Networked Insights, a 5-year-old, venture-backed company that mines data on social-networking sites and other areas of the web where users engage and leave a footprint to help direct their clients' media spend, has secured a $20 million funding round led by Goldman Sachs.
The Madison, Wis.-based company -- which also has offices in New York and Chicago and now has $29 million total in funding -- has a client list that includes Samsung, Millercoors, MTV Networks, Kraft and Starcom MediaVest and says it guides $5 billion in clients' media spending.
While Networked Insights also once built online communities before shutting down that part of the business three years ago because of competitive overlap with Ning, the core idea always lay in the notion that social data could be a predictive indicator for business decisions.
"When I first pitched this to VCs five years ago, I described this as the 'Moneyball' for marketing," said Dan Neely, Networked Insights's co-founder and CEO, who noted that clients tend to be challenger brands and not category leaders. "If you're No. 2, you can't compete with No. 1 using No. 1's tactics."
By way of example, he mentioned a client that wanted its advertising to reach "Sunday Night Football" viewers, but available inventory was expensive. After examining social data -- including sports sites where NFL fans were commenting, as well as social TV sites -- Networked Insights concluded that a significant number of football viewers were flipping channels during half time and tuning into the AMC drama "The Walking Dead," which had inventory available at 32% of the cost. Mr. Neely said the client opted to make a big buy around "The Walking Dead" to reach its desired target audience.
Samsung's VP-Strategic Marketing Brian Wallace said he started working with Networked Insights three years ago when he was Research In Motion's head of digital marketing and media. He was skeptical when Network Insights recommended doing a deal with "Saturday Night Live" to distribute content on RIM's devices, but the campaign ended up being successful.
"I realized they were going to help me make smart decisions that weren't gut-based," said Mr. Wallace, who said he used Networked Insights to inform RIM's entire media mix.
According to Gaurav Bhandari of Goldman Sachs, who manages the firm's private investment portfolio, his team had met with several companies but decided to lead the round for Networked Insights after concluding it had differentiated itself in the already crowded but still nascent space of social analytics.
"We had approached the space around the notion that social media is playing a very important role in the advertising industry, looking at how brands can engage with these audiences and capitalize on what is being said and have a more robust media strategy as a result," he said.
Networked Insights has 60 employees and is looking to use the $20 million infusion to expand client support, according to Mr. Neely. He also said the company would look to go beyond social and incorporate other data streams -- such as geo, TV, radio, mobile and sales -- into its algorithm at greater scale, enabling it to show potential clients how retaining its services would affect their sales, for example. Mr. Neery also said that the company would be exploring strategic partnerships with demand-side platforms with the end goal of becoming more of a full-service solution.