
Buddy Media has become the go-to platform for building brand pages on Facebook. It’s got 90 percent gross margins and more than 500 clients, including eight of the world’s top 10 brands (Sprint, NFL, Target, and Ford, to name a few). It’s the biggest, oldest, and most recognizable company of its breed—one that’s been careful to avoid stepping on the toes of social ad agencies.
Buddy Media, in fact, aims for partnerships with agencies, rather than competition, counting Digitas, Razorfish, Publicis, and backer WPP Group among its clients.
In the past year, however, Buddy Media’s competitors have proliferated, all of them claiming to do what it does—only better, faster, simpler, more holistically, more specialized, more sophisticated, more user-friendly. To stay on top, Buddy Media won’t be able to rely on the sometimes haphazard methods it took to get there.
Lazerow and his wife Kass, serial entrepreneurs, started the company in 2007 with $1.4 million in seed money. They resolved to build something—unsure of exactly what—to help brands, publishers, and retailers harness Facebook’s new open Web. “It was very much like a startup, like throw stuff against the wall and see what sticks,” Lazerow says.
They tried everything from developing virtual currency, to launching an ad network, to building apps, to agency-like marketing services, winning clients like Starwood Hotels simply because it existed. (Back then, social media spending was as hit-or-miss as Buddy Media’s business model.) But when Facebook launched Pages in March 2009, “it was a no-brainer,” Lazerow says. “We knew brands were going to need content management systems, a retail presence, all of that.” The company quickly launched one of Facebook’s first page management systems. Its clients (including, to this day, Starwood) jumped on board.
Later that year, when Facebook announced its Preferred Developer Consultant Program (a list of Facebook-approved vendors for brands), Buddy Media was among the initial 14. Now there are at least 85 vendors, including several ad agencies that provide Buddy Media-like tools but also supply strategic and creative services. New competitors are entering the market in droves, having watched businesses like Buddy Media weather the experimental phase and fine-tune the social marketing software business model.
And despite sharing investors with Facebook—Peter Theil, Ron Conway, Zynga founder Mark Pincus, and the European Founders Fund—Buddy Media’s relationship with the company does not guarantee an inside track. In fact, Lazerow was as astonished as the rest of the market by Facebook’s Timeline profiles, unveiled at the Sept. 8 developers conference.
Competition in social service software has become so fierce that in 2010 Buddy Media accepted a nominal $5 million investment from WPP not because it was desperate for cash—Buddy’s venture backing now totals $90 million—but because it didn’t want a competitor getting that capital. “I didn’t need their money,” Lazerow says. But WPP was itching to make a social play, if not with Buddy Media, then with a rival, he explains.