The exponential growth in social media has seen a rapid proliferation in buzz monitoring tools and so-called listening platforms. However, what was once a lucrative seller's market is now
becoming increasingly commoditized.
The honeymoon period for listening platforms is coming to an end as clients have matured quicker than expected. Attracted from the outset by charts,
graphs, neon lights and cute flash animations, they no longer have a need for information for information's sake. Clients now want actionable insights they can use to improve their business. The
players that listen to this change in expectations and take steps to deliver value will be able to protect revenues, but those who ignore it will inevitably see prices collapse.
I've seen the
listening platform market grow steadily over the last seven or eight years, but it has really exploded in the last two. This growth has been fantastic for the buyers - brands and agencies that use
these services - as it has provided them with a massive amount of choice and increased the pressure on the vendors to innovate. The intense competition has pushed listening platforms to deliver
improved functionality and usability and this has driven the market forward.
Competition is great news for customers, but worrisome for vendors while the pressure on innovation remains
relentless. While the leaders in the industry have built successful businesses around their solutions, I'd argue that none of them have yet built a truly established brand. As a consequence, very few
can differentiate themselves based on anything other than price. It's obvious that vendors are beginning to cannibalize their own market, with prices falling at least 50 percent in just 18 months.
Although the larger economic picture has played its part in this price collapse, the lack of differentiation amongst services will continue driving down the segment's value if changes are not
made. The only thing that will stop the rot and prevent prices from falling through the floor is a focus back on substance, not style -- actionable insights, not more cute animations.
Clients
are investing in buzz monitoring solutions because they want to gather information and feed these insights back into their business in a way that will deliver genuine value. Unfortunately, the
majority of platforms are focusing on new ways of presenting the same data, rather than uncovering deeper insights. Only by delivering deeper, actionable insights will listening platforms survive in
the future. This means exploring different technologies (semantic Web, natural language processing, etc.) that can deliver a much more sophisticated analysis of online conversations - providing
greater insights into themes, topics and sentiment as well as identifying key influencers across thousands of sites and millions of pieces of content. Those vendors that invest in better analysis
will be able to differentiate themselves from the competition and protect their prices.
As an example, the Scandinavian market for listening platforms has matured ahead of the U.S. and U.K. and
it has already gone through this pain. It follows three clear stages: adoption, price compression and (r)evolution. In the U.K. we are just beginning serious price compression and we can expect to
see the market change substantially over the coming months. With Microsoft and Google about to launch their own tools, things are set to get even tougher for listening platform vendors.
But
the future is bright for the vendors that are committed to investing in better technology to deliver rich and actionable insights from social media. They will not only protect their pricing, but also
ensure that their business is in the best possible position to take advantage of the certain consolidation in the market. Proceed with caution because the shake-up is inevitable and rapidly
approaching.