Following the announcement of the Lexalytics merger, I wrote that the availability of off-the-shelf text analytics and custom software development suggested some questions about technology strategy for social media analysis vendors. The main question is an old one in software: Build or buy? The follow-up flows from a value chain analysis, and it sets up a series of decision points for the build/buy decision. It turns out that a social media analysis platform is built from a few, basic building blocks, and a decision to build a custom system doesn't imply a decision to build every part.
Three basic building blocks
The technology behind monitoring and analyzing social media content fits into three basic categories: content sourcing, analytics, and the software application that provides end-user features, such as dashboards, reports, and alerts. Many service providers add value beyond what is baked into their software, of course, but these are the basic technology building blocks. What makes them interesting is that each generates a potential product that can be offered as the "buy" option to other companies.
- Content sourcing
The first step in analyzing social media content, sourcing includes source discovery, content aggregation, filtering and metadata tagging. The result is a feed of relevant content data, with duplicates, spam and other noise removed. Feeds of traditional media sources have been available for years; syndicated content sourcing is available for social media types now. (See a list of social media aggregators)
The next step is analysis of the content, also known as text analytics. The system extracts key words, concepts and sentiment from individual messages; depending on the vendor, it may also evaluate messages and sources for influence, demographics, location, audience size, and more. This is the hard part, which inspires the question of whether computer analysis is good enough.
Perhaps assuming that text analytics must be homegrown, many vendors skip the analytics entirely, using human analysts or leaving metrics out of their product. But text analytics has its own build or buy decision. The technology is available from software companies in the business intelligence market, and at least two companies focusing on social media, Lexalytics and Leximancer. (See a list of text analytics options)
Content sourcing and analytics constitute checklist features in a social media analysis platform: "Sentiment? Check!" They represent a lot of work, but it's hard to tell whose works better. The application software, on the other hand, is what clients see, and it provides many opportunities for evaluation. Is the user interface dated and clunky or sleek and current? How is content presented? What can users do with it? How easy is it to explore the data or create reports?
The once clear line between dashboards and social media analysis platforms for workgroups has blurred over the past year. Outside sofware development services will tend to increase the capabilities of dashboards from less traditionally technical vendors.
Syndicated and licensed components don't lead directly to commmoditization, but the threat is there for vendors who fall behind in capabilities. There's still room for differentiation, especially in application features, not to mention the research and consulting services many vendors offer in addition to their systems. But separating the build or buy decision into at least three discreet decisions does have effects:
- Lower barriers to entry. New entrants—startups or established players in adjacent markets—can launch social media analysis tools without building everything from the ground up.
- Higher baseline expectations. Dashboards from companies without strong technology traditions will soon include advanced technologies. Basic monitoring dashboards are becoming commodities (witness the $5/month entry pricing).
- Fewer reinvented wheels. Vendors can compete on their strengths in content sourcing, analytics or application development. External sources remove the need to develop their own capabilities in areas outside of their core strengths.
More posts in the "Build or Buy?" series: