Bluefin Acquisition by Twitter

Bluefin Acquisition by Twitter

Case Study: Bluefin Acquisition by Twitter

The Web, social media, and mobile technologies are increasingly converging with television and influencing the ways in which people experience programming. As such, the emergence of social media applications has eventually reinforced the significance of television in entertainment and information. Also, advertisers and marketers are increasingly monitoring user behaviors in social TV networks in order to align themselves with customers’ needs. As a result, Twitter decided to acquire Bluefin Labs, which provides tools and applications that have the capacity to offer comprehensive user data analysis and interpretation services. For instance, Bluefin can determine the characteristics of users from its data through comprehensive analysis and interpretation of their behavior. Conventionally, brands often depend on audience surveys to determine who watches a specific program. The acquisition of Bluefin is expected to transform the way in which Twitter understands its user groups. This paper is a decision case analysis, whereby Twitter is faced by the dilemma of whether or not to reopening Bluefin.

Qualitative and Quantitative Facts

Qualitative Facts

  1. Bluefin Labs was founded to monitor and measure social TV use.
  2. The purpose of Bluefin was to assess the degree of user engagement on social TV and not merely consumption.
  3. Twitter was the main source of Bluefin’s analysis data.
  4. Twitter acquired Bluefin Labs in 2013; however, observers were concerned that the acquisition decision was done in haste.
  5. Some critics stated that Bluefin could have become a competitor to Nielsen, which is the TV audience measurement market, converting its market to a currency without which the media and advertising professionals could not do their jobs.
  6. Twitter hoped that Bluefin would enable it to analyze social TV user behaviors.

Quantitative Facts

  1. Twitter had about 200 million monthly active users across the world.
  2. In 2013, Twitter acquired Bluefin that was estimated to be between $70 million and $100 million.
  3. Bluefin had accumulated programming of about 2.5 million minutes of television programs.
  4. Buefin stated that it had found that approximately 40 million people in the United States often communicate promptly about television programs.
  5. In addition, Bluefin found that 35 million people made about 910 million tweets and comments.

Internal Controllable Facts

Marketing Mix

            Product/ Service. Bluefin provides social TV analytics services to Twitter and other organizations and groups. The firm has a group of web-based applications that provide business organizations with the social TV user patterns within a specified period of time. The analysis of user patterns includes determining the average length of time that each customer group is engaged in their respective social media TV platforms (Deighton & Kornfeld, 2013).  By analyzing and tracking the behavior and change in user perceptions towards television program contents that are accessed through social media, Bluefin advices business organizations on the right social TV programs to use, for advertising, their products and services.

            Pricing. Bluefin mainly uses a premium pricing strategy for its services. The purpose of using premium pricing strategies to target customers and organizations is to create the perception that the services that it offers are more valuable than competitors. The organization has grouped pricing packages into three levels and categories: bronze, gold, and platinum. The monthly prices for these packages include $3000, $5,000, and $10,000 respectively.

Place. Bluefin’s distribution strategy represents the chain of intermediaries through which the final customers get services. The company uses a direct distribution channel in which the customer gets the social TV analytics services directly from the organization. However, the firm does not have physical stores or outlets that are scattered across different geographical regions (Deighton & Kornfeld, 2013).  Since it provides online analytics data to advertisers, the organization’s main channel of distribution is the internet, which is not only cost-effective but also has wide network coverage. Moreover, the internet has enabled Bluefin to establish a high international presence. Consequently, accessibility to the organization’s services has been enhanced since customers from different geographical regions can easily access the applications online.

            Promotional Strategies. Bluefin’s promotional efforts mainly focus on internet advertising. The organization has established wide advertising network across different social networking platforms. The advertising contents are designed in a way that is appealing to corporate audiences. Besides, the contents are embedded into television networks that are aired in social media platforms such as Twitter. Bluefin’s promotional programs also emphasize on discounts to customers. For instance, the organization can offer free trial periods for users who wish to test how the company’s social TV analysis application works.

External Uncontrollable Forces

Political and Legal Forces

            The political and regulatory environments within which Twitter and Bluefin operate influence their successes. Governments are some of the leading users of Bleufin’s services; therefore, in both local and foreign markets, change in government resource allocation policies can potentially affect the organization’s sales and profitability. Tax regimes also have the potential to affect the company in many ways (Deighton & Kornfeld, 2013).  For instance, change in taxation policies in both the American and European markets can impact Twitter’s revenue. In the last two decades, Bluefin Twitter has benefited from lower taxation rates in the Western parts of the world. Bluefin and Twitter also have to respond to changes in social media regulations over time, which may include privacy, confidentiality and extraction of personal customer information without their consent.

Economic Forces

            Local and economic conditions affect an organization’s performance. During economic recessions, business organizations often take austerity measures by withholding funds for research, development, and marketing. Since most of Bluefin’s customers are marketers, tough economic conditions may discourage them from using the organization’s services to conduct social media research. On the other hand, increase in government expenditures and disposable income has the potential to boost investments in the social TV sector. Moreover, the availability of critical infrastructures and resources in both local and foreign markets can provide the company with prospects for growth and expansion. For instance, nations that have invested in state-of-the art transport, telecommunication, and internet communication networks can provide Bluefin and Twitter with the necessary conditions for international expansion.

