Photo: Jud Valeski
Gnip has an interesting take on one of the most exciting opportunities on the web today: how to make money from social data.Gnip grabs as much data as it can from 40 social media providers through their APIs and deals, packages it up in one firehose and sells access to that, and it’s one of just two authorised resellers of Twitter’s data firehose. (Whenever Gnip sells data from Twitter, it gets a cut.)
We spoke with Gnip CEO Jud Valeski to find out more. And it turns out, Gnip has the potential to be a really disruptive company if it can figure out how to weave social data and online advertising.
Right now, two thirds of Gnip’s biggest customers are social media monitoring firms–companies like Radian6 that watch over social media for big brands. Valeski says Gnip “dominates” that industry, serving nine out of 10 of the players. And “we love those guys, but that’s too small.”
The other markets Gnip is going after are:
- The financial industry. More and more hedge funds are using social data to make investment decisions.
- The business intelligence industry. That one is obvious.
- The government, which sort of surprised us. Valeski says it’s mostly for things like disaster response.
- And finally, the ad tech industry.
That last one, ad tech, is “the big one and the most challenging one,” Valeski says.
Online social conversations are “the most powerful interest signal”, and yet the ad tech industry can’t take advantage of it because “it’s built around cookies and URLs and clicks,” a model which is now outdated.
So there’s a huge, multibillion dollar industry that doesn’t know how to tap this potentially invaluable source of data. That’s the huge opportunity Gnip has ahead of it.
Right now, Valeski said, Gnip is calling up ad tech players, and most of them look to Gnip to figure out “the magic.” The Magic being “how to weave social data into ad tech. That’s the big question, and it’s unanswered right now.” And yet “the vast majority of the industry has no clue,” Valeski says.
“When we dig into a conversation with adtech,” Valeski says, “all their systems are built around cookies and URLs. Weaving users or social data into those databases is a huge challenge. We’re just a couple of months into trying to figure out what’s going on.”
The answer? Potentially, Gnip could figure out its own solution: build its own social ad tech technology instead of just selling data to the ad tech guys.
Ok, so what about competition?
Gnip’s biggest competition is “build versus buy”, Valeski says. Nine out of 10 sales calls Gnip loses, Valeski says, are customers who want to build their own social data aggregation tool or are doing it. Another way they lose sales, he tells us, is that some people aren’t “above-board”. Some people, who he wouldn’t name, will scrape social data and say “You want 10 million tweets? I got ’em, but don’t ask me where I got ’em.” Gnip either has deals with social media publishers or uses their public API and, Valeski says, is very careful about only using legitimate data.
What about DataSift, the startup that just raised a big $6 million round from top-notch investors and is the other authorised reseller of Twitter data?
Well, on the plus side, competition validates a market. “Downside is, there’s competition.”
Gnip’s target market is big enterprises, while DataSift’s seems to be “developers in their apartment,” according to Valeski.
“So far, the impact on our business has been negligible. We’ve been doing this for 3 and a half years, and our customers need highly reliable connections for large masses of data, and that’s hard to pull off when you’re talking about tens of gigabytes of data per second. I have all the confidence in the world that we are head and shoulders above DataSift for that. And our customers and prospects who have spoken to both will tell you that.
“I consider them more as a data-snacking utility. If you need a couple hours of tweets, odds are they can do that well and for cheaper. Our average contract is 12 months, and we charge a minimum of 3K/month.”
At the same time, “we’re thinking about our pricing, we have to watch that tier of the market, and we have to either consciously concede it or go and provide a solution.”
But when Valeski talks to customers, “none of those companies are snacking. The use case never even comes up.”