News hit this Monday that Powered has acquired three social media agencies: crayon, Drillteam and StepChange. I just had a skype video conversation with Aaron Strout and Joseph Jaffe to learn more, here’s my take. You can read crayon founder Joseph’s take and Aaron Strout the CMO of Powered and a quick mention in NYT.
A Solution Set of Services Bolsters a Marketing Platform
I’ve heard of crayon, and have many conversations and even podcasts with founder Joseph Jaffe, I’ve also spent time with the Powered executive team last year. Stepchange is a 13 person team out of Portland focused on Facebook Apps and mobile, and Drillteam, from NY, has been around for 10 years and focuses on experitntial and advocacy marketing, such as connecting events to online like street teams, guerrilla, and ambassador programs. Powered isn’t just a community platform, I learned they have other marketing features that really intent to provide a suite of offerings.
Natural Evolution Of A Growing Market:
- Consolidation happens in downturned markets. As the recession starts to show signs of it lifting, now’s a great time for companies to come together and create a greater value. We saw this type of acquisition behavior from agencies during the first boom, and we should expect similar patterns here.
- Acquisition provides key services software platforms can’t fill. It makes sense for Powered platform to partner up with a service(s) teams that have already been successful for some time, this improves the time to market to deployment. In addition to coming with a book of business, they can quickly deploy the Powered platform, expanding the software footprint. Joseph Jaffe has strong thought leadership, an existing marketing brand, and reach needed to the group.
- Yet, brings risk for Powered and new partners. First of all, there are some big names coming together, the real stress will be can these cultures, and their strong willed leaders, be able to jive together. Secondly, it’ll be interseting to see if Crayon and services teams forces stragies on their clients that involve the Powered platform. I asked if there are any layoffs coming from consolidation, they haven’t made any plans, but when you have 4 companies coming together expect redundancy.
Impacts To Customers, Partners and Competitors:
- Social Agencies should rekindle and bolster relationships. This impacts other social agencies like Stage Two Consulting, Social Media Group, AdHoc, Ant’s Eye View, ForumOne, Community Roundtable, Shift Communications, Dachis, FutureWorks, New Marketing Labs, who may be at medium and small tier, they should quickly partner up with other firms to increase their value.
- Customers of crayon, Drillteam, and Stepchange should request agnostic recommendations. Any client of these three agencies should make sure that the strategy they are being offered includes other vendors and platforms –not just the Powered platform and Facebook platform. Remember, first find out where your customers are online before choosing the tools to use.
- This is competition for larger agencies –yet savvy agencies will partner. This is a threat to large agencies like Organic, Razorfish, Ogilvy, and Edelman. Yet the smart agencies won’t get defensive, they should partner with this team, and figure out what offerings they can offer that they don’t have in their portfolio.
Congrats to the Powered, crayon, Drilldteam and Stepchange team for this merger, I’m excited to see the industry emerge from small disparate startups to a larger entity going forward.
We worked closely with StepChange as we built the first version of Second Porch, the first vacation rental and trading portal inside Facebook, and they deserve this…smart guys, great ideas. I am excited to see what they can do now with access to these other folks and capital.
What's the value of these acquisitions? Was any money exchanged?
That's unknown and probably will not be revealed. I never ask for that now a days as I know the answer, something like this:
“we're not publicly talking about value right now, but it was fair market value and a great incentive for both parties to collectively increase their value at this time”
I think the biggest challenge is merging the different approaches and cultures. We'll have to keep a close eye on things.
Agreed. With 3 culture being sucked under one brand, expect to see some tension –and some to jive very well.
Great observations and recommendations for the market Jeremiah. The Community Roundtable is, in fact a partner of Powered (http://community-roundtable.com/about/partners/) as well as more traditional agencies like Rosetta and firms like Burton Group (recently acquired by Gartner themselves). We also actively partner with some of the vendors in the social software space. And we agree – it is the only way we, as a small group, can extend our reach and value. Thanks for including us in the post and congratulations to Powered – big news!
Thanks Rachel, it's good to see you're already partnered, excellent.
