Amanda Wegner: How and when did you come up with the idea of tracking social networking sites?
Dan Neely: The idea of NI came about as a result having been fortunate enough to go through the first dot-com boom. We had no idea how to measure the stuff we were building; we didn’t know if it was performing the way it should […] it’s one of the reasons the dot-com bust happened in the first place.
Fast-forward to Web 2.0. We had YouTube, we had MySpace , and even before that we had places like Motley Fool and Edmunds, where communities already existed where people were engaging with each other and social activity was happening. Companies wanted to be in social media, too, but they needed to be able to measure this stuff, because they had to show the value to the company. So I thought it would be really interesting if we could come up with a solution to that problem.
Click-stream analysis, which tracks every click made on the Web, doesn’t really work in social media, because I want to know who’s doing the clicking. Not “who” in terms of personal information, but who from the standpoint of “Are you influential?” In click-stream, an invite here is the same as an invite there. Now, if this invite came from Tiger Woods and the conversation is about golf, and this invite over here came from Dan Neely and it’s about golf, his invite should be worth more than mine. You can’t count them to be the same. So at NI, we said it would be really cool if we actually had a way to understand this stuff. If we could truly understand who the influencers were, if we could truly understand all this interaction and activity happening online, and we could ultimately measure it all rather than just measuring a portion of it.
There are many companies that are looking at what we call today the 15 percent of activity, which is posting activity. I may go into a site and post something, and there are lots of people who scrape that stuff and use that information. But they are missing out on the whole other slew of information, which is the other 85 percent we call “Measuring the Social,” which is about understanding all the other activity, the reading, rating, the sharing, the linking, the writing. How do you understand all that as well, because that’s where there’s a whole other set of value. I think about how I use Edmunds. I may go in and see a car review and invite my wife to go read it because it’s of value. I never posted anything, but certainly I have social activity. Let’s say I looked at the Ford Focus or Edge; it’s valuable to advertisers to know that this is being passed around.
So we came out the an application we call it SocialSense; it’s a way for companies to not only to understand that 15 percent, the post content, but also that other 85 percent, the Measuring the Social aspect, so they can actually get down to the influencers in specific areas. The impact on their businesses has been pretty massive. It’s a cool thing.

AW: Since launching, have other companies come onto the scene doing the same or similar things cropped up?
DN: There are a lot of companies in the space. You have folks like Nielsen that are ultimately scraping the 15 percent of data. They understand the post content; they can rank posts. You may have 100,000 posts here made by 500 people; over here you may have 1,000 posts. But if these 1,000 posts have one million people reading, rating, sharing, linking, writing, this is more important. The problem is, these other companies, and they are good businesses, they are just looking at the 15
percent. But there is no other company that we’ve come across, yet, that is measuring the other 85.

AW: How is that 85 percent qualified?
DN: The reason that NI works so well is because we actually looked at it from an anthropological perspective. Instead of saying, let’s take a technology and apply it to social media, we said, how does social and influence grow in the real world? Let’s understand that and then create a technology.
The way it works is: If you get an invite, did you join? If you joined, did you invite other people? If you invited other people, did you create content? When you created content, what happened? So influence is defined by the connection of those linkages rather than the individual clicks. So influence is an aggregation of your social activity versus interactions or the instances in which you actually click through things. The combination of those two help define what we call Measuring the Social.

AW: Who is your primary consumer today?
DN: We play with the Fortune 2000. Our smallest client is under $100,000 in revenue.
Our biggest client is in the Fortune 15, so it runs the gamut as far as companies we’re working with. The great thing is that anyone can learn from all this activity. We used to have this old standard, staid market research which meant people getting in a room and talking about what a company wanted you to talk about. But the reality is, if you can get consumers in their natural environment to just talk about stuff, you can learn from that … it exposes opportunities in the white space.

