Q&A With Socialbakers CEO Jan Rezab: An Insider's Perspective On The Social Media Industry

The social media marketing and analytics industry has been growing in tandem with the rise of social networking.

Americans now spend more time each day with social media than they do with e-mail. So, brands are asking themselves, “What does all this activity on our Facebook, Twitter, and other sites mean, and what is the real value?”

It’s a question that Jan Rezab, co-founder and CEO of Socialbakers, gets asked a lot.

Socialbakers is a Czech-based social media analytics company that launched in 2008. More than 30 Fortune 500 brands have used Socialbakers’s platform to better understand how social media engagement influences sales and marketing.

We sat down with Jan at BI Intelligence headquarters in New York City to talk about the social media landscape and how he foresees it evolving.

This Q&A has been edited for clarity and brevity.

BI Intelligence: Do you see social media advertising becoming mainstream?

Jan Rezab: Absolutely. Facebook has 600 million people accessing its homepage every day. Show me a television station that has that anywhere in the world. There are more people browsing their News Feed on Facebook right now than people watching any single TV station.

Facebook and Twitter have evolved to become an extension of human communication. But what’s it to advertisers? They can tap into social media by purchasing sponsored content and pushing it to the top of Facebook and Twitter feeds, as high as they can. With that said, I don’t think advertisers have come to this realisation yet. 80 to 90% of brands are not ready to take the leap into this new world of social advertising.

BII: Let’s address advertising on Facebook. What’s going on from a bird’s eye point of view?

JR: I think Facebook is the best channel for a full-scale global marketing campaign. If Coca-Cola executes a full-blown campaign on Facebook, I bet it reaches more people than a well-thought-out campaign on TV. I think that’s a big strength Facebook has. Yet, have advertisers been paying for that? No, certainly not to the extent they should.

I think video ads on Facebook are a myth. We hear the media saying that Facebook will charge up to $US2.5 million for video ads. Sure, Facebook will add these pre- and post-roll video ads, which I think is the right move. But consider this: A brand can already invest $US2.5 million in promoting a Facebook post that contains video, and that content will gain tremendous scale and exposure on Facebook. So in a way, video ads already exist on Facebook, but brands aren’t investing in them yet.

I think all Facebook ads will become in-stream News Feed ads, and that all right-rail ads will go away eventually. Social media advertising will cultivate this new medium of content advertising (such as promoting organic content). How does that change the way advertisers approach a campaign? It means creating content, either internally or outsourcing it to an agency, and what’s more, it means producing great content and having the right media strategy to complement that.

BII: We recently saw Syncapse, one of Facebook’s preferred marketing developers, file for bankruptcy. Are there too many social media marketing and analytics companies vying for the same dollars?

JR: Absolutely. In this business, there will not be many surviving parties. In my opinion, the determining factor for which companies will stay in business and which will flop will be flexibility.

Companies such as Adobe, Salesforce, and Oracle are too large to be operating in this space. They acquired a slew of medium-size social marketing and analytics companies and now their departments are bloated. It’s affecting their client service, and so their clients are moving back down to work with medium-sized firms.

On the opposite end of the spectrum, you see firms with 200+ clients, but an engineering team of just 15 developers. That model is not sustainable either, because they don’t have the resources to guarantee data integrity and distribution.

As with anything in business, it’s about balancing cost and revenue. Because this is such a new industry, management at these companies is still trying to find their happy medium. How much should we be spending on engineers? On sales? On support? How many clients do we need? How much time can we afford to devote to each client? Socialbakers has 230 employees, 100 of whom are engineers. That is our happy medium.

In terms of why Syncapse went bankrupt, I can only speculate, but my speculation is that it’s because they had no product. They were operating as an agency with no mature product to offer their clients.

Before a brand partners with one of these social media marketing firms, they have to ask themselves: “Will this firm be around one, two, three years from now?”

BII: How important is engineering talent for your company?

JR: Extremely. If you don’t have the talent now, then you won’t be ready for the period that is coming. There will be a lot of changes as firms adjust to new platforms. Facebook used to be the only game in town for us to sink our teeth into for data analytics. Now, Twitter has its own ads platform, creating more analytics around tweets and engagement. A lot of our clients want globalized analytics. Sina Weibo in China is now half the size of Facebook. Our clients wants us in China analysing those social media users. Globalized data is the future of our industry.

BII: How big do you see the social media analytics industry becoming?

JR: It’s already a multibillion-dollar industry. Relative to other channels, Facebook ads are not big right now. The managed size of that — meaning the dollars flowing through preferred marketing developers and analytics companies such as ours — is probably $US1 or $US2 billion in revenue. Only 5 to 10% of brands are using these tools, so naturally our market will grow. I see it growing to five to seven times the size of what it is now.

BII: Which platforms are you most excited about from an advertising and marketing perspective?

JR:Facebook and Twitter.

I’m also very excited about some of the newer platforms, such as Vine and Pinterest, but I think a lot of companies are overestimating their power. I do believe it’s important to test and experiment on these newer platforms, but you need to keep yourself in check and not simply throw resources into wherever the early adopters go, because you don’t know what the return potential is.

BII: What about social video services in general?

JR: I think excitement around Vine and Instagram peaks in six months. The growth of those platforms is predictable and we already know what the potential is for a brand. Volume-wise, Instagram video isn’t at the level Vine is, but it has already surpassed Vine in engagement levels. YouTube still outperforms both on the engagement and volume side. I would have thought Vine would drive better engagement levels.

BII: Snapchat?

JR: I don’t think messaging apps can be counted as social media. WhatsApp, Snapchat — I think these are purely messaging platforms that compete with say Facebook Messenger or text messaging on your phone, and they have very little to do with social media. Of course, I think these companies can find a similar monetization formula to social media, or link up to social media, and then they would overlap with the social media category.

BII: LinkedIn?

JR: LinkedIn’s promoted posts are good. I see that platform going in the right direction. I truly believe promoted content is the future of social media advertising. It’s more elegant than display ads, and it’s so inherently natural for a platform built on communicating with friends, family, and coworkers.

BII: Some brands are experimenting with conducting customer service via social media. Do you see a future there?

JR:Most certainly, but I don’t think brands are there quite yet. The average customer service response time by brands on Twitter
is longer than six hours. That is simply unacceptable. However, there are some brands that excel at social media customer service.

U.K. National Rail responds, on average, in six minutes. During peak activity they have 20 people on call responding to customers via social media. From surveying our clients, we found that 70% considered it a cost-saver, but even more considered it a ROI-driver. KLM or Royal Dutch Airlines sells their customers a better seat via social media, which drives customer satisfaction. AirFrance also does a stunning job on social customer service.

BII: Why the airlines? Isn’t it a little ironic that they are pioneering excellent customer service on social media, when they’re not really known for being customer-friendly in general?

JR: I think they were pushed by the natural disasters that they’ve faced. In Europe, it was the two ash clouds that disrupted airlines around the world. If they can help cushion those costs by good customer care, then that’s good for them; they can regain customer trust.

In the U.S. it was Superstorm Sandy. JetBlue and American were barely using social media before Sandy, but we saw their activity pick up after the storm to inform travellers of when flights would take off. I hope you don’t need a natural disaster in these industries to get them to start responding.

Electronics companies from a historical perspective, didn’t deal with customer complaints, the retailers did. So it wasn’t Samsung, it was BestBuy doing customer care. But that’s all changed. Now, customers go directly to the manufacturing brand.

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