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The vitals
Radian6's first office wasn’t technically an office at all – it was a small room in the National Research Council building in Fredericton, N.B. The original cast of three swelled to 36 following the IPG contract, and workers split their time between offices in Moncton and Fredericton. Prior to IPG, Radian6 had only a handful of trial clients, none of whom paid for their software. Now, 130 public relations firms around the world are paying customers.
The key decisions
Radian6's founders knew they were onto something with their software, which could monitor and analyze Internet conversations, but they were unsure about their target market. After interviewing contacts in several industries, they decided to focus their efforts solely on adapting their product for the public relations industry.
The oversight
Their contract with PR conglomerate Interpublic Group of Companies (IPG) brought a sudden rush of customers, and each one had to be trained on how to use the software. In just a few weeks, 450 new users were led through live, online training sessions. Prerecorded training videos would have eased the burden, and have since been bundled with the software.
The intriguing idea
The hidden opportunity is the overseas market, which is expected to grow by 3.3 per cent even as the economy slows. That’s why its software can function in most major languages, including French, German, Spanish, Japanese and simple Chinese.
The market
There are more than 54,000 public relations companies in the United States alone, according to market research firm IBISWorld, with IPG holding the biggest market share at just 4.7 per cent. That leaves a lot of doors for Radian6 to knock on, as it looks to earn a chunk of the $11-billion (U.S.) in revenue the U.S. alone generates each year.
Numbers
$6.9-billion (U.S.): amount spent annually on social media by 2012. 1,600,000: blog posts per day. 10 hours: content added to YouTube every minute. 40 per cent: Canadian companies that fear they will lose customers to companies that are embracing social networking. 87 per cent: Companies that think they will be forced to adopt social media technology.
The brains behind Radian6, a New Brunswick start-up touting software that tracks word-of-mouth conversations on the Internet, were understandably nervous. They were waiting to learn if Interpublic Group of Companies, one of the world's largest marketing, advertising and public relations conglomerates, would pick their product. A contract with IPG would give Radian6 instant credibility, and open the door to more than 100 PR agencies that work under its banner. A miss would set the social media monitoring firm back significantly, and cost it precious momentum. "It was the difference between starting at the top and working our way down, or starting at the bottom and trying to convince people to give us a shot," says CEO Marcel LeBrun.
Their anxious wait didn't last long. Within weeks, they learned that Radian6's software - which creeps the Internet for any mention of a company and compiles reports on its findings - would be adopted by IPG and recommended to all of its agencies.
That was November, 2007, when the company had only a handful of paying customers and a few employees working out of a one-room office. Today, Radian6 employs 36 people in two offices, and has more than 130 customers. "We were able to enter the market with a significant amount of credibility built into our brand," says Chris Ramsey, the company's vice-president of business development.
There was nothing random about Radian6's big contract with IPG. After developing the Internet-scouring software, founder Chris Newton spent months knocking on doors before the firm decided to target the public relations industry. "There were 15 or 20 applications that it could have been used for," Mr. LeBrun says. "They were all great, but in my experience you want to go narrow and deep on something."
The PR agencies had admitted they were running into trouble with customers who expected them to monitor what was being said about them on sites such as Facebook, YouTube and Twitter. Suddenly, the agencies were spending inordinate amounts of time performing random searches, and cutting and pasting what they found into reports.
Convinced Radian6 was heading in the right direction, Mr. LeBrun started trying to raise money. With the help of friends, angel investors and employees, he pulled together $750,000, enough to develop the software and tack two new rooms onto their one-room office in the National Research Council's Fredericton facility.
The company then approached IPG subsidiary Weber Shandwick, and asked if it wanted to take part in an "early adopter" program. Weber could use the beta software for free, as long as it agreed to provide Radian6 with regular feedback. "It was a formal invitation. The deal was, you let us deeply into your business so we can understand exactly what you are doing and what you want to be doing," Mr. LeBrun said. "We'll build your dream product, and you can use it free for a while. So they ended up getting disproportionate influence in the product, and were happy to be able to shape its development."
Using the software in their day-to-day work meant that the PR professionals were able to identify revisions the programmers hadn't considered. For example, Radian6 had started with the idea that it was important to measure only the "important" Internet hits, ranking their findings based on the level of influence of the source. But the real problem facing PR firms was that clients were finding things on the Internet before the public relations professionals they were paying to do it for them. "Once we heard that, we spent months making sure [our reach was] broad enough to cover everything," Mr. LeBrun says. "That can just sound like nuts-and-bolts engineering, but it's a huge differentiator for us. We can go in and say, 'You won't miss anything your client is going to find.'"
After one year of constant development and a $14-million round of financing, Radian6 was in a position to win the IPG contract. "They were very happy with our software by the time we actually got it to market," says Mr. Ramsey. "The market that we happened to go into was extremely hot....Having that deal signed and publicly announced had a tremendous impact on our business."
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- In his own words
Marcel LeBrun talks about Radian6's strategies for snagging new clients, the challenges growth created for the small business and what he would have done differently. Click here to download the podcast (right-click and choose "save as").
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Connect with Marcel LeBrun
Marcel Lebrun will join us for an online discussion Friday at 1 p.m. ET. To ask Mr. Lebrun about his strategy behind developing Radian6 and securing Interpublic Group of Companies as its make-or-break client, click here.
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Expert insight
"Businesses are built on a series of breakthroughs. You need these moments at different stages in a life-cycle of a firm, and once you have one you need to start thinking about the next phase of growth and be brutally honest about what will get you there. It's like the old saying, the things that allow you to take the hill aren't the same things that allow you to hold them hill," Elspeth Murray, a Queen's University professor of strategy and new ventures, says. Click here for more and to pose your own questions to Ms. Murray.
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