Thanks for the Rosetta shoutout Rachel! Rosetta has also been collaborating with both Powered and Drillteam previously, and Rosetta's director of social media is a Drillteam veteran. I think the combined focus and strategic value of crayon, Stepchange, Drillteam and Powered is a compelling value proposition. As indicated above any transition like this has tension but talented leadership teams can bring companies through that. We (Rosetta) are looking forward to continuing to expand our working relationship with smart partners, like the new Powered team and the Community Roundtable, where we can supplement the value and insight delivered to our clients. This is exciting news and I'm personally thrilled for all the teams involved.
Thanks for the mention, we at @antseyeview have seen some similar trends and pressures. In the early stages, talent, experience and alignment amongst the principals is critical to success – hence our early acquisition of Wabash and Lake, bringing on board proven leaders in Ben McConnell and Jackie Huba. Like Aaron, I think we bristle a little at the term “agency,” but that philosophical point of view isn't always worth debating. The bottom line is that the industry is looking for proven leaders that can drive real change forward and services firms need to grow and or align with others where they can deliver on that need. 2010 promises to be an exciting year of change, but 2009 was pretty exciting too and so will be 2011! In the grand scheme, the transformation to the customer enlightened & engaged culture is just beginning.
Sean O'Driscoll
CEO, Ant's Eye View
http://www.antseyeview.com
Jeremiah,
It was great catching up with you this morning. And thank you for the resulting write up. I'm amazed at how fast you were able to digest our news and turn around with a thoughtful, well-written blog post.
I think you've captured all of the salient points from our conversation and certainly bring up an important one in our success will lie squarely in our ability to assimilate our skill sets while subduing our strong personalities. Fortunately, we've had the luxury of spending the last eight months together getting to know one another. While this doesn't guarantee that we'll always agree with one another, we've come to a place where we're pretty comfortable with each others strengths and weaknesses.
Finally, I like your recommendation of our existing clients making sure that we are offering “best of breed” tools and platforms and not limiting customers to our own proprietary platforms. Of course we feel that we have some pretty darn good platforms to offer but as part of offering strategy/recommendations, we need to be sure that we're always acting in our clients' best interest. We expect that our clients won't hesitate to keep us honest on this front.
Thanks again for taking the time to meet with Joe Jaffe and myself. We look forward to continuing the conversation soon. Maybe at OMMA Social? Would love to buy you a drink.
Best,
Aaron | @aaronstrout
Sean (Ant's eye view)
Along with Aaaron, I've found that the term “Agency” is a term that resonates with buyers, and will be here after social isn't 'cool' anymore.
Indeed…and we don't like the term social a whole lot better. I'm in the customer experience camp 🙂
sean
We worked closely with StepChange as we built the first version of Second Porch, the first vacation rental and trading portal inside Facebook, and they deserve this…smart guys, great ideas. I am excited to see what they can do now with access to these other folks and capital.
What's the value of these acquisitions? Was any money exchanged?
That's unknown and probably will not be revealed. I never ask for that now a days as I know the answer, something like this:
“we're not publicly talking about value right now, but it was fair market value and a great incentive for both parties to collectively increase their value at this time”
I think the biggest challenge is merging the different approaches and cultures. We'll have to keep a close eye on things.
Agreed. With 3 culture being sucked under one brand, expect to see some tension –and some to jive very well.
Great observations and recommendations for the market Jeremiah. The Community Roundtable is, in fact a partner of Powered (http://community-roundtable.com/about/partners/) as well as more traditional agencies like Rosetta and firms like Burton Group (recently acquired by Gartner themselves). We also actively partner with some of the vendors in the social software space. And we agree – it is the only way we, as a small group, can extend our reach and value. Thanks for including us in the post and congratulations to Powered – big news!
Thanks Rachel, it's good to see you're already partnered, excellent.
Thanks for the Rosetta shoutout Rachel! Rosetta has also been collaborating with both Powered and Drillteam previously, and Rosetta's director of social media is a Drillteam veteran. I think the combined focus and strategic value of crayon, Stepchange, Drillteam and Powered is a compelling value proposition. As indicated above any transition like this has tension but talented leadership teams can bring companies through that. We (Rosetta) are looking forward to continuing to expand our working relationship with smart partners, like the new Powered team and the Community Roundtable, where we can supplement the value and insight delivered to our clients. This is exciting news and I'm personally thrilled for all the teams involved.
Thanks for the mention, Jeremiah. It's unquestionably interesting timing, as we (Stage Two) are doing a lot of 2010 planning right now, specifically addressing how we can better team up with other firms and provide specific value in the relationships. To any of the aforementioned agencies, or those not listed, we'd love to have a conversation about where strategic alignments can be forged. Please get in touch!
