Thursday, March 31, 2011

Radian6 Sells for 10X Revenues to Salesforce

There's over 100 tools available to measure or monitor social media traffic, but ask the average marketing pro for a product by name and they're most likely to mention “Radian6.” Whatever you think of their products – and there are detractors – the Canadian company has done an undeniably phenomenal job at marketing itself.

This week, we learned that Salesforce has acquired them for $326M in cash, plus $50M is stock. In interviews, Salesforce CEO Marc Benioff claimed Radian6 has annual revenues of about $35M, so he paid a handsome 10X multiple. Why so much, and why now?

Despite the cruddy economy, there's a nascent bubble emerging in social media-focused companies. Evaluations are skyrocketing even for start-ups unencumbered by income of any kind. Radian6 is on the peripherary of this market, but no doubt the evaluation reflected some of this hype.

Second, Radian6 has attracted a large pool of the kind of customers attracted to Salesforce's core CRM technology. At between $400 and $600 per month, Radian6 was priced such that SMBs could buy-in. The company also did a great job at selling through influential intermediaries – advertising and PR agencies.

Finally, the company ate its own dog food. The social media outfit worked the social media world tirelessly. Anyone remotely connected to their world, even lowly Uninfluentials like me, have been contacted by them.

Did Salesforce pay too much? Maybe. Certainly the hopes of many competitors will have been raised, and rightly so: expect more consolidation over coming months. Arguably there's also a new opportunity for these other companies to take up the position Radian6 held, and become the “leading independent” in the category. For sure, this is an early-stage market. Radian6 is a good company, but there's plenty of room to improve on their technology, and I speak from experience.

Tuesday, March 29, 2011

Is the Public Relations Bubble About to Burst?

A few weeks back the good people of the Publicity Club of New England invited me to speak on a panel with journalists from TechTarget, InformationWeek, and Mass High Tech, as well as a director from the PR agency Weber Shandwick

Ostensibly, the subject at hand was advice on launching a new technology product, but as is often the way with these kinds of events the conversation got tangential and we talked about a host of entirely unrelated topics. Things really got interesting when the journalists discussed the harsh realities of their working world. We all know that journalism is getting a beating these days and that the underlying economics of the news business stink, but hearing firsthand how threadbare tech journalism has become was shocking. The pool of professional journalists is evaporating fast.

Nor are new professionals entering the field. Earlier the same day I'd gone for lunch with an industry analyst, an old friend from my days teaching at university, who told me that journalism undergraduates are openly questioning what career future they have in an environment that places little value on professional news gathering.

None of this is new. What struck me, however, was the apparent nonchalance of the PR professionals attending the event. I'd argue that the wholesale destruction of professional journalism will have profound repercussions for PR pros, yet I don't see much concern.

The Hack/Flack relationship is symbiotic: If one disappears then arguably so goes the other. PR professionals, and especially PR agencies, need to rethink what value they deliver and how they fit in a new ecosystem for information gathering and sharing. Some thoughts:

  • The Content Kingdom?
    If journalism is crumbling, where will authoritative content come from? The question seems ridiculous, given that we're all drowning in a sea of conversations, a Babel of social media banter. Everyone's a journalist, right? The reality is more complex. Increasingly, creating credible, trusted content – developing a voice that is a part of the social media landscape – will be a critical part of PR. To my mind, this requires a degree of authenticity and originality that places a new burden on PR professionals to do what journalists have done.
  • How does news get transmitted?
    The age of mass media is dissolving so that most of us are exposed to numerous different sources of news and information, rather than a few monolithic and ubiquitous news organizations with formidable reach and influence. How information gets transmitted – and retransmitted – across a web of social connections is a problem that will plaque PR pros. In the old, massive media days, it was easy to operate within a limited network of gatekeepers, or push press releases out to a waiting audience. With this gone, PR pros need to think about how they can influence awareness and drive information transmission.
  • How do you measure success?
    One of benefits of our always on, always online world is that everything becomes visible and hence measurable. This is a boon to PR pros, who can make themselves more relevant and more effective by taking accountability for more meaningful business outcomes. Gone are the days when PR could measure activities and feel that is enough. And measuring nebulous levels of “awareness” is only a step in the right direction. PR pros need to meet real business goals – and take actions now to figure out how they can hold themselves accountable.

