Buddy Media Turns a Page | Adweek Buddy Media Turns a Page | Adweek
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Buddy Media Turns a Page

The company's popular platform for Facebook brand pages faces new rivals
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One of its bigger rivals is Wildfire Interactive, a two-time winner of seed money from Facebook’s fbFund, which lends capital, mentoring, and marketing to developers. It’s even used by Facebook itself to manage its 50-plus fan pages. Another, Vitrue, also offers location-based mobile marketing software to clients like American Express, McDonald’s, and AT&T—and as of February 2011, the company had been tripling its count of blue-chip clients on a quarterly basis. Context Optional, the social CRM company that sold in May to digital ad company Efficient Frontier for $50 million, provides a menu of options, including display and search ads, and social community management to clients like Dr Pepper and Wells Fargo. There’s also Syncapse, Shoutlet, and KickApps, all of which have respectable chunks of venture backing. Friend2Friend provides customizable campaigns and dashboards to clients like Universal Pictures, Focus Features, and Volkswagen. ThisMoment last year launched a platform that unifies brand channels across YouTube, Facebook, Myspace, and other social networks globally.

These competitors for the most part embrace Buddy Media’s software as a service (SaaS) model, pioneered on the Internet in other categories by the likes of DoubleClick, Omniture, and Salesforce.com. It means they make money on software licensing fees and stay clear of the ad agency game. Once a client is set up, it’s mostly self-service, on a one-size-fits-all platform. The model has the benefit of scale, speed, and simplicity—but the detriment of inviting pricing competition.

“It’s clearly not difficult to [build a platform],” says Vince Broady, CEO, ThisMoment.

“It’s just software,” adds Scott Johnson, managing partner of New Atlantic Ventures, which invests in ad startups. “It can always be copied, improved, and out-marketed.”

The point is not lost on boutique shops that offer both marketing and technology services, such as Mr Youth, Banyan Branch, Carrot Creative, noise, and Resource Interactive.

“If they’re just a tool, then it’s a race to the bottom on price,” says Matt Britton, CEO and founder of Mr Youth. The shop, launched in 2002, offers services including brand development and online creative—for Neutrogena, for instance, it created a Web series—as well as custom social software.

“At the end of the day [these software kits] are tools—not full solutions,” adds Chris Petescia, chief product officer and co-founder of Carrot Creative, which specializes in social media strategy, design, and development. (Red Bull, PepsiCo, and MTV are among its clients.) “They are by necessity templated (read: rigid) and priced at a per-build fee.”

Creating custom platforms, says Blake Cahill, a principal at Banyan Branch—which launched as a full-service shop offering both technology and marketing services—is part of the evolution of social advertising. Ten years ago, every website, he says, was designed with an out-of-the-box template; now, they’re all custom built. He believes brands will quickly outgrow the offerings of Buddy Media and its software-only peers as they seek more unique user experiences and more control over their social campaigns. 

Lazerow counters, “We see our system as foundation technology that probably gets you 90 percent of the way there to what you need. And if there’s something you need to do custom on top of that, great. We are not in the world of mutual exclusivity.”

And, of course, tiny agencies can’t scale like an SaaS company—a creative shop can only take on so many clients at once. Also, the turnaround time is slower; Carrot Creative typically takes a month and a half to get a custom social platform out the door, for example.
This may be why Lazerow says Buddy Media isn’t too concerned about the competitive threat. Which isn’t to say it’s not watching its back. The company, for instance, has been racing to roll out new products, and Lazerow admits that, at one point, Buddy Media was too  dependent on Facebook.

The company’s offerings now also include: ConversationBuddy, a publishing platform and dashboard used by clients like Mattel and Johnson & Johnson to manage discussions on Twitter and Facebook; ReachBuddy, which helps clients like PepsiCo and Hearst Magazines Digital Media integrate social content from Facebook and Twitter into their websites; ConversionBuddy, a set of sharing buttons designed specifically for e-commerce; and a full analytics suite, the result of its acquisition of Spinback in May.

Buddy Media’s own platform is open to developers as well, allowing publishers and agencies to build apps that can be syndicated to their own clients.

And the company hasn’t hesitated to drop big branding dollars of its own, uncommon for a b-to-b software provider. It has burned up to $40,000 in a month on marketing, plastering its colorful “Power Your Connections” campaign (a shift from its previous imagery of utilitarian power tools) across airports, events, and in magazines. “I don’t think anyone can doubt that we’ve out-marketed and outsold everyone combined,” Lazerow says.

Buddy Media also remains on the prowl for acquisitions and recently hired Dennis Morgan, the man behind $5 billion worth of acquisitions at Yahoo, as its CFO. He’ll have plenty of money to play with in his new role: Of Buddy Media’s $90 million in venture backing, it still has around $70 million sitting in the bank. The category is expected to capture $3.1 billion in ad spending by 2014, with VCs, brands, and agencies all eyeing that growth. Buddy Media won’t be the only one with money to burn.