Thanks for the mention, we at @antseyeview have seen some similar trends and pressures. In the early stages, talent, experience and alignment amongst the principals is critical to success – hence our early acquisition of Wabash and Lake, bringing on board proven leaders in Ben McConnell and Jackie Huba. Like Aaron, I think we bristle a little at the term “agency,” but that philosophical point of view isn't always worth debating. The bottom line is that the industry is looking for proven leaders that can drive real change forward and services firms need to grow and or align with others where they can deliver on that need. 2010 promises to be an exciting year of change, but 2009 was pretty exciting too and so will be 2011! In the grand scheme, the transformation to the customer enlightened & engaged culture is just beginning.
Sean O'Driscoll
CEO, Ant's Eye View
http://www.antseyeview.com
Jeremiah,
It was great catching up with you this morning. And thank you for the resulting write up. I'm amazed at how fast you were able to digest our news and turn around with a thoughtful, well-written blog post.
I think you've captured all of the salient points from our conversation and certainly bring up an important one in our success will lie squarely in our ability to assimilate our skill sets while subduing our strong personalities. Fortunately, we've had the luxury of spending the last eight months together getting to know one another. While this doesn't guarantee that we'll always agree with one another, we've come to a place where we're pretty comfortable with each others strengths and weaknesses.
Finally, I like your recommendation of our existing clients making sure that we are offering “best of breed” tools and platforms and not limiting customers to our own proprietary platforms. Of course we feel that we have some pretty darn good platforms to offer but as part of offering strategy/recommendations, we need to be sure that we're always acting in our clients' best interest. We expect that our clients won't hesitate to keep us honest on this front.
Thanks again for taking the time to meet with Joe Jaffe and myself. We look forward to continuing the conversation soon. Maybe at OMMA Social? Would love to buy you a drink.
Best,
Aaron | @aaronstrout
p.s. meant to thank Brent, Adam and Rachel for their kind words. Much appreciated!
p.p.s. Sean. Good point about the term “agency.” We went back and forth about this term but felt like at the end of the day, it was the term marketers (our target audience) were most comfortable with.
Sean (Ant's eye view)
Along with Aaaron, I've found that the term “Agency” is a term that resonates with buyers, and will be here after social isn't 'cool' anymore.
Indeed…and we don't like the term social a whole lot better. I'm in the customer experience camp 🙂
sean
I think this is a big move and one which I am sure will pay off for them. Great analysis.
What is interesting in my mind is the emphasis a lot of “social media agencies” are now placing on building highly socialized web properties (either tightly coupled or loosely coupled to brand.com) and also buidling digital assets rather than on engagement through third party channels. It will be interesting to see how traditional PR agencies without any of these build capabilities respond.
Best of luck to all at the new Powered
Social Media alters the playing field for everyone within the enterprise; formerly successful strategies and tactics are being challenged, while old and tired methodologies are getting new legs.
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Agreed. To your point, there are lots of integration options. I think that the three tier service offering makes a lot of sense:
1) Strategy and thought leadership from crayon
2) Community and public relations from stepchange
3) Tying it all to events from drill team
During the call I asked them about measurement, and they indicated that they had existing teams that could do measurement.
Thanks Aaron for the response.
These services make total sense to your offering. I just met with Alex Blum the CEO of Kickapps after we talked for a separate briefing, he's bolstered nearly a third of his company as social media professional services now.
Enterprise buyers need a solution sell –complete with services, this really bodes well for Powered.
Yup, your specific challenge as CMO will be making sense of three different ideologies, methodologies –and even egos– to a holistic experience to your customer base.
Thanks for the mention, Jeremiah. It's unquestionably interesting timing, as we (Stage Two) are doing a lot of 2010 planning right now, specifically addressing how we can better team up with other firms and provide specific value in the relationships. To any of the aforementioned agencies, or those not listed, we'd love to have a conversation about where strategic alignments can be forged. Please get in touch!
Thanks to an observant reader, I corrected “Social Media Today” to “Social Media Group”
I think this is a big move and one which I am sure will pay off for them. Great analysis.
