It was announced yesterday that an agreement was reached on May 19th for the BzzAgent word of mouth marketing site to be purchased by a UK consumer research firm called Dunnhumby, which itself is a subsidiary of Tesco (the world’s second most profitable retail chain, behind only Walmart), for somewhere around $60 million.
BzzAgent, headquartered in Boston, was founded by Dave Balter in 2001 and now has around 800,000 members who have completed over 2,000 word of mouth marketing campaigns. Their staff of 60, including Balter, will remain in place, says Dunnhumby, and BzzAgent will continue to operate independently.
BzzAgent at one time was a rewards program offering points redeemable for merchandise for trying new products and spreading the word about them. The program evolved over time with the evolution of social media and the now-accepted standards of disclosing compensation when blogging about a product. Points are still awarded for telling others about new products — in person, in blogs, and on social networking sites — but the points are now more of a status symbol, with a few perks such as early invitation into upcoming product trials.
The new owner, Dunnhumby, is a company that analyzes the loyalty card data of 200 million cardholders — including 55 million in the U.S. — to better understand consumers’ behavior and to better market to them. They have some major clients that include Coca-Cola, P&G, Heinz, Nestle, Best Buy, Macy’s, and Kroger.
Dunnhumby CEO Simon Hay said in yesterday’s press release that, “Customers’ choices are influenced in many places and social media and word-of-mouth are playing a key role for brands and retailers… With BzzAgent, we believe we can now help our clients understand advocacy and use this knowledge to earn more loyal customers for retailers and brands.”
This purchase is a sign that social media is now being considered a crucial factor influencing purchasing decisions. And perhaps not coincidentally, this purchase is just one month after Walmart purchased a social media company that aggregates and filters content called Kosmix for a reported $300 million. (An interesting side bit of trivia: Kosmix’s founders also created Amazon Mechanical Turk.)
For members wondering how this will affect the program, I can only imagine it being an improvement now that it has the resources of the second most profitable retail chain in the world. I would expect that this acquisition will result in more BzzAgent campaigns — a definite plus. I also wouldn’t be terribly surprised if BzzAgents would be asked to link their loyalty cards to their BzzAgent accounts. In Dave Balter’s announcement of the sale to members, he says something to this effect, specifically, “Shortly (with opt in, of course) we’ll begin engaging campaign participants based on actual purchase activity.”
This is an interesting development, and one that I doubt that Balter could have ever dreamed of ten years ago. “We’ve had several companies interested in acquiring BzzAgent over the years and this combination clearly makes the most strategic sense,” says Jeffrey Glass, a member of BzzAgent’s board of directors. Congrats to the team at BzzAgent!
To see an archive of my past posts on BzzAgent, click here.