Buddy Media Attracts World’s Top Brands With Facebook-Management Platform
In February, the Facebook page for the popular snack brand Pretzel Crisps had drawn only 6,800 fans. So Jason Harty, director of field and interactive marketing for the brand, launched a campaign on Facebook offering a dollar-off coupon to anyone who became a fan. In two weeks, the fan base grew to 13,700 for Pretzel Crisps, which is made by Skillman, NJ-based Snack Factory. A few weeks later, in the middle of the night, Harty decided to sweeten the offer. With a few clicks, he revised the coupon to buy one bag, get one free—a $4 value. In 36 hours, Pretzel Crisps had 29,000 Facebook fans.
The software platform that allowed Harty to act on his midnight marketing whim is made by Buddy Media, a fast-growing, New York City company that was founded in 2007. The company has since amassed an impressive client list, which not only includes Snack Factory, but also Mattel, Aflac, Sony, Johnson & Johnson, Discovery, and many more. On August 15, Buddy Media raised $54 million in a Series D funding round, bringing its total venture haul to $90 million.
Some members of the financial press estimated that the Series D round valued Buddy Media at a half-billion dollars. In an interview a week later at Buddy Media’s headquarters, the company’s co-founder and CEO Michael Lazerow declined to confirm the valuation estimate, except to say, “We didn’t say it was wrong.” Instead, he chose to focus on how the company will use the cash going forward. “We have to go global,” says Lazerow, a former journalist who founded the company with his wife, Kass, the company’s chief operating officer. “Only 25 percent of people on Facebook and Twitter are in the U.S. So we have brands telling us, ‘We need help.’ It’s a huge opportunity.”
The platform that Buddy Media is taking global is, in its simplest terms, a social-media content-management system. While it’s true that marketers can use Facebook’s own tools to publish basic fan pages and the like, Lazerow believed companies would need far more sophisticated capabilities. So he and his team of engineers built software that offers a drag-and-drop system for doing everything from tailoring content to specific countries to tracking tweets and retweets of wall posts. “Our strategy is to help customers use social media to better engage with their customers, and with the data about their customers,” Lazerow says.
In his corner office on Manhattan’s west side, Lazerow pulled up some Facebook pages to demonstrate Buddy Media’s capabilities. Brand managers in different countries can use Buddy Media to design pages specific to their locale. If someone in Israel clicks over to the Facebook page for a consumer brand, for example, the system automatically detects the location of the user and pulls up a page in Hebrew that’s all about that brand’s products available in Israel. Brand managers can monitor wall posts in real time, and set up filters that will alert them to anything that they need to track carefully, such as comments about competitors. “Our clients don’t have to log into Facebook” to manage their pages, Lazerow explains. “My mom, who doesn’t use the Internet, can use this.”
Pretzel Crisps’ Harty says Buddy Media has made it simple to offer a variety of features on Facebook, including sweepstakes and ongoing content such as recipes for dips that go well with the snack. Harty is also tracking the effectiveness of his Facebook campaigns. The dollar-off coupon scored an 87 percent redemption rate, while the buy-one-get-one free offer was redeemed by 95 percent of Facebook fans, the company found. In the year ending in July, sales of Pretzel Crisps grew 93 percent over the previous year, according to market research firm IRI. “It was validation of the importance of giving value to fans,” Harty says. “This allowed us to get our product out to new customers.”
Buddy Media’s customers pay about $5,000 a month in licensing fees, Lazerow says. Within two years of launching the product, the company hit $1 million in monthly recurring revenues. “The next million took five months, and now we’re cranking,” he says. The company is profitable on an operating basis, he adds.
Buddy Media is facing plenty of competition, not only from Facebook’s native page-building capabilities, but also from about 100 startups, Lazerow says. But he’s not worried. In fact, part of the plan for the newly raised capital is to buy up rivals that he believes will enhance Buddy Media’s platform. On May 12, for example, the company bought Spinback, which makes social-commerce and analytics tools. “That gave us conversion tracking—the ability to track retweets of wall posts and different layers of sharing,” Lazerow says.
Jeff Richards, a partner at Buddy Media investor GGV Capital, says his company spent about six months talking to top brands about the social-media landscape before deciding to invest. “There was a lot of noise, but when it came down to direct competition for the top 500 brands, there were only a few players, and Buddy was always in the conversation,” Richards says. “They were winning the deals.”
Still, says Richards, the company will have to stay on its toes to keep ahead of the competition as it expands into other countries. “This market is changing quickly and it’s going to get more competitive as the opportunity gets bigger,” Richards says. “Customers are going to want more functionality, quickly.” Participants in the Series D funding round included GGV, along with Institutional Venture Partners, Bay Partners, and Insight Venture Partners.
On July 20, Buddy Media opened a European headquarters site in London, and Lazerow says his team is currently exploring opportunities in other regions. Overseas sites will be staffed with sales and support folks, he says. The company—which has grown from 40 employees to 200 in the past year—is also looking to add salespeople and programmers in the U.S. Buddy Media prides itself on its live customer support: All customer queries are answered within a half hour, Lazerow says. And the company trains marketing managers to use its platform at live sessions it calls “Buddy University,” which attracts about 500 people a week.
Lazerow, who founded three companies before Buddy Media, didn’t start his career expecting to make a mark in social media. After receiving a journalism degree from Northwestern University in 1996, he worked as a reporter, most notably at Roll Call on Capitol Hill. But his love for Facebook convinced him that social media would eventually play an important role in the business world. “I knew Facebook would be a wedge to open up the Web, and that it would affect content, marketing, and publishing. It became apparent that companies would need help managing their content in this distributed social world.”
While some Internet experts warn of “Facebook fatigue,” Lazerow is confident that companies will always need social media—as well as an easy way to control their presence there. “We now touch 700 million people on Facebook across our platform. The more you humanize your brand, the more you connect, the more you put people first, the better you’ll do as a business, we believe.”
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