What is interesting in my mind is the emphasis a lot of “social media agencies” are now placing on building highly socialized web properties (either tightly coupled or loosely coupled to brand.com) and also buidling digital assets rather than on engagement through third party channels. It will be interesting to see how traditional PR agencies without any of these build capabilities respond.
Best of luck to all at the new Powered
Agreed. To your point, there are lots of integration options. I think that the three tier service offering makes a lot of sense:
1) Strategy and thought leadership from crayon
2) Community and public relations from stepchange
3) Tying it all to events from drill team
During the call I asked them about measurement, and they indicated that they had existing teams that could do measurement.
Thanks Aaron for the response.
These services make total sense to your offering. I just met with Alex Blum the CEO of Kickapps after we talked for a separate briefing, he's bolstered nearly a third of his company as social media professional services now.
Enterprise buyers need a solution sell –complete with services, this really bodes well for Powered.
Yup, your specific challenge as CMO will be making sense of three different ideologies, methodologies –and even egos– to a holistic experience to your customer base.
Jeremiah, good analysis, I was wondering what you thought of the influence of the social media monitoring companies in providing services directly to the industry, especially if many companies are consulting companies? The SMM companies will work through the channel, or work directly.
If you were to put each of the industries that cater to social media consulting and agency work, what list would you put together?
Thanks to an observant reader, I corrected “Social Media Today” to “Social Media Group”
Jeremiah, good analysis, I was wondering what you thought of the influence of the social media monitoring companies in providing services directly to the industry, especially if many companies are consulting companies? The SMM companies will work through the channel, or work directly.
If you were to put each of the industries that cater to social media consulting and agency work, what list would you put together?
Sorry to reply so late to this post. I was on the road and commenting via iPhone is a drag. 😉
Jeremiah, you nailed it, particularly when discussing the need for partnerships. Social Media has crunched everyone's expectations and beliefs about “who does what.” It is now imperative that agencies build as much flexibility into their offerings as possible through a combination of in-house expertise-building and external partners (as I recently wrote about in my post about the “Fill In The Blank Agency” – http://j.mp/7W8T3b).
The tricky part is that these partners will also sometimes be competitors. In fact, Powered is a client of SHIFT Communications – and yet we've also received the same RFPs from companies. And we compete with Razorfish for new clients as often as they pull us in to help out with their existing clients.
It's easily debatable whether we belong on the same RFPs, but it goes to show how confused the marketplace can be nowadays!
Sorry to reply so late to this post. I was on the road and commenting via iPhone is a drag. 😉
Jeremiah, you nailed it, particularly when discussing the need for partnerships. Social Media has crunched everyone's expectations and beliefs about “who does what.” It is now imperative that agencies build as much flexibility into their offerings as possible through a combination of in-house expertise-building and external partners (as I recently wrote about in my post about the “Fill In The Blank Agency” – http://j.mp/7W8T3b).
The tricky part is that these partners will also sometimes be competitors. In fact, Powered is a client of SHIFT Communications – and yet we've also received the same RFPs from companies. And we compete with Razorfish for new clients as often as they pull us in to help out with their existing clients.
It's easily debatable whether we belong on the same RFPs, but it goes to show how confused the marketplace can be nowadays!
I like the way you presented the matter,
thank you for the post,
keep going on.
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The influencial impacts this has on a number of companies will undoubtebly cause some excitement in the industry, I for one feel like this is a great move for all parties and with Powered all the best.
The influencial impacts this has on a number of companies will undoubtebly cause some excitement in the industry, I for one feel like this is a great move for all parties and with Powered all the best.
Powered and Social Media Group are in talks at the minute about SMG being taken over.
i like it
A good PR person must be aware of all possibilities that a situation might offer. He must make scenarios for every turn of faith. You gave a great advice concerning companies, that they ought to come together and create a greater value, but, also, as you pointed out, the economical crisis just “starts to show signs of it lifting”. Until it does, we should search for revenue enhancement solutions given by Encore marketing.
I agree that for larger agencies to continue to be profitable they must be open to using the services of other sources, which many do anyway, as they have used outside vendors for decades, and electronics is jsut another tool that they will embrace as more people are using the technology.
But how does this affect the competitive nature of business? We cannot be everything to everyone, but need to be a leader in our own niche. Therefore, the relationships we build and maintain are ever more important, and that means strong commitments to communications and interpersonal skills.
Great observations and recommendations for the market Jeremiah.
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