It wasn't long ago that Syncapse Corp., a Toronto-based social media marketing management company, was regarded as an international leader in the social media marketing industry.
The company raised a staggering $45-million, had offices in Toronto, London, New York, and India, boasted a client roster that included some of the world's largest corporations, was honoured with Facebook's preferred marketing developer designation and was considered an international thought leader in social media marketing. Clients included Coca-Cola, JP Morgan Chase, Johnson & Johnson, Anheuser Busch-InBev, Amway, and L'Oreal, to name just a few.
So when the company filed for bankruptcy last week, laying off 154 staff members in the process, many were left wondering how the most promising name in the industry could have met such an abrupt end.
"Syncapse going bankrupt, that to me is kind of crazy, because they have huge huge clients, and I just can't fathom having the global clients they have and also claim bankruptcy," said Mario Zelaya, global managing director of Toronto-based social media marketing company Majestic Media, which also receive a preferred marketing developer badge from Facebook.
"(Syncapse) was the one that first produced what in our industry was kind of revolutionary, that [white] paper on what a [Facebook] 'Like' is worth, nobody had had published or done that kind of research before," he added. "It was clear these guys knew what they were doing, they knew what they were talking about, they're thought leaders, market leaders, and once you publish things like that it's no wonder Johnson & Johnson came knocking at their door."
Syncapse was founded in 2008 by then 24-year old Michael Scissons in the Regus Business Centre at the corner of Young and Dundas. Over the next five years, the company quickly grew from four staff trying to make a splash in Toronto to 200 staff servicing clients in 60 countries.
The company offered a wide array of social media marketing solutions, including consulting and strategy, measurement and analytics, social and search advertising, engagement automation and training.
As one of the first innovators in the industry, there's no question that Syncapse helped define social media marketing as it emerged in the late 2000s, being recognized as one of Deloitte's Technology Fast 50 and making the PROFIT HOT 50 list in 2010. But as the industry continued to evolve, Syncapse began to fall behind.
There are many reasons why Syncapse found itself filing for chapter 11, but asset sales documents reveal a company that leaned heavily on a single client. In 2009, RIM/Blackberry accounted for as much as 89 per cent for the Syncapse's revenue. As the smartphone developer's shares began to fall, the company scaled back its social media marketing campaigns, providing less than 10 per cent of Syncapse's revenue by 2013.
"They (RIM/Blackberry) were far and away Syncapse's biggest customer, and they gradually disappeared as a customer over a couple of years, so that was a giant challenge," said Barry Reiter, chair of technology, media and entertainment for Bennett Jones LLP, and one of Syncapse's former board members. "The other challenge was that we didn't have as quick or as big adoption by replacement customers as we might have wanted."
Though the loss of the Blackberry account crippled the company, Mr. Reiter believes it was only one of the many challenges that led to Syncapse's downfall. "People ask me all the time what went wrong, and the answer is about a thousand things went wrong," he adds.
Syncapse's founder and former CEO Michael Scissons similarly believes that there was no single cause that led to Syncapse's bankruptcy filing.
"Syncapse competed in a highly competitive market with many well-funded competitors from around the world," said Mr. Scissons in a statement prepared for The Globe and Mail. "Despite our best efforts, multiple factors relating to evolving customer needs, market pricing changes, customer revenue concentration and rapid changes within partners like Facebook, Twitter and YouTube left the company in a position where this action was necessary."
According to Mr. Scissons, some of the biggest challenges faced by Syncapse were simply part of the everyday life for a social media marketing company trying to innovate in an industry that is constantly evolving.
"There's no product that's built to last anymore, especially in that space," said Paul Crowe, a partner at BNOTIONS, a mobile and data innovation firm. "Six months later everything may change. The platform may change, Facebook may roll out an entirely new analytics or insight tool that could kill something that you've been working two and a half years on, so it's a challenge."
But in spite of these inherent challenges, and in spite of how Syncapse's story ended so abruptly, Mr. Crowe believes that social media will continue to be an important and profitable sector of the marketing industry for years to come.
"We don't refer to what we do as social media marketing, it's just marketing, and one of the areas we can help our clients improve what they do is utilizing social media, but it's no longer separate from marketing itself," said Mr. Crowe. "I don't think the industry is going away any time soon."