Editor's note: Our Splash Health, Wellness and Wearables event is coming up on March 23 in San Francisco. We'll have Mario Schlosser, Founder & CEO of Oscar Health, Brian Singerman (Partner, Founders Fund), Steve Jurvetson (Draper Fisher Jurvetson), J. Craig Venter (Human Longevity), Lynne Chou (Partner, Kleiner Perkins), Michael Dixon (Sequoia Capital), Patrick Chung (Xfund), Check out the full lineup and register for tickets before they jump! If you’re a healthcare startup and you’re interested in being part of our competition, learn more and register here.
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Social media management company Hootsuite is best known for offering social selling tools, allowing its customers to develop relationships, via social networks, as part of the sales process.
More recently, it expanded into a new area: social advertising, complementing customer's organic social media efforts with social advertising campaigns. It's a shift from monitoring the conversation to actually being able to drive the conversation.
Hootsuite Ads launched in October with six partners, and now the company has bought one of them outright, announcing on Tuesday that it has acquired AdEspresso, a SaaS solution for Facebook and Instagram advertising. No financial terms of the deal were disclosed.
AdEspresso allows its users to split test every aspect of their Facebook Campaigns, allowing them create thousands of variants with only three clicks. Customers also get customizable dashboards and detailed metrics.
On average its users, which include startups, merchants and small agencies, save up to 70 percent of the manual work needed to setup a Facebook Campaign and improve their performance up to 40 percent, the company says.
Current customers include Kabbage, Microsoft, HubSpot and Teespring.
"AdEspresso stood out to us for a number of reasons, one of which was their customer base. They are one of Facebook's largest market partner globally, with 5,000 customers. We talked to their customers and they love their product. It's one of the fastest growing companies in the space," Rich Hungerford, Senior Director of Business Development at Hootsuite, told me in an interview.
"They also cover wide a breadth of problems. We have 15 million signups at Hootsuite, and AdEspresso can be used across the spectrum, at all sophistications and levels. It's easy to use and a powerful application."
Going forward, AdEspresso will continue to operate as an independent company, focusing on the self-serve market, while also powering Hootsuite Ads, which serves the company's more than 1,000 enterprise customers. The service will cater to those customer's specific needs and functionalities, allowing organizations to create and manage social advertising campaigns faster and more efficiently.
"Look at where we are in our trajectory. We have thousands of social marketers who create a ton of content across organic channels, so this fits well within our organic strategy by complimenting it with paid content," Hungerford said. "There is an increasing need to promote organic content, measure, track and optimize it. AdEspresso allows us to provide our customers with a tool that is powerful for Facebook and Instagram ads, which they can manage across teams, and put spend behind it."
Founded in 2013, AdEspresso had raised $3.2 million in funding from investors that included 500 Startups, BoomStartup, Texas Atlantic Capital, VTF Capital, VentureFriends, SierraMaya360, and others.
The company has over 40 employees, in San Francisco, Milan and Rome.
"AdEspresso was really a market leader in terms of volume customers. They are one of Facebook's top partners and growing really fast. Now they can take the opportunity of Hootsuite's global footprint. The combination of the two companies helps accelerate the growth and the roadmap for our customers."
Social ad growth
Social paid advertising has been growing quickly, and Hootsuite sees itself taking advantage of a big opportunity.
This year, social network ad spending is expected to reach $35.98 billion, representing 16 percent of all digital ad spending globally, according to data from eMarketer. That is up from $29 billion in 2016, a growth rate of 24 percent,
"More and more our customers have spending budgets for paid content as well as organic. We've seen an evolution over the last couple of years of in the growth of social marketing departments, and we want to provide tools to enable them to do optimize their spend," Hungerford told me.
He specifically pointed to AdEspresso's key functionalities, including split testing and automation, which "make each dollar that much more effective."
"We eat, live and breathe social. Display ads aren't going away but we see a really unprecedented opportunity in the ability to target specific demographic across social," he said. "We look at how content algorithms are changing, making the need to promote content that much more important. We've hit a huge amount of Facebook usage and we've had a ton of success for our customers as they promote content on Instagram and Facebook, and we only see that increasing."
While display ads are paid for by CPM, social ad success is measured in brand awareness and impressions, as well as in performance based success, meaning conversion to website and to point of sale.
"In the future, customers will be a lot more conscious about how they spend their ad dollars, making sure the right content, and the right copy and creative, is to promoted to the right demo. There is going to be a lot of maturation in this space."
(Image source: adespresso.com)