5 Reasons for Consolidation in the Social Media Monitoring Industry

The social media monitoring (SMM) industry is booming. Pure play SMM software providers, startups, traditional web analytics firms and now the large software companies are making advances in the field.  Ken Burbary has a wiki listing many of them, worth checking out.  If you work for one of the smaller companies, get to know your competitors big and small – in the next couple of years you could be working together or could watch them eclipse the competition.   Here are five reasons to expect more upheaval in the industry – what did I miss?

1. Scale and Demand for Sophistication

We’re all watching big brands like Ford, Pepsi and Starbucks jam away in successful social media endeavors.  The bigger the brand, the bigger the need for processing power to really crunch the data to make it meaningful – and the more internal skills and resources will be required to get access to the data.  A web analytics analogy would be using Google Analytics for a large $100M+ eCommerce site.  Those in the business know it isn’t enough to get the sophisticated level of measurement required, and many of these tools lack the robust UI and toolset to meet all requirements.

2. Business Process Changes

Many SMM tools leverage workflow to route mentions to the right person or department for triage.  Having spent years back in the heyday of SAP ERP configuring workflow, this is a deep rooted business challenge that takes thorough design effort to make effective.  Decision trees are not easy to build, and as more and more companies leverage these features, complex organizations will demand best of breed products.

3. The Data Isn’t Interesting

The numbers are the numbers.  “Number of mentions” is a just pile of comments – they have to be sorted through and made relevant.  It takes people with analytical skills to tell what they mean, intepret the story, and ultimately mine the information to translate them into actionable insights.  The tools that make this job less labor intensive will be more successful at market penetration and meeting the demands of agencies, consultants and internal departments spending energy to leverage them.

4.  Sentiment Analysis is Useless (By Itself)

Maria Ogneva wrote a terrific Mashable article about how to get the most out of  Sentiment Analysis for businesses.  The fact remains that even as these automated tools improve, they require manual labor.  If a tool is 80% accurate in automatic sentiment measurement, someone has to go through to find the 20% that aren’t.  The tool that has the best, most accurate options for making that data useful and less labor intensive will be sought after – but that technology could come from a big company with heavy R&D or a startup.  Who knows, but the best tool will make lives easier for practitioners.

5. Industry Growth

IBM just recently announced an entry into the SMM market.  Big Blue.  That should put smaller competitors on notice – either they need to improve to compete with Big Blue, or work on their exit strategy. Traditional web analytics companies like Webtrends and Omniture are adapting their offerings.  Forrester and other industry data shows continual growth and adoption of social media channels by consumers – increasing the urgency for companies to listen.

What did I miss and where do you think this industry is headed?  For posterity, wondering what the folks from Radian6 and Alterian think – two great companies we tend to see and work with most often.

Photo credit: xrrr via Flickr

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  • http://twitter.com/jimmyrey Jim Reynolds

    Adam,
    Great post! This has been quite the topic recently with the acquisitions of Scoutlabs, Buzzgain, Filtrbox and biz360, and I don't assume it's going to stop anytime soon. As for the reason behind many of these acquisitions is that social media just like any other data source (survey data, web analytics, research data) is only telling part of the story. Everyone one of these acquisitions highlight the penetration into the enterprise and the future of where social media is going. Once these data set's start being integrated and overlayed with each other it tells an absolutely amazing narrative of the voice of the customer.

    Seeing that we were one of the first to acquire a company (Andiamo Systems) and also get acquired ourselves (Techrigy was purchased by Alterian), we've been counting down the days till there will only be a handful of stand alone players.

    One question that I see missing even though you noted IBM, is how long will it take until Google, Microsoft or Oracle make an acquisition or just use their muscle to enter the market.

    Thanks for the shout out Adam!

    Jim Reynolds
    Alterian
    @jimmyrey

  • http://adamhcohen.com adamcohen

    Thanks for weighing in Jim. We should see more from Oracle, Cisco, SAP (aka the “big dogs”) that are tied to data in some way. They come to mind not just due to their R&D muscle, but their prevalence in the CRM space in big Fortune 500 companies that are mining data for business intelligence already. Looking forward to seeing where this is heading.

  • http://filtrbox.com/blog arinewman

    Adam, your points are right-on in terms of what we'll continue to see in the space. I'll echo Jim's comment about the powerful narrative the data tells once its part of the bigger picture. A few other things I think we'll see is a deeper separation in the market between the high-end vendors and the smaller folks, and the beginning specialization where some vendors focus on certain areas of SMM+E (engagement, influence, workflow, etc). Usability and “empowerment” become critical as these tools get deployed across functions.

    Best,
    Ari Newman
    Jive Software
    @arinewman

  • http://adamhcohen.com adamcohen

    Great thoughts Ari. I think the differentiation between high end vendors and the smaller folks is a great way to think about it, but they also need to focus on the value of the differentiation. Today a lot of the smaller folks can compete because they have 80-90% overlap of functionality of the bigger folks, with a freemium or much cheaper price point.

  • http://spotlightportfolios.com/ Allen – Personalbrander

    Monitoring conversations has become the today's market! I would like to see more changes to these tools rather just measure activity in aggregation and of course which are high in price! May be in future I guess someone finds a real-time conversations monitoring tools!

  • http://twitter.com/sbarnes0215 Sarah Barnes

    Your points are right on. It’s important to remember to look at the bigger picture, as social media is non-linear. I’d also like to point out that competitor analysis is another important feature of SMM tools! Competitors are part of the big picture in monitoring.

    Sarah Barnes
    MutualMind
    @mutualmind