Socio-Cultural Forces

            Societies across the world vary in the way they do business and marketing activities. These cultural variations and patterns can support the organization to increase its understanding of the ways in which it can meet the continuously-changing consumer environment. Examples of these social factors may include traditional practices, societal roles and norms, and demographic patterns. For instance, social media users’ television program preferences vary from one society to another. Unlike western cultures that prefer liberal entertainment contents, eastern societies are more reserved in what they access online. Thus, understanding the cultural characteristics of customers can enable the organization to avoid costly mistakes.

Technological Factors

            Technological change is increasingly revolutionizing how business organizations deliver their products and services to different customer groups. The main technological forces that are influencing the company include innovations in customer services and increased access to big data. Furthermore, the widespread adoption of mobile technological devices provides the company with the opportunity to reach out to social media users in both urban and remote areas. Bluefin should also closely monitor technological advancements in user experience with increasing speed and access to social TV networks. Finally, the organization should embrace technologies that will enable it to significantly lower production and operational costs while maximizing profits.

Environmental Forces

            Environmental sustainability is increasingly becoming an important aspect of all business operations. Government regulators continue to encourage business organizations to exercise social responsibility by reducing pollution and promoting environmental conservation. Twitter and Bluefin should improve its environmental sustainability practices in order to comply with foreign and local policies and laws. Environmental factors influence the company’s success in that regular scrutiny by environmental bodies adds the costs of operations. In addition, environmental patterns are increasingly altering the priorities of product innovation. In many situations, products are designed on the basis of environmental standards and expectations as opposed to traditional value propositions.

SWOT Analysis

Strengths

            There are various capabilities that Bluefin possesses, which gives it sustainable competitive advantage over rival firms. For instance, the organization has a diversified revenue generation model. Although the company primarily generates profits from the sales and marketing segments, it has invested in areas outside this function. Consequently, Bluefin has been able to diversify its revenue stream beyond sales and marketing. Moreover, Bluefin is a highly innovative company, and has impeccable records in consumer-driven innovation compared to many firms that operate within the sales and marketing segments. Furthermore, the company has established a high international presence; it provides services to an expansive network of dealers who support it in delivering efficient services to customers.

Weaknesses

            There are various factors that deter the company from improving its performance and productivity. For instance, Bluefin faces high costs of establishing new supply chain and logistics networks. The improvement of internet and artificial intelligence technologies has significantly changed the business model in disruptive ways (Deighton & Kornfeld, 2013).  Therefore, the company has to develop new and innovative supply chain networks, a move that will cost it significantly. Moreover, Bluefin can be easily imitated by rivals in the same sector. In order to avoid a possible imitation, the organization has to develop an integrated system of suppliers, vendors, and end-users. Finally, the organization faces challenges associated with low investments in the Bluefin Twitter’s customer oriented services, and this area can encourage competitors to gain Bluefin’s market share.

Opportunities

            Bluefin and Twitter have potential areas for improvements in growth and sales. For instance, customer preferences are shifting at a high pace. Increase in disposable income coupled with easy accessibility to information will increase customers’ decisions to explore new products and services. In addition, low inflation rates and recovery from recession and financial crisis has brought stability into the market. The provision of credits at lower interest rates to prospective clients can increase the consumption of Bluefin Twitter’s products and services. Finally, Bluefin stands to gain from increasing customer base in lower market segments. The continued migration of customers from unorganized operators in disruptive innovations will provide the company with the opportunity to penetrate into emerging markets.

Threats

            The leading challenge that Bluefin Twitter is encountering is widespread commoditization of its product segments within the disruptive innovation and information ethnology sector, which poses threats to the company’s growth potentials. Moreover, the change in demographic characteristics of customers poses major threats to the company’s future prospects (Deighton & Kornfeld, 2013). The new younger generations do not have the financial capacity to seek Bluefin’s services compared to baby-boomers who are now retiring. Finally, Bluefin faces stiff competition from similar firms that are increasingly venturing into the sales and marketing sector. While Bluefin is still the market leader in its segment, competition from players such as Nielsen and new entrants may reduce its influence and dominance. 

Conclusion and Recommendations

            Social media gains influence and market share by attracting millions of users across the world. Such organizations may use different platforms and channels to attract users. Social networking sites use applications to track and monitor user behavior in order to develop contents and structures that appeal to them. Therefore, Twitter acquired Bluefin with the primary reason of attracting millions of active social TV users across different social networking platforms.  Bluefin had the potential to provide Twitter with data monitoring services and measuring Social TV user patterns. Twitter also viewed the acquisition as important in providing an opportunity to measure level of user engagement in the social networking site, and not merely media consumption.  Thus, it was not wise for Twitter to shut down Bluefin. One suggestion that the social media company should take is to reopen Bluefin in order to continuously monitor user engagement in its sites.

            Reopening Bluefin can also help Twitter understanding the degree of user engagement on its social media platform; thus acquiring insights into developing contents that attract customers. Bluefin provides advertisers and brands with flexibility in determining their marketing strategies. The ability to quickly modify apps and media contents in accordance with changes in user perceptions and comments can enable an organization to be updated with shifts in consumer tastes and preference.  In addition, Bluefin can give organizations insights into ways of boosting consumer engagement with their products and services. By analyzing people’s views, Bluefin can accurately determine whether or not they like certain television programs. Understanding their perceptions on certain media contents can also provide businesses with strategies of adjusting their contents to meet the constantly-changing customer needs. There exists a strong relationship between user engagement and consumer behavior. Thus, by understanding the television contents and programs that keep users engaged, Bluefin can guide advertisers on the right platforms to market their products and services to attract a wide audience base.

Reference

Deighton, J., & Kornfeld, L. (2013). Bluefin Labs: The Acquisition by Twitter. Harvard

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