Hootsuite: Swooping Into Education

The Rise of Hootsuite

Hootsuite is the most widely used social media management platform globally with more than 16 million users as of 2018. With 66 per cent of the American population projected to be using social media by 2022, the company’s goal is to revolutionize the way users communicate through online channels. Hootsuite’s main offering is an integrated platform that allows marketing professionals to conveniently manage networks like Facebook, Twitter, and Instagram through a single dashboard while simultaneously gathering and presenting analytics essential for managing marketing campaigns. Its clients range from small businesses to large enterprises including Virgin Media Group, Herschel Supply Co., and DAVIDsTEA. On top of its core product, Hootsuite also curates training programs and video seminars on social media marketing and use of the platform. Hootsuite maintains a unique relationship with its main social media partners, who offer paid access to application programming interfaces (APIs). This API access is core to Hootsuite’s offering and allows the company to pull user data from social media and display it on Hootsuite dashboards.

The rising popularity of social media has created strong momentum for Hootsuite to grow its business, enabling it to raise more than $300 million in equity and complete more than 10 strategic acquisitions to date. However, while the symbiotic relationship with social media platforms has been key to Hootsuite’s success, a dependence on partners poses a long-term threat.

Ascending Concerns

While social media platforms benefit from third-party API use, revenues from such partnerships are often insignificant. Conversely, Hootsuite’s business model is predicated on this access, and interruptions threaten the company’s ability to maintain its offering. Furthermore, Hootsuite has little bargaining power against social media partners; many firms would simply not prioritize third-party application support in face of rising consequences and higher associated costs from data breaches.

This dynamic fundamentally threatens Hootsuite’s ability to generate stable revenue. Since Hootsuite is reliant on its partners, changes in prices or data access from these partners could make Hootsuite less appealing to its users. As an example, Twitter reportedly began charging Hootsuite close to 10 times its previous price for API access. In response, Hootsuite chose to deprecate the Twitter Inbox and Outbox streams in favour of implementing its own direct message management tool, Hootsuite Inbox.

Data privacy trends are also concerning for Hootsuite. The recent European Union implementation of the General Data Protection Regulation has increased digital privacy requirements for corporations. As a result, the future for applications like Hootsuite, who rely on a constant flow of data from social media platforms, is uncertain. For example, in the wake of the recent Cambridge Analytica data breach, Facebook terminated thousands of third-party apps’ access to personal information.

This presents a significant issue because there is no apparent tactical or operational way to directly reduce this dependency. With the data privacy landscape rapidly changing, large firms like Facebook are unable to guarantee Hootsuite long-term access to all the information it needs. Therefore, Hootsuite needs to reduce this business risk by diversifying into a new revenue stream that does not rely on social media companies. To do so, the firm should capitalize on its online education offering, Hootsuite Academy. While this platform has an existing presence with educators and students, it is underdeveloped and not fully monetized. Investing in this segment can help Hootsuite develop a sustainable revenue stream and protect its business from the volatility of social media partnerships.

Bird’s-Eye View

As of 2017, the U.S. online education industry, which includes mobile learning, massive open online courses, and collaborative learning, was a $27-billion industry. A key trend within this education market is the rising demand for new graduates possessing practical experience. Studies show that 71 per cent of corporate recruiters find a lack of practical experience to be the biggest challenge when recruiting for candidates. To address this experience gap, many companies in the technology and computer science space are turning to edX, a service that partners with corporations to create dynamic training programs. Given Hootsuite’s extensive experience in social media marketing, the company should follow suit and offer a practical educational solution for post-secondary students looking to gain hands-on experience.

Closing in on the Opportunity

Hootsuite Academy is an online education offering that currently educates users on the effective use of the Hootsuite platform and on social media marketing principles. The platform offers a free student program, which gives students access to a basic Hootsuite dashboard and two social media modules. However, in its current form, this program is limited in functionality.

Looking forward, Hootsuite should expand to provide universities with a practical and dynamic social media training product. There is an excellent opportunity to capitalize on demand as evidenced by the 280,000 students that Hootsuite has educated and the 880 schools that use the free student program. Hootsuite should fully monetize its education platform for universities and create a dynamic hands-on simulation to provide maximum value to students. The new educational offering would consist of two components: a marketing simulation application and a concentration of multimedia resources structured as