When building a technology platform, self-service isn’t always the Holy Grail it seems to be - at least initially, as Spruce Media founder and CEO Rob Jewell discovered.
A couple of years ago, his company was an early Facebook Ads API partner, and after seeing Kenshoo and Marin Software take a self‑service approach to channels such as search, he decided to do the same for Facebook ads with Spruce.
He quickly learned that clients needed more than just technology so Jewell and team quickly built out a managed service layer to assist with the strategy and execution side of buying. But, in the last year, Jewell says his company has started to see demand pick up again for the self‑service business.
AdExchanger spoke to Jewell and COO Lucy Jacobs last week about Spruce Media and its Facebook ads business.
AdExchanger Can you talk about the popular use cases today, starting with the managed service business at Spruce Media?
A good use case for managed service, specifically, would be that an agency or a brand would tap us to increase their fan growth, so take them from five to 10 million fan base.
But, we’re starting to see the market move beyond “the like” as we're also helping brands achieve engagement goals, word of mouth media goals, and so on.
LUCY JACOBS: The more established and savvy brands [that are already on Facebook] are about improving what we call “PTAT” or “People Talking About This,” which is the viral metric of sharing or amplification.
For earlier‑stage brands, it will be around driving app installs for social gaming, or consumer brands that have apps, or building fan bases and helping them understand more direct response metrics for them to try - whether it's driving credit card sign‑ups or driving leads for an EDU client.
Our whole focus and philosophy is to help understand what brands' objectives are, help them navigate the social ecosystem, and then identify what specific products and media buying executions are going to hit each of those individual strategies. It could be very varied, from likes to app installs to engagement metrics.
What's the use case on the self-service side? It sounds like that's where you've got your momentum. Is that right?
ROB JEWELL: Yes, absolutely. We want to build our technology in a way that allows brands to intuitively come on to Facebook and buy media to accomplish different goals they may have.
LUCY JACOBS: And, that's part of the reason I joined Spruce. I saw all of my trading desk and large direct client relationships that I'd built at adBrite and their need for a powerful, self‑service social tool that would allow them to execute within holding companies like VivaKi and WPP. As Rob mentioned, the market wasn't there a year or two ago. That's changing as Facebook evolves and the ecosystem matures. We have two buckets of self‑serve clients. It's large direct clients and then it's the trading desk, both of whom will license our technology to execute the social buys themselves.
Lucy, what are some of the key differences between the display ad ecosystem that you became very familiar with at adBrite, and then what you're seeing in the Facebook ad ecosystem?
LUCY JACOBS: The first is just the nature of Facebook marketing. When you look at search and display, it's typically a one‑way conversation of brands engaging with their consumers through outbound messaging and marketing. Facebook is all about “social by design,” so it's a brand having a three‑way conversation with their customer. It's the brand talking to the customer, the customer giving feedback to the brand, and then the customer sharing concepts of the brand with their friend base. It's about word of mouth marketing and earned media – and very different than display.
Do you think that the PC-based display - outside of Facebook - can get to a point where it, too, is about word of mouth and earned media? There are a few companies that say they are focused on this.
LUCY JACOBS: There are two factors to consider. First, there's the self‑reported user data of Facebook. And then, if we look at display ad landscape, we know there are the data companies like the BlueKai’s and the eXelate’s that are hoping to gather feedback at what a person's looking for. But, that’s not self‑reported user data, and the ad units aren't designed to be social. If you look at the Facebook ad units, there's polling and sampling ad units that let brands like Procter & Gamble get feedback from clients.
The challenge with display folks that are orienting toward social is that they don't have the valuable self‑reported user data or the social context of ad units that Facebook has within their ecosystem.
Rob, for any company, what are some of the keys to differentiating with APIs? After all, there are many Facebook Ads API partners. Likewise, platforms such as Twitter provide API access to many partners.
ROB JEWELL: Even though it is one or a couple sets of APIs that Facebook has, what we've seen is that competitors focus widely. Yet, there's always some crossover. For example, there are a number of players that are focused on building with the Facebook API and building tools, but focused on the attribution model across other channels like search and display. There are other competitors that are focused on building with the Facebook API, but specialize in more of the direct response ROI for e‑commerce or social gaming companies, for instance. Some are just building to the API, and focused on driving likes and others are focused on building collaboration tools which they're building to the APIs. Finally, still more are focused on the Facebook Exchange.
So, there are a wide variety of specializations going on, even though people are building towards the same API. The vision for Spruce is - which I do see as different than a lot of other companies - aligning ourselves with the vision of Facebook.
I think all marketers will agree that what's unique about Facebook is the word of mouth marketing at scale that you can get in no other channel. However, the market right now on Facebook is still primarily focused on driving “likes.”
What Spruce is starting to do now is helping marketers with the many challenges associated with measuring and optimizing and scaling your word of mouth marketing. We help them solve that through our technology and services.
In terms of the Facebook Exchange, any plans there?
ROB JEWELL: We look at the Exchange as a great inventory source for DSPs to do what they do best, which is retargeting. But we think that most big brands have embraced “social by design,” which uses Facebook Pages as their mission control. Retargeting is not their mission.
Now, I think a lot of brands do have an initiative going on with retargeting, which is why they're using DSPs. But most brands look at Facebook as more than just an inventory source to drive bottom of the funnel type traffic. They look at Facebook as a way to increase awareness, start with the top of the funnel and optimize all the way down through the funnel. This includes building a fan base, building engagement of that fan base, encouraging that fan base to talk about their brand – and then optimizing that word of mouth marketing of those fans that are talking.
Is mobile becoming part of your business? What can you say about momentum there?
ROB JEWELL: The beautiful thing about Facebook's mobile strategy is that it fits perfectly within the overall advertising strategy. It's not a separate product. The big change for us is that the advertisers that we see come on Facebook are interested in building their fan base or engaging with that fan base. They typically don't care whether it comes from the Facebook desktop or Facebook mobile. It's not surprising since their users are going back and forth.
What Facebook has done is essentially allowed us to select the ad placement and we optimize for that end advertiser on which placement performs better for them. There are no “carve outs” in terms of what advertisers are allocating to desktop versus mobile, so it makes it very easy for us to get in and offer that mobile business for advertisers.
What are some of the milestones you’d like Spruce Media to achieve in the next 12 to 18 months? And, can you talk about headcount and funding?
ROB JEWELL: We're at 45 people today and have been for the most part bootstrapped. We're profitable, since the quarter we launched the product in early 2010. By the end of next year, we'll probably be looking at 90 to 100 people.
In terms of milestones we hope to reach within 12 to 18 months, the current state of the market is that probably 80 percent of the Fortune 1000 advertisers in agencies are still building their fan base. We think that the focus is still there because the tools and services haven't been built to-date to help advertisers usher in to that true word of mouth marketing era.
We hope with a new release of our platform in the coming weeks, and with our services, we can provide access to the true power of Facebook marketing - word of mouth marketing at scale.
LUCY JACOBS: One other trend that we expect to see is the platform used on a self‑service basis. We're definitely seeing some changing tides and expect self‑service to be an increasing share of the market a couple of years out as agencies and trading desks start adding social buying to their services and their platforms.
Also, we see more of an integration across pages, ads and insights. As Rob mentioned, advertisers are building up their fan base and then taking it beyond the fan into amplification. We see more of a holistic integration and things moving more up funnel beyond the “like” to amplification through paid media.