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Zuberance raises $8M for advertising platform

The company takes a different approach to word-of-mouth advertising

Financial trends and news by Faith Merino
October 26, 2010 | Comments
Short URL: http://vator.tv/n/130c

Most businesses and advertisers know that the most successful and trusted product reviews come from friends.  Many have tried to harness the power of word-of-mouth advertising to tout their product or service by offering perks and rewards to customers who recommend the product to friends, but this can be tricky.  I, personally, don't like getting sales pitches from friends who are capitalizing on our friendship to earn points and rewards.  Zuberance takes a slightly different angle to word-of-mouth advertising and the company is seeing some big backers.  Zuberance announced Tuesday that it has raised $8 million in a Series B round led by Canaan Partners, with participation from existing investors Emergence Capital Partners and Correlation Ventures.

What makes Zuberance different is its focus on brand advocates to generate word-of-mouth advertising about a product or service.  Brand advocates are consumers or business buyers who frequently review and recommend products without being paid to do so.  Zuberance's platform allows businesses to identify brand advocates using mailing lists and other resources, energize voluntary brand advocates to recommend a product to friends, and track results in real-time.

Zuberance's brand advocacy system includes advocate apps that make it quick and easy for consumers to create a publish reviews and share promotional deals on their Facebook or Twitter page. The advocacy system also includes marketing tools that allow marketers to create and manage advocate campaigns, as well as an "advocacy engine," which allows marketers to scale and track the effectiveness of advocate campaigns.

The San Carlos, Calif.-based startup is boasting some impressive results. The company claims that businesses who use Zuberance's platform see a ten-fold return on advocate campaigns, and conversion rates are five to ten times higher than paid search, online advertising, and email marketing. 

Some of the brands that are using Zuberance's platform include Norton, 24 Hour Fitness, Taleo, and the chain restaurant Chili's.  In a recent interview, Zuberance's CEO Rob Fuggetta told reporters that Chili's identified 500,000 brand advocates in eight months and the restaurant's brand advocate campaign generated $1.6 million in new revenue.  Additionally, Club One, a fitness company, spent $20,000 on a test program with Zuberance and reportedly saw a $180,000 increase in revenue.

I can see how a marketing campaign like this would be much more effective than a traditional word-of-mouth campaign that offers rewards for encouraging friends to sign up.  For one thing, decent, hard-working, God-fearing people don't give sales pitches to friends.  If my friends encourage me to try out a new hair salon because they can get a discounted cut if they bring their friends in, they'll tell me as much and won't go out of their way to sell it to me.  Now, that doesn't actually mean that my friend likes that salon.  It means she can get a discounted cut--that's very different.  People like deals, even if they don't like the actual product.  So ultimately, I'm left with no real reason to try that salon.

On the other hand, I will try the salon if I know she really likes it and goes there often, which is where brand advocacy comes in.  It seems logical that if a company really believes in its product, it won't go out of its way to get customers to pitch to their friends, but will simply make it easier for them to recommend it, letting the product speak for itself. 

Apparently, Canaan Partners agree.  “Zuberance has succeeded in creating a technology platform that helps brands harness and encourage Word of Mouth, turning their most enthusiastic customers and others into Brand Advocates who directly impact sales among their social networks,” said Deepak Kamra, General Partner at Canaan Partners, in a prepared statement.

Image sources: businessihub.com, wearesocial.net


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