Whenever Silicon Valley companies are sold for around the billion dollar mark, you kinda need to take some time to reflect *why*. Generally it’s not the case that their valuations are driven by their balance sheets or profitability, more their driven by their vision and their market leading position in their specific niche.
Whilst most chat recently has been around Facebook’s IPO, Buddy Media’s $800+ million sale to SalesForce.com has been widely overlooked for its significance – significance of its deal size significance of where it suggests the clever guys at Salesforce / Buddy Media (and its backers, including WPP) think the future (or at least a large part) of advertising lies, which seems to be *social media management apps* (SMM). WildFire’s recent sale to Google for $250+ million also backs up the significance of the SMM space.
SMM apps are, and will become, such a big deal because social media is inherently inefficient, and there needs to be efficient ways for brands and agencies to manage all their social media activity. As social media diversifies even more – with more networks and more ways of interacting with them – then the more use SMM apps like Buddy Media become. And arguably, these SMM apps could prove just as valuable the networks themselves as they provide a centralised third party way to interact across them all – enabling the SMM to take a slice of the action across not just one social network, but all social media activity, which is a nice slice to own.
So I guess the interesting question is – who’s the next Buddy Media? And the answer here is *whoever else can come up with apps to help help empower agencies and brands and make their lives easier (and the quality of advertising better)*. By this I mean companies like mine – VAN – who are building tools to empower agencies and advertisers.
VAN is a spin off company from an ad agency I founded, and is designed to help other agencies do what we do (i.e. seed viral videos) – but in an automated way, replacing people with algorithms – and therefore allowing us to help 10,000’s of agencies and advertisers at once rather than 10’s. The idea for VAN came from observing the inefficiencies of social media, and wanting to develop a more efficient social video distribution system to help both bloggers and advertisers.
Of course apps and algorithms will never replace the need for awesome ideas – the bread and butter of good advertising – but what they can do is help empower those ideas makers to make better ideas and execute them more efficiently, which isn’t a bad thing . . .