On Monday, social marketing software company Buddy Media announced that it had acquired UK-based Brighter Option, provider of a self-serve ad product via the Facebook Ads API. Terms were not disclosed. Read the release. According to a post on his company's blog, Buddy Media CEO Mike Lazerow said about the deal, "... integrating [Brighter Option's] social ad management software product into the Buddy Media suite, will ensure that our customers' social marketing dollars work harder and smarter. Engagement data from advertisers’ Facebook Page posts made via Buddy Media can now be used to power social ads." Read more.
On Monday, Lazerow discussed the social ad business with AdExchanger and the implications of the Brighter Option acquisition.
AdExchanger: Lots of talk these days about “ad stacks.” Do you think there's a "social ad stack," if you will?
ML: No. I don't think there's just one social ad stack. If you look at email, video and search and a lot of other industries that have come out of digital marketing, they're really verticals. We're moving into a world where social is actually a part of everything, just like mobile is a part of everything.
From our perspective, we are making a bet that advertising is moving from the front end of the campaign, where you're trying to get people to do stuff they don't want to do for the most part - usually in places they don't want to do it - to the middle and end of the campaign, meaning you put out content through all the channels you already own, and then you figure out what people are telling you with their comments, clicks, likes, tweets and retweets and everything else.
What [people] find is most engaging, you take that and amplify the stuff that they actually want, and you do it on platforms that they want to hang out on. So if you like hanging out on Tumblr, great. You, as a brand, will communicate with that user on Tumblr. If Facebook is where people want to continue to congregate, perfect, we'll go to Facebook.
There's nothing about these announcements, in my mind, from any one platform, that basically means that they're going to take over the social advertising world. But as a brand advertiser
What this does mean is that you're going to have to publish content across many different channels where people hang out.
Some of it will be free, like through your websites, email lists and Facebook pages, and some of the content distribution will be paid, meaning you'll pay for more distribution, but it all starts with great content. As a journalist myself, that's why I'm so excited about this space.
Is Buddy Media starting to think about aggregating supply? Put another way, do you think about a supply‑side strategy, where you end up acquiring appropriate content?
We haven't thought about it ‑ to be completely honest. But, we haven't thought about aggregating supply because Facebook, Twitter and YouTube and a few others like Instagram, Pinterest, Tumblr, they're doing that for us. The way they're doing it is by organizing people in a social web who used to hang out on 100,000 blogs. Now they spend most of their time in one of these very large community sites.
We're not an ad network, so we sit on the brand side of the table. “Every brand needs a Buddy.” We're not selling ads. We don't sell inventory. We provide technology and we get paid a license to provide that technology to help them make their dollars go further and connect with other things they're doing.
What you're talking about would get us more into a traditional ad network type world, in which we would aggregate supply and sell that, or deliver that supply to our advertisers. Which to me doesn't feel like the right solution for the marketplace, primarily because we're moving out of this world of starting with "where" ‑‑ so "I want to buy video ads" or "I want to build a Facebook page" or "I want to build a website." ‑‑ into a world where you start with "what is the content I want to create? What is great content that I can create about the organization?"
Then distributing that everywhere I can, in much the same way I do. I like writing. I have a column at Inc Magazine. I have a column at Ad Age. I enjoy it personally. I went to Northwestern, to McGill, I'm on the board there, all my friends are journalists. I just love communicating.
And that's helped Buddy Media, because we've been able to focus on what the content is that we want to create.
How about a BuzzFeed-type of destination site?
Buddy Media has no plans to get into anything even close to that space. [Buzzfeed CEO] Jonah Peretti is a good friend of mine and brilliant at what he does. I would never want to compete with him, just because he is so much smarter than I am, but more importantly, our business model is an enterprise software business, and our customer is the buyer of that software.
Once I start launching sites, I then turn into a seller of ads and I'm trying to not do what's best for my client - I'm actually trying to sell media. I'm not saying that there's not a business there, but for Buddy Media, we build software, we sell it, and we support it.
Why is self‑serve important to Buddy Media?
Self‑serve is not only important, it's critical to Buddy Media because we're not an agency and we don't want to compete with agencies. Most of the other companies in our space are a managed service, so they may have a technology underpinning, but they actually make most of their money off of the services.
We make 90 percent of our revenue off of technology. We license the technology. We don't have the staff to do the managed service. We think that that's ultimately the job of the brand and the agency to do it, that's how they're going to be most successful, by focusing on what is the content, what is the voice.
For us, and with Brighter Option, we really like how a 21‑person company managed last quarter 300 clients, 100 billion impressions, and through a very scalable technology stack. There’s incredible operating efficiency, with this business.
And, the reason why they didn't have to raise a lot of money - they did one round of financing - they funded themselves off of revenue, which is what you're supposed to do as a business – but obviously, if you have to build a building that's going to cost $100 million, you're not going to fund that off revenue, you're going to borrow the money and raise equity.
For Buddy Media, we can't get into the space without having it as a technology. Even if we wanted to, we have too many clients to start to service like an agency.
Self‑service also inspires the idea of local advertising and long‑tail advertisers. Do you think there's an opportunity for Buddy Media to get into the long‑tail advertising crowd through the self‑service tool?
There's definitely an opportunity. We've always had a part of our business that is local business. If you look at the award that we won with L'Oreal, the Forrester Groundswell award, that was about empowering 5,000 local salons to be more successful on Facebook. We know the technology works. We know that connecting with your consumers is as important to a local restaurant or salon as it is to P&G and Unilever and all the top advertisers. It comes down to, in our mind, where do we want to focus the business?
For the time being, we're focused on our core customer, which is an enterprise customer that needs to market a huge company in the States or a big global business. We may attack the local market in partnership with them, but there's been no decisions about launching a standalone, "put in a credit card" self‑serve product. Most of the companies in that space just have not done well.
It's high churn. It's more hand‑holding than you would hope for, and for us, it's just a different business. We work with eight out of the top ten global marketers. We set up this whole business of offices globally - London, Singapore, San Francisco. We're going to focus there for now and see what happens.
The last thing I'd say about self‑serve is Facebook and Twitter - that's really what they're focused on. [For example,] Twitter is now in partnership with American Express to launch a new self‑serve platform.
And, Facebook is constantly launching these programs around "Sign up as a business and we'll give you $25 in Facebook ad credits." Twitter hasn't launched [its small business solution] yet, so I haven't really seen it, but Facebook's system is built for a small business.
By John Ebbert