How to Build a Business on Facebook: Brand Networks, Nanigans, & More

3/5/12Follow @gthuang

Facebook may not have an office in the Boston area, but it certainly has friends here. Take, for instance, the startups that are building their businesses on top of the social-networking giant—and have some thoughts on where the company is headed.

Last week, those startups (among many others) watched the first-ever Facebook Marketing Conference in New York City with great interest. Facebook rolled out a bunch of new features with names like Reach Generator, Timeline for Brand Pages, and Real-Time Insights. These features could have a big impact on the digital advertising and marketing industry, so the event led me to look at some local companies that are affected by the announcements.

First stop: Boston-based Brand Networks. This is a five-year-old social marketing company that has been profitable without taking any outside capital investment. The startup was one of the early Facebook preferred developer consultants—a select group of vendors that help brands promote themselves on the social network. Thanks in large part to its business with Facebook, Brand Networks has doubled in size in the past year and now has about 45 employees. Its big customers include American Express, JetBlue, AT&T, Starbucks, and Warner Bros.

Back in 2006, Brand Networks founder and CEO Jamie Tedford (see photo, left) was a self-described “agency wonk” at advertising firm Arnold Worldwide. “I saw an opportunity to build a company around activating on social networks for brands,” Tedford says. But at the time, that meant building tools for MySpace, Hi5, Bebo, and other social sites as well as Facebook.

Tedford’s company started working with Facebook in 2007, building an application for Puma. That was the beginning of a strategy to focus its marketing efforts on what was becoming the world’s biggest social network. And as its recent IPO filing indicates, Tedford says, Facebook now “is so much more than a social networking site. It’s a social software company. Facebook owns the social graph.”

Of course, that means the tech giant could also own the future of online advertising. And that’s why there is such a frenzy of activity as advertising and marketing companies jockey for preferred position with Facebook while they also vie for the attention of brands. Indeed, Brand Networks faces competition from plenty of other firms such as Stuzo, Vitrue, and Buddy Media.

Tedford’s takeaway from the New York conference is that Facebook’s advertising strategy is being unified around the notion of storytelling. He says Brand Networks is dedicated to “the creation and amplification of stories through advertising,” so that seems to dovetail with Facebook’s philosophy.

Tedford sees this philosophy—together with new advertising features Facebook has announced, such as the inclusion of ads within news feeds both on the Web and mobile devices—as a watershed moment for the social giant. “On the development side, there have been bigger changes to the platform,” he says. “This for me is the biggest advertising innovation I’ve seen in our years of working on the platform.”

But he insisted that he has no special insights into the company’s broader strategy. “Our biggest challenge is keeping up with Facebook,” Tedford says. “It’s such an innovation-driven company. It’s not like we have a roadmap more than anyone else does.” That said, it’s clear that “mobile is the next frontier. We’re all anticipating that there will be a mobile advertising product coming soon,” he says.

On that front, Brand Networks is certainly not alone. Just around Boston, several other firms are watching Facebook’s developments closely. One of them is Nanigans, a Boston startup that helps brands such as Gilt Groupe and T-Mobile track and optimize their ads on Facebook. The two-year-old company has been growing fast and says it helped run more than 700 large-scale Facebook ad campaigns last year. In a statement in January, Nanigans CEO Ric Calvillo called 2011 a “year of validation” for Facebook’s ad marketplace as well as Nanigan’s software platform.

Meanwhile, Boston-based tech shop Bocoup Labs worked with Facebook to develop a new mobile Web browser testing suite, called Ringmark. The idea is to give developers ways to test mobile browsers for the apps they’re building—things like whether the orientation of the device (horizontal or vertical) is locked for games, and how the camera works for social apps. Bocoup has done consulting and development work for lots of big companies, including Microsoft, Google, eBay, and Walmart.

It remains to be seen how Facebook’s fortunes will affect its ecosystem of partners and developers. Lest we breathlessly proclaim a new dawn of social advertising, for instance, plenty of challenges remain there. And the battle for mobile-ad supremacy is only in its infancy. It seems the company that started at Harvard but moved westward to seek its fortune must continue to evolve, even as businesses around its birthplace bet their future on its success.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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