Thursday, June 14, 2012

A Look at the Social Media Marketing Sector

It is one of the hottest spaces in the technology sector right media marketing. The torrid growth over the past several years of social networking services such as Facebook (Nasdaq: FB) and Twitter has presented companies with both new marketing opportunities and new marketing challenges.

Companies today need to keep pace with their customers, many of whom now use social media to talk about firms and their products. Companies gaining intelligence from conversations by consumers across social media will allow them ideally to create a stronger brand image, products more suited to consumer tastes and improved customer service. Since this industry is still in its early stages, even companies in the same sector such as GM and Ford, are pursuing differing social media strategies as my recent article pointed out.

Because of the rapid growth in this area, there is hotly-contested race between software powerhouses – Oracle (Nasdaq: ORCL), SAP AG ADT (NYSE: SAP) and (NYSE: CRM) to become a dominant player in the sector. The field is one where Facebook has generated a ton of traffic, but with no direct revenues flowing through to the bottom line. As many analysts have said, it is a “missed opportunity” for Facebook to generate additional revenues.

Facebook allows companies to market on its platforms for free. As companies look for ways to monitor and manage an increasing number of Facebook pages and fans along with other social media sites like Twitter, social media marketing firms (which did not exist not long ago) are stepping in to help companies. Facebook calls these firms “partners” and gives access to its platforms free of charge. But, in turn, these firms are charging corporations a fee for use of their software which track their performance on Facebook and other sites.

A number of these firms have been snapped up recently by the aforementioned Oracle, SAP and, folding these companies into their portfolio of software offerings. Some of the most recent deals include's $689 million deal to acquire Buddy Media and two purchases by Oracle – Virtue for $300 million and Collective Intellect for an undisclosed sum. Last year, started the feeding frenzy with its purchase of Radian6.

These deals highlight a growing macro trend technology investors should be aware of...the line between marketing and technology firms is becoming increasingly blurred and morphing into one. As Salesforce's CEO Marc Benioff said recently, “The marketing industry is undergoing the biggest transformation it has seen in 60 years. Facebook has become the new corporate homepage.”

Investors should expect the trend of software firms acquiring social media intelligence companies to continue. Zach Hofer-Shall of research firm Forrester stated this week “This social technology arms race is the start of something very big to come.” He should have added that the big – Oracle, SAP and – will only get bigger in the field. Their profits will grow larger too unless, maybe, Facebook decides to monetize the marketing occurring on their site and start charging the software companies fees for access to their platforms.

This article was originally written for the Motley Fool Blog Network. Make sure to read all my daily articles for the Motley Fool at


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  2. Social media marketing, undoubtedly, is dominating the web. Businesses are relying more on this strategy for establishing brands and improving customer service. Aside from it can easily be accessed by anyone with internet connection, it provides more interactive solutions, and a wider target market reach. It’s no wonder was accepted by and easily reached by the consumers around the world.

    Staci Burruel

  3. Because more and more people are using social networking sites, companies treat it as an opportunity to market their products or a way to engage ordinary people in conversations. Also, just by following their tweets, blog and FB status, marketing teams can quickly gain new ideas to promote products in a more effective manner.

  4. I agree with Darryl Prinz. Social media is the fastest way to connect with your consumers without physical interaction. What is important here is that you were able to send messages to followers and provide real-time updates. Still, companies should promote responsible marketing. It is not advisable to attack competitors online, or to let your consumers say bad things about them. The market is filled with stiff competition, but one should play fair and square.

  5. Social media maybe a considered a new tool in the marketing world, but it is already creating a buzz on the business sector. Apart from being cost-efficient and user-friendly, social media can send your message to a variety of audience in a fraction of time. In addition, you can easily keep track of the efficacy of these channels via immediate audience feedback.

  6. Most companies nowadays understand that social media plays a big role in consumer engagement. And with the continuous innovation of technology we’re seeing today, almost all people around the world use social media platforms. And these platforms can be the avenue of the companies to be known and seen.

  7. Like what Staci said, social media marketing is dominating the web. Everybody is now on the internet, and it has become a part of their daily life. It also provides an open line of communication for faster customer service, for everything is done with just a single click. Social media makes it appear as if everywhere is just within reach.

    -Neil Linnen