Dachis Group Plans For A Future Where Social Data Is King

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dachis-feb-13Dachis Group is going after a social marketing opportunity that's much larger than the collective users of Facebook, Twitter, and LinkedIn. As CEO Jeff Dachis likes to point out, about 400 social platforms around the world have more than one million users each.

"If you’re a global brand, what are you doing in Korea? What are you doing in China?" he asks. "What are the different ways that you’re approaching social marketing in those different markets, given that in Russia social sharing, connecting and engaging is a different thing than it is in China or than it is in Japan? "

It's been nearly five years since Dachis launched Dachis Group with backing from Austin Ventures, to help answer those questions. Just as he did with his previous company, Razorfish, in the late '90s, he has used M&A to add capabilities and expand the global footprint. The company has done six acquisitions in all (including those of Powered, Stuzo, and ArchRival in rapid succession two years ago), but hasn't bought anything since 2011.

It now employs 170 in seven offices globally, including its Austin headquarters. That's down somewhat from the 220 "consultants" that worked for it in 2011, and the company is now seeking different, more data-centric skill sets than it did two years ago.

AdExchanger spoke with him about the business.

AdExchanger: How do you balance your platform business with managed services? 

JEFF DACHIS: We’re unique in that we have a big data analytics platform that collects and analyzes the data from over 30,000 brands from several billion social signals, from several hundred million social accounts every day, all in real time. We’re able to collect and analyze all that data into one place, sell a software license to our clients for the applications that we sell, or run those applications on behalf of our clients via managed services to augment a rich set of program strategy, program development and program execution services.

For us it’s a huge competitive advantage that no one else has the platform that we’ve got. Then of course, it provides us with software gross margins.

Can you say a little more on the managed services aspect? What's available there?

We offer social marketing, program strategy, program development, and program execution. Of course, there are always wrap around services like understanding how to establish policies, procedures, training and education, decision rights, social queue structures. Helping the clients really succeed in their social marketing effort. It’s all data driven though. We’re really focused on all the insights we can provide, all of the methodology we provide.

Buddy Media/Salesforce and Percolate are two companies operating in social media presence and content creation. Contrast yourself with those two companies and how you came to be.

Buddy started out in the services business, much like we got our start in the beginnings … [Buddy] in essence was the Page management platform. I think they entered the market at the right time when a lot of brands really wanted to establish Facebook presences. Buddy made it really easy for them to do that. I give kudos and I’m happy to see them with their new home.

We highly believe that the value in social is going to be in the data. The only way to effectively connect and communicate with your constituents was going to be in an understanding what they were saying, how they were saying it, where they were saying it and being able to engage with those constituents in an authentic, transparent and trusted way.

We don’t really believe that you can engage meaningfully with a million friends on your Facebook wall by broadcasting at them on that wall, nor can you effectively engage with a million of them with a small number of people manning your Facebook wall. That's not what we believed to be the right approach to engagement at scale.

We believe in collecting and analyzing the data from 30 or 35,000 brands, understanding how these conversations come together and being able to use machine learning algorithms to analyze. We use sentiment analysis, and questioning algorithms to understand who is saying what and why, then sharing that information with the brand. That’s the approach that we’ve taken.

We’re about understanding every aspect of all the conversations happening across the entire social web, across all the platforms that we see out there and then helping brands engage in those conversations at scale by measuring what’s working and then amplifying those things that are working in the marketing and the social spheres.

Percolate is probably doing a really good job at a sub-set of that, which is content specific. We also do that. We’re very adept at understanding what content you’re getting shared, in what context, and why for a specific brand.

We’ll be able to help that company or brand understand which of their top 1,000 advocates are active and why. What content are they sharing? What conversations are they having? Who are they having those conversations with, et cetera.

How do you think about paid media?

We like to steer the conversation towards utilizing paid media to amplify a brand’s earned and owned media. We don’t think you should start with reach-and-frequency or clicks as a mode to build purchase intent. We think you should start with owned content. Amplify that owned content via earned content, and then amplify that earned and owned content via paid -- by activating a mass of communicators and getting advocates, if you will, or people to amplify your message for you. Then of course, as a secondary line, use paid media to amplify that amplification.

Does Dachis Group execute paid media directly?

We have planned those paid media campaigns. We help determine what content or where to target those paid media campaigns and then help measure the effectiveness of those paid media campaigns, but we do not actually execute them.

Do you think Facebook has succeeded in building an ad platform that captures word of mouth at scale?

How do any of the social platforms out there monetize their native engagement currency at scale? Facebook isn’t unique in that regard, in that they’re evolving their offering as the marketplace becomes more sophisticated to meet the needs of brand marketers who want to engage with their constituents at scale.

That said, there are a ton of brand marketers who have not yet figured out how to meaningfully engage and are therefore still purchasing ad units that are reach-and-frequency, or click-based. I think Facebook is absolutely going to lead the way in figuring out how to monetize the engagement currencies… But It’s also presenting challenges for marketers who are trying to figure out, “Well, what are all these engagement currencies worth?”

For us, the keys to all of this are: one, the ability to measure engagement, and two, the ability to amplify it. Those are the key drivers we think need to be addressed. Facebook is doing that through a variety of different products and it’s really exciting to watch them iterate.

Outside of Facebook, what platforms are most important to you and what do you see coming?

We’re platform agnostic in many ways. Of course, we’re in tune with Facebook and LinkedIn and Twitter and all the major platforms, but we also have to look globally. There are over 400 social networks with over a million users each globally, outside of Facebook. That’s not inconsequential.

You have to say to yourself if you’re a global brand, what are you doing in Korea? What are you doing in Japan? What are you doing in China? What are the different ways that you’re approaching social marketing in those different markets, given that in Russia social sharing, connecting and engaging is a different thing than it is in China or than it is in Japan?

What do you aim to accomplish in the next one to two years?

We’re really looking for great people, really smart, socially adept, data driven folks who are excited about data, who are excited about the effect that data can have on a marketing effort.

I really look at social as the largest shift in the communications landscape, literally in the history of mankind. I don’t think we’ve seen a shift like this. I’ve been doing this for almost 20 years -- Ihelped to create the first banner ad ever and the first web animation ever, finding and growing Razorfish -- and now with social, it just feels even more exciting than the digital revolution that we helped pioneer in the early 90’s. This is bigger.

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