AW: In looking through your “Measuring the Social” reports online comparing NI’s research to traditional ratings systems like Nielsen and Billboard, there are some large, in-your-face differences. What does this tell us about the “old way” of measuring and rating this information? Looking into the notso- distant future, how do you think these rating systems will fare in terms
of reliability and efficacy if they don’t incorporate social media measuring?
DN:You have companies like Nielsen who are the standard because they were the first out there and have grown to be massive companies. The reality is, in general, people are frustrated with the numbers they provide, but they are the standard, therefore everyone uses them. Basically, they are taking what they know and extrapolating it across a lot of data they are roughly guessing. The difference I have is I can accurately tell you exactly what’s going on. So, when they tell me that the No.
1 show on TV is Dancing with the Stars or Desperate Housewives, and the No. 5 show is Two and a Half Men, but the reality is that when we Measure the Social, Two and a Half Men is the No. 1 show. The smart advertiser is the one who bought ads on Two and Half Men and got a 10-times interaction value online. If someone does in-show placement of a pair of Birkenstocks, all of a sudden people are talking online about Birkenstocks because there are 10 times the amount of interactions on the Web than there was viewership in the study we did.
The same is true with Billboard magazine. They ultimately are doing things in the oldfashioned way, which is measure what we know and extrapolate across a lot of data, but what we’re saying they’re measuring the wrong thing. If you’re trying to measure things in a social capacity, everything on the Web will ultimately become social. The fact is that we have so many content creators; everyone is a content creator today. The tool set has shifted from being owned by businesses to being owned by the Web user; I will tell you what I think is interesting rather than you telling me what you think an advertiser
thought was interesting. When that power shifts and the consumer is in control in a world where you have Nielson, Billboard, the folks that do the gaming analysis, the game changes. That shift is what’s taking place. NI is in a great place with regards to that, because we are actually able to go after what consumers are telling you through their actions is the most important thing to them.

AW: How immediate is your research?
What sort of turnaround do you get so advertisers, businesses, etc. can make timely decisions?
DN:We can tell them what’s happening on a weekly basis. We can inform them of exactly what they should be buying and where they should be buying it, what they should do from a product placement standpoint. We can arguably inform the TV studios on what they should be greenlighting in terms of consumer interest.
For instance, if a brand is selecting a spokesperson and they’re looking for a music artist, let’s go and check out online who’s
most engaged with this set of demographics and this topic before we even spend the $25 million to have them in the next Pepsi commercial. Let’s figure that out. Let’s figure out the right brand. Let’s figure out if it should be Seinfeld for Microsoft or not. We’ve shifted to a world that is pre-informed versus post-measure. The post-measure aspect used to be: This is my hypothesis with regards to advertising, let me put it out there with a control group, let me measure it … did it perform? If it did perform, let’s throw a whole bunch more money against it. Whereas now I can say, no, here’s what you should be doing, here’s the conversation you should be having, here’s where you should have it and here’s who you should have it with. I can pre-inform knowing that it’s going to perform in a good way because I know how much engagement is there.

AW: How will what you’re doing at NI affect traditional advertising venues such as print, TV and radio?
DN: One, it’s informing the language. This is a great example: Johnson & Johnson uses the term “oral hygiene.” Most people, when they search for toothbrush and toothpaste, don’t use the words “oral hygiene.” Use the right vernacular. Use the words your customers use. I am a foodie, so if a chef describes it as a “croque-monsieur” and you describe it as“cheese on toast,” then maybe you should call it cheese on toast because that’s what people use. So let’s inform them so the conversation
in print and on TV is the conversations your customers want to have and can understand and you’re using their language rather than using your own. Let’s move away from doing 45 tests for the right TV ad and making sure the right language is used. Forget that. Use your customers to inform it beforehand. I think you’ll see more in-show TV placement as a result of social media. I think you’ll see a shift in connectivity of print to online; there has often been a wall between the two.
I think you’ll see more of a push to destinations. I think you’ll see more celebrity created in print and TV; if I have a heay
influencer online, maybe I want them to write a story that’s going to be my ad in Time magazine or wherever it may be.

AW: What is about Madison that makes NI a good fit?
DN: My original premise about NI was we would build a company, raise our first round of capital and then move the company to San Francisco, given that’s where I came from. That changed when I recognized we had a great set of talent here. We have a university that I believe is the No. 1 recruiting school for Microsoft when it comes to computer development. We have a great set of marketing talent here. The other plus side is running a business in San Francisco is very expensive; running a business in Madison is moderately experience. It isn’t without its challenges. I’m doing a technology company in a biotech environment.
It’s hard and I’m the biggest naysayer when it comes to how easy it is to do technology companies like what I’m doing, what
Brian Weigand does, what Penelope Trunk does; those are hard things to do in an environment where you’re ultimately competing against biotech. The biotech mentality is that it’s going to take a long time and it’s driven by the university, we’re not that. If you think about FaceBook, FaceBook is just over two years old; that’s how quickly it can happen,
so we need to get there as a city and as a state. It’s not without its challenges. Having Google move here is great, the Microsoft thing is great, and we’ll get a bunch of other companies here eventually. My goal is to build something that is lasting in Madison.

AW: Where do you see NI headed in the next year?
DN:You’ll see more of a presence from NI in the advertising space. You’ll see us play more of a role there as far as direct interface with our advertising partners and publishing partners. You’ll see some growth from a geographic standpoint. Ultimately, for us it’s about taking the stuff we’ve proven to be valuable and do more of the same. We are in a growth phase of
the business, so where we have to scale this thing is what the next piece is about. ■