Browsing all articles from April, 2012
Apr
18




 





Even Smarter Analytics: IBM to Acquire SPM Software from Varicent

On Monday, IBM announced it will acquire Varicent Software Incorporated, adding sales performance management (SPM) capabilities to its already impressive Smarter Analytics offerings.  The move puts IBM in a strong position to compete for new business in the financial, insurance, retail, and telecommunications industries.

Varicent’s software should be particularly attractive to businesses whose revenue is driven by commissioned salespeople.  By automating and analyzing the collection and reporting of sales data across finance, sales, HR, and IT departments, Varicent helps businesses yield more profit from their sales, most notably by aligning compensation and other costs with strategic business goals.

In addition to state-of-the-art SPM software, Varicent also brings a network of more than 180 customers to the table.  Their portfolio includes a significant number of sales organizations within high-growth markets – in other words, the exact customers IBM must target in order to achieve their goal of building a $16 billion analytics empire by 2015.

We continue to be impressed with IBM’s strategy of uniting cutting-edge analytics solutions under the Smarter Analytics banner.  It’s also great to see software geared towards sales executives incorporated into a portfolio that already includes Coremetrics and Unica – both of which are more strongly associated with marketing.  Hopefully, by linking these two related disciplines in a single platform, Smarter Analytics will help reduce some of the tensions that often exist between sales and marketing departments.

The market’s appetite for software that can transform IT insights into profitable outcomes is still growing.  More and more organizations are realizing that analytics can help them use operational and financial data to gain a significant edge over their competitors.  And by folding the most powerful tools available into a single platform, we think IBM is positioning itself for unparalleled success in the ever-expanding analytics market.

Apr
9




 





Facebook is a Bad Investment

We like Facebook for its internet marketing capabilities. But at a valuation of $100 billion, it’s definitely over-valued.

The world’s largest social media network only made $3.1 billion last year, with an income of about $1 billion – so that’s a valuation that is 100 times larger than its income.  And Facebook has 800+ million users, meanings its actual income is about $1.25 per user. But at the current valuation, the average user value is $125.

When thinking about the value of a user, it makes sense to look at media giants, like Disney, or CBS. After all, television is still king.  For instance, did you know that the average CPM for national television shows is about $15 – $30 per thousand? A TV commercial usually costs $150,000 to $300,000 per 30 seconds for national programs.  The most successful prime-time TV shows have a rating of 11.0, meaning they reach about 11% of all households in America (there are approximately 102 million households).

For the sake of argument, let’s assume that everyone in the US watches TV – that’s about 307 million folks. Let’s take a look at the major networks: Combined, Fox, NBC, ABC, CW and CBS took in approximately $21.7 billion in 2010 – a 5.3% increase over 2009, when they captured about $20.6 billion in ad revenue, according to ad-spending tracker Kantar Media.

So, the major players in the US market for television advertising took in $21.7 billion in revenue in 2010 (that’s the most recent number I could find using a quick Google search, but let’s face it, we know it didn’t grow more than a few percentage points at best in 2011). That values each user of the television industry (which, again, is all of us) at about $70.00. Does one website like Facebook really deserve more valuation than the entire TV industry?  We don’t think so.

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