Flowtown Turns E-Mail Lists into Customer Networks; Acquires Who Should I Follow? to Boost Twitter Marketing

11/10/10Follow @wroush

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moved to the Bay Area, in our heart of hearts, to do that. We didn’t know what it would be specifically, but we knew our strengths were understanding social and marketing.”

The pair started Flowtown that month, and spent about a year doing social-media consulting work while developing prototype Web-based systems. They abandoned their first product, a system for creating website landing pages to capture e-mail addresses, after it turned out to be harder than they’d realized to make the pages compelling. “You can create a landing page, but then what do you put in for copy?” Bloch says. “We just weren’t that passionate about that problem. But now there are tools out there that create great landing pages.” (He points in particular to Unbounce and Performable.)

Helping customers figure out how to capitalize on existing e-mail lists turned out to be a more interesting challenge for Bloch and Martell. With colleagues David John, Andrew Ng, and Assaf Arkin, they unveiled the first working version of Flowtown on November 1, 2009.

Now the startup’s challenge, before its angel cash runs out, is to prove that there’s a major market for its services—which will depend in part on providing to customers that there’s a reason to pay for them.

There are strong arguments, in the big picture, that social media marketing is a good investment: a study last year by Seattle-based Wetpaint and Altimeter Group, a San Francisco-based consultancy, showed that the companies that are the most active on Twitter and Facebook, such as Starbucks and eBay, saw an average revenue increase of 18 percent between 2008 and 2009, while those that were the least active saw a revenue decrease of 6 percent. (Of course, companies that are doing well are going to have an easier time justifying spending staff time on Facebook than those that are doing poorly, so this study doesn’t prove causation, just correlation.)

But if you run a small company, it’s hard to gather any statistics to demonstrate the value of your own social media activities. So one of the biggest improvements in the works at Flowtown is a set of tools that will track and quantify the effects of specific social media marketing actions. Say Bob sees a tweet from Alice, retweets it, then comes to Alice’s site and opts in for an e-mail newsletter, or, even better, buys something. Those are the kinds of causal connections Flowtown will soon be able to trace, Bloch says.

Even without tools for measuring the return on users’ investments, Flowtown is gaining customers fast—its user base is growing 20 percent month over month, according to Bloch. And by ingesting plenty of its own dog food, the company has built up a respectable following: 11,000 fans on Facebook and 16,000 followers on Twitter. But I asked Bloch whether he ever worries that social media is a fad—or that the shine could eventually come off Twitter and Facebook the same way it has for companies like AOL or MySpace.

“I think it’s undeniable that social is here to stay,” Bloch answers. “Maybe it won’t be Twitter and Facebook that are dominant in the future, and we as a company are agnostic to the platform, but social is very real. Businesses using only social as a channel have been able to acquire really big audiences. They are building an asset—this perpetual social presence—that will continue to give them repeat customers forever.” Or at least for a few years, which is forever in Internet time.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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