Author: Leon Chaddock

I was one of the first to found a social media monitoring/analytics company in 2005. At this time I didn’t even know this is what the industry would end up being named. In fact when I started there was no Twitter or Facebook.  I had outsourced to a team of developers and built some blog search technology, the plan was to use advertising as a business model.

I soon started to use this technology to research where I would go on holiday, what to buy, pretty much anything you could think of and it was at this point I realised the immense value in this social media content for businesses, and hence the dawn of Sentiment Metrics.

As I have grown this company from just me, to a dynamic team with offices in the UK and Australia, and over 400 clients through our own internal sales and partner network, it has been interesting to watch what has happened.

A couple of years ago I watched as acquisitions in this space began to kick off. SM2 were sold to Alterian for around $5 million. I had spoken to SM2’s CEO several times at this point, but I am yet to understand the reasons for such a low value sale. This felt very early to me and they isolated one of their biggest partners Meltwater, that soon moved on and left their platform.

Of late we have seen acquisitions of Sysomos and Scout labs for $20-30 million dollars. Most recently as everyone knows Radian6 was acquired by Salesforce for over $300 million, at a multiple of something like 15 times their annual revenue.  Which is BIG…

So why is this happening?  

Apparently there are now over 300 competitors to Sentiment Metrics, however only a few are enterprise grade, and of those few the majority of these have now been acquired, and for large multiples.

The reason this is happening is simple supply and demand. Enterprise companies are starting to realise the enormous value in the data we collect, and analyse and the value this offers in nearly every area of a business. They need to utilise this intelligence, and they need to do this now.  For enterprise companies looking to offer and integrate these capabilities the problem is it takes a large amount of time and a high investment to build out this technology, so there only viable route is through acquisition. As Salesforce CMO Kendall Collins said, it would have taken at least three years for Salesforce to build the technology in-house, when discussing why they acquired Radian6.

I have managed to build up this company without VC and still retain 100% ownership which I am immensely proud of. In fact this is probably one of the reasons Nathan Gilliatt one of the leading commentators in this space now tips us to be one of the next acquisition targets.

So is this the end of the independent Social Media Monitoring Company?

I don’t think so, I think there will be more acquisitions in this space, but I think one or two will break through and become large $500 million companies in their own rights. Are we going to be one of these? I certainly hope so. We have the technology to do this, it’s whether we can scale our sales team to get us there, against the large teams of Saleforce et al. It’s an arms race and it’s getting interesting!