Monday, March 21, 2011

Book Review: Social Media ROI by Olivier Blanchard

Search on “social media” on Amazon books, and you get an astonishing 1,300 titles – you'd never know there's a crisis in the publishing biz judging by this embarrassment of riches. For those seeking guidance on social media, this overabundance makes it a struggle to sort the wheat from the chaff.

First-time author Olivier Blanchard's book initially caught my attention because of the brevity and bravery of the title; many writers may have been tempted to appended a question mark after Social Media ROI, but Blanchard is fearless. He is trying to address the key question being asked by many in marketing, public relations and the media, and he does so with clarity and without dodging the complexity.

The book is especially good at rooting social media in a recognizable marketing landscape. Readers familiar with marketing principles, strategy, goals and objectives will quickly understand Blanchard's arguments and frame of reference.

The book is refreshingly straightforward in determining what a meaningful ROI should be, and realistic in how to attain returns. I'd have liked to have seen more real-world examples (and less of the now tired case studies from Dell and the like). In places the book labors the obvious.

The book is not for those looking for tactical details on how to use Twitter, Facebook and the rest, or indeed an understanding of the tools and techniques for measuring ROI – Blanchard defers to others on these details. Rather, this book will help marketing pros understand how social media can play a role in programs and campaigns, and suggest ways of using social media that are results-oriented and driven by common-sense business objectives.

I'd specially recommend the book for marketing managers.

Tuesday, March 8, 2011

Is “Ethical PR” an Oxymoron?

It's very hard to conjure up a sentence containing the words “ethical” and “public relations” without inviting ridicule and invective. In the popular imagination the whole point of public relations is to flex the truth, to manipulate and obfuscate the facts of things in the self-serving interests of a client. In the war between Hack and Flack, most often it's journalists who come off as the protectors of truth's virtue, and PR pros as grubby low-lifes. They make Oscar-winning movies about investigative journalists; I can't think of a single movie that has a flack as its hero.

This all came to mind when I read that Cambridge-based consulting firm Monitor Group had taken on Moammhar Khadafy and Libya as a client, their brief being to somehow rehabilitate the dictator's image and “generate positive news coverage of the country.” Yuck. Then today Kirk Hazlett, writing on behalf of the Public Relations Society of America in the letters page of the Boston Globe, felt inclined to point out that (a) Monitor Group is most definitely not a public relations agency, and (b) organizations like the PRSA have a code of ethics designed to deal with just these sort of nasty situations. Needless to say, Hazlett's letter was greeted with the ridicule and invective mentioned above.

So, what's the truth here? Are PR firms – and their employees – a bunch of unscrupulous peddlers of lies, damn lies and even more damn lies? Are they turning a blind eye to obvious evil in exchange for a retainer contract plus expenses? Do they meddle in political affairs and do business with dictators?

Well, sometimes.

Lets first agree that if your client is Rwanda, Uganda, Kazakhstan or Sri Lanka, you're doing business with folks that have reputation issues that go well beyond your usual brand management challenges. These countries, and others like them, engage in torture, corruption and murder of their own citizens on a grand and well-documented scale. And they've all had representation by PR firms, including major names like Hill & Knowlton. Edelman represented Yugoslavia in the 1970s, and even today the Brit PR agency Bell Pottinger is representing Bahrain. Rehabilitating third-world despots is a thriving business.

So, whatever the PRSA may say, plenty of PR firms do deals with devils. But is this sufficient to damn a whole industry?

Of course not. The other side of the flack coin is that many agencies do wonderful work for organizations that are fighting the most to make changes in these dictatorships. Amnesty International, UNICEF, Oxfam and others have all relied on agency support.

The problem, I suspect, is in the toothless declarations made by organizations like the PRSA about “codes of ethics.” We should ask ourselves what consequences arise if these ethical codes are violated, and to what extent the PRSA and others police agencies to ensure compliance. It's interesting to note that whenever a TV shows attracts the ire of public watchdogs, as MTV's Skins has recently done, advertisers vote by removing their financial support. I don't see many clients of PR agencies taking a similar view, and this too should be questioned.