by Chris Bahn
Posted 5/13/2013 12:00 am
Updated 10 months ago
Marketers have long recognized that word-of-mouth advertising can impact the success of a product. Consumers who have strong opinions regarding a purchase will typically share those thoughts with family and friends.
Finding a way to maximize the influence of that single shopper and magnify that positive review hasn’t been as easy to figure out, however.
Collective Bias seems to have cracked the code.
Recently recognized by Forbes magazine “as one of America’s Most Promising Companies,” the firm headquartered in downtown Bentonville is becoming a popular tool for brands looking for influence with shoppers. Tyson Foods, Disney, Colgate, Kimberly Clark and Nestle are among Collective Bias’ growing roster of clients, and the firm recently secured $10.5 million in investment funding to continue its momentum.
Co-founders John Andrews and Amy Callahan launched Collective Bias in 2009 and today it is an operation with 67 employees and satellite offices in Chicago, San Francisco, New York, Minnesota, Toronto and London.
Collective Bias uses a community of 1,400 bloggers with large followings and vast reach on social networks to help influence consumers. That network, called “Social Fabric,” has an aggregated reach of 50 million people, according to the company.
What began as a “back of the napkin” idea is now being hailed — by Forbes, again — as one of the “5 Most Important Companies You Need to Know,” all because Collective Bias has figured out a way to build on the personal relationship between consumer and company.
A Nielsen study released in April 2012 underscores the importance of what Collective Bias is doing. More than 90 percent of consumers surveyed worldwide said that they trusted word-of-mouth recommendations more than any other form of advertising.
“A brand can’t just talk about itself all day long or people will unfollow or ignore you,” said Callahan, also the company’s COO. “This was built around the idea of harnessing the power of people who are talking about you, people who are already advocates for you.”
May 2012 was the first $1 million sales month for the company, which reported $10 million in revenue last year. Andrews, who serves as CEO, said the company should exceed $20 million in 2013 and isn’t shy about stating his goal of growing revenues to $100 million for 2014.
Brands are starting to catch on to the power of the Collective Bias model for advertising and marketing. Companies are buying into the idea that a customer posting a favorite recipe and including specific product names with links and photos can be just as valuable — if not more so — than a traditional advertising campaign. That post gets distributed on Facebook, Twitter, Pinterest and other social sharing sites, generating new customers.
Bloggers apply to be part of a campaign and are given a certain product to buy at a specific store. From there they incorporate the product into their daily lives and then through a story, photos and video — or some combination — document the process.
It’s a mostly organic process, although Collective Bias does help manage the posts with embedded links and offers tips on how to supplement a post.
Callahan and Andrews said the impact of their company is only as strong as its blogger community and the content provided. That’s why Collective Bias lists “think community first” as No. 1 on its list of founding principles.
Finding ways to empower bloggers and strengthen that Social Fabric was the idea behind a recent conference in Rogers. Sears, Nestle, Conair and Kraft were among the sponsors for the SoFabCon event, held with the intent of bringing bloggers and brand representatives together for brainstorming sessions on how to better push products in a medium that is viewed as more “real” than traditional ad campaigns.
Personal stories posted on blog sites with names like “kidsaregrown,” “lumpytolean” and “goobermonkey” are becoming go-to marketing tools. And they are having an impact at a fraction of the cost of circular inserts or other forms of print advertising.
Calvin Peters, online and public relations manager for New York City pharmacy chain Duane Reade, was the keynote speaker for one SoFabCon session. Peters praised the power of social shopper media for helping reach customers in a significant way despite a limited marketing budget.
Although it is a city-specific chain, Duane Reade now boasts four times the number of Twitter followers of parent company Walgreens. As part of a case study on what a network of consumer bloggers did for Duane Reade, Peters noted that the chain would have had to purchase $4.9 million in ads for the same impact.
Peters now oversees his own network of VIP bloggers, who work with retailers who sell products through Duane Reade. These “brand ambassadors,” as Peters calls them, are offered perks like travel, meet-and-greets with celebrity endorsers and opportunities to use products before the general public. In some cases bloggers, like a small percentage of those working for Collective Bias, are paid for their contributions.
Do the benefits encourage only positive reviews? It’s a common question but Andrews doesn’t think it is an issue.
“Readers aren’t dumb,” Andrews said. “If I read three or four articles and everything is unicorns and kittens, that sets my radar off as a consumer. We don’t want canned brand messaging. We want it to be in people’s voices. But at the same time there are branding objectives.”
Marrying corporate marketing goals of a client with the content from those (mostly) independent bloggers is where Collective Bias has excelled. Peters said managing the relationship between the two is where Callahan and Andrews “are visionaries.”
Collective Bias has money to invest in its vision thanks to the outside funding secured in April from Updata Partners, an investment firm in Washington, D.C. Startup capital in 2009 — money from Andrews and Mars Advertising CEO Ken Barnett — was only enough for an investment in people who could build relationships with bloggers and brands.
Now Collective Bias is in a position to develop technological tools as well. “We could have continued self-funding, but felt like at this point capital would let us scale at a greatly accelerated rate,” Andrews said. “I think the marketplace is really coming into being right now.”
Implementing an Idea
Collective Bias of Bentonville launched nearly four years ago as a “back of the napkin idea” of co-founders Amy Callahan and John Andrews. Since then the social shopper media company has grown to 67 employees in three countries with a network of 1,400 bloggers. Following are key moments in the company’s history so far.
June 2009: Collective Bias is launched with investment capital from MARS Advertising.
February 2010: Begins aggregating content to help strengthen search engine traffic for brands.
May 2011: Grows its community of bloggers, Social Fabric, to 1,110 members, while doubling its full-time staff.
October 2011: Opens an office in Canada.
November 2011: Develops its own publishing platform for bloggers to promote brands.
May 2012: Achieves the first $1 million sales month in company history.
November 2012: Opens satellite offices in New York, Minnesota and San Francisco.
February 2013: Callahan named by Forbes as one of the top 11 women starting companies. Collective Bias ranks No. 100 on Forbes’ list of most promising companies.
March 2013: Opens an office in London.
April 2013: Secures $10.5 million in Series A Round investment funding.