The Big Bet on Social Data

At a time when content businesses grope for business models, it’s clear where the real money remains: data. The best part about data: no need to publish content or even attract users.

The latest evidence: Clearspring Technologies, a company that started as a widget maker back in the heady days of MySpace, closed a big $20 million funding round, led by former Twitter and Zynga investor Institutional Venture Partners, to build out its social data business. Clearspring boasts it sees a billion Internet users — all without operating a single Website. It does this through its AddThis box that sits on about 9 million Internet sites. The innocuous box is more than an easy tool for social-minded users too lazy to cut and paste a URL. It’s a vacuum of social data, collecting who is sharing what and how often they’re able to get people to click on what they share.
Clearspring has turned that trove of data into a tidy advertising business that satisfies the rising demand for audience-based placements. It collects the audience data, packages it up into segments, then sells it through ad exchanges. It’s a sign of the times that it can do all of this itself without creating any media to show the ads. Others do that, but Clearspring has the raw material (audience information) that’s more valuable nowadays than creating the content that brings users to the sites in the first place. It’s not like people go to sites with AddThis because there’s a box that lets them share on Facebook.
The question is whether publishers will see tools like this, which benefit them by encouraging sharing that drives more traffic back to their sites, as another form of data leakage. After all, Clearspring boasts scooping up enough data per week as the Library of Congress has stored online in total. Via email, Clearspring CEO Hooman Radfar offered this explanation of why it was a net positive for publishers.
“AddThis is a valuable part of a web publisher’s social media toolkit because it provides them with content sharing tools and analytics to optimize traffic from social networks,” he said. “Because that value proposition has resonated with so many publishers, we have achieved a massive reach via our network of 9MM domains. Now, we’re working on tools that will leverage the power of our massive footprint and bring that value back to each individual publisher.”
That last part is the challenge for Clearspring. Publishers rightly worry about the army of buttons and tags on their sites that are sucking in data. It can seem to many publishers like this new world of data-fueled ad buys that find precise audiences benefits nearly everyone except the people doing the work of creating content that people want to share. Instead, a new generation of middlemen appear to be making out quite well while publishers struggle with the commoditization of ad space.
Radfar said that’s not the case. Publishers all think their data is the most special, but the truth of the matter is it’s typically only valuable in aggregate and parsed in certain ways.
“Some publishers when they look at the value of their data are saying my brand is worth X and thus my data must be worth Y,” said Radfar. “Often the value of the data coming from brand publishers in verticals isn’t necessarily the most valuable data for advertising and targeting.”
Even with the consent of publishers, social data has yet to definitively prove its value. Buyers say it is certainly important, but the question remains just how important. Intent data — search, a visit to a retailer’s site — is without a doubt the gold of ad targeting. The connections people have, their proclivity to share and who they’re connected with are new signals that are often packaged with intent data. Social ad targeting companies like MediaSix and 33across aggregate such social data, from sources that include AddThis competitors, in order to augment remarketing campaigns, for instance.
“What social has done is unlock data,” he said. “The biggest outcome of social media is big data.”
Radfar promises more to come with the social data Clearspring has stockpiled.
“In the coming months, you will see the next generation of our audiences that leverage the massive ‘socially connected’ data set we have built as the Web’s largest sharing platform,” he said.
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