Jonathan Spier, chief executive officer of social-media analytics company NetBase Inc., had the chance to win multimillion-dollar contracts for his 25-person firm if he could answer one question: Why do men sport stubble?
The query, posed by a consumer-product company to more than 100 firms, had to be answered by mining millions of postings by men on social-media sites. NetBase’s software, which reads and analyzes 50,000 sentences a minute, helped it seal the deal.
“The technology reads and understands every sentence of every document that we touch from billions of Web sources,” said Spier, whose Mountain View, California-based company now employs 50 and works with Coca-Cola Co., Kraft Foods Inc. and Procter & Gamble Co. “It’s all oriented around what businesses need and want from information. That’s our selling point.”
Companies may more than double the amount they’re spending for online data to $840 million in 2012 from last year, according to New York consulting firm Winterberry Group LLC. At the same time, social-media monitoring sites are being snapped up by software and market-research firms. That’s because Twitter, Facebook and blog postings can be windows into the thinking process of consumers, said Debbie DeGabrielle, chief marketing officer of Visible Technologies.
“For years advertising was one-to-many, and then there was all this big hoopla about how to do one-to-one advertising, with the advent of the Web and Web metrics,” said DeGabrielle, whose social-media analytics company is based in Bellevue, Washington. “Social intelligence is the iteration beyond that -- it is not mass personalization, it is personalization one-to-one, to many.”
Getting the Message
Visible Technologies has increased revenue more than 18- fold since 2006, posting $9.8 million in sales last year, according to Inc. magazine, which ranked the company the 15th fastest growing in its industry this year.
“Companies need to acknowledge that this social dialogue will occur whether they like it or not, without their ability to control it. But they can choose to participate in it,” DeGabrielle said.
Advertisers in the U.S. are getting the message. They will increase their spending on social-media sites by 24 percent next year to $2.09 billion, according to EMarketer Inc. in New York.
The information can help companies avoid product disasters. When Coca-Cola released New Coke in 1985, it committed one of biggest blunders in marketing history, “spawning consumer angst the likes of which no business has ever seen,” the company says on its website. Some three months later, the company returned its original soda to the market. Stan Sthanunathan, vice president of marketing strategy and insights for Coca-Cola, doubts it would have taken that long to react in today’s world.
“Back then people had to write letters and send it to us, saying ‘please bring back old Coke,’” Sthanunathan said in an interview from Atlanta. “It came out in large numbers, but it came after a few days. Right now, people will tell you that in a matter of two minutes, on their Facebook page.”
Gap Inc. experienced such a reaction this month when it briefly replaced its iconic blue box logo with a new design. The new logo was widely panned online, and the San Francisco-based company pulled the plug on the project a week later.
“We did not go about this in the right way,” Marka Hansen, the Gap brand president in North America, said in an Oct. 11 statement. “We recognize that we missed the opportunity to engage with the online community.”
‘On the Map’
Adobe Systems Inc.’s purchase of Omniture Inc. for $1.8 billion last year raised the profile of social-media analytics, according to John Lovett, a senior partner at Web Analytics Demystified. Acquisitions in the industry have reached $2.5 billion, he said.
“That helped to a great extent to put our industry on the map,” said Lovett, who is based in Merrimack, New Hampshire. “The potential is that the companies that are swallowing the companies are going to be swallowed by even bigger companies.”
Other deals over the past few years include Nielsen Co.’s acquisition of BuzzMetrics Inc. in 2006. TNS Media Intelligence, which bought Cymfony in 2007, was subsequently purchased by WPP Plc unit Kantar Media. JD Power & Associates acquired Umbria Inc. in 2008, and, last month, ComScore Inc. bought Amsterdam- based Nedstat for $36.7 million.
“A big part of what this is, is large research companies, the billion-dollar players, realizing they need to fill out their portfolios,” said Joel Rubinson, president of Rubinson Partners Inc., a marketing and research consulting firm in New York. “You want to have a complete offering for a global client.”
Traditional market research, which involves surveys or focus groups, can be backward-looking or shaped by the questions asked, instead of tapping into what consumers themselves want to discuss or comment about online, Rubinson said.
Monitoring social media for insights doesn’t always uncover the next big thing, according to Sandra Fathi, president of Affect Strategies, a New York-based public-relations, strategic marketing and social-media firm. There’s the issue of listening to the “loudest” bloggers online instead of getting an aggregate of consumer sentiment, she said.
“People tend to react when they have extreme emotion, whether they absolutely love something or absolutely hate it. Those who are indifferent tend to be a bit more silent on social media,” Fathi said. “Companies can be mislead by listening too closely to those voices on either end of those extremes.”
Another stumbling block is sarcasm, said NetBase CEO Spier. And simple keyword searches for a product and words such as good, bad, love and hate won’t necessarily tell you a consumer’s true opinion.
A sentence that declares a product “has never been good,” versus one that states a product “has never been this good” have completely different meanings, Spier said. NetBase has hired several linguists to help. He says the company’s software is 90 percent accurate in determining a consumer’s opinion, compared with 50 percent for a simple key-word search.
So why don’t men shave more often? A NetBase search found 77,000 mentions of stubble online in less than six seconds. The company then isolated all the positive comments, categorized them into themes, and built a chart in less than an hour displaying the reasons according to percentage.
The answer: The main reason men wear stubble is because they perceive it to be sexy.
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