Syncapse, a top Facebook marketing company with a roster of Fortune 500 clients, filed for bankruptcy recently.
What caused Syncapse to go bust? That question is important because Syncapse was one of Facebook’s 260 or so preferred marketing developers, or PMDs.
These firms are part of an elite global group that are supposed to have the best technologies and strategies to help brands and businesses make the most out of Facebook as a marketing platform.
If PMDs aren’t viable as businesses on their own, that’s a big problem.
There’s some speculation in the marketing world that there are too many companies chasing the same Facebook marketing dollars, and that more and more PMDs will fail in a wave of consolidation.
That may be true, but Syncapse had unique problems of its own. It depended heavily on ad fees rather than on technology licensing. Plus, it suffered from over-reliance on one client, BlackBerry. When BlackBerry began to lose its grip on the smartphone market in late 2010, it was inevitable that any firm dependent on its marketing budget would need to look for alternative revenue streams.
It seems Syncapse wasn’t able to make up for the shortfall.
Also, Syncapse’s software licenses — sales of its marketing technology and services to support it — didn’t account for a healthy share of its revenue, only 24% in 2012 or around $US3 million. The data comes from an offer letter for Syncapse assets.
The lessons? Diversify your client base, and build your company on a foundation of great technology, not fee-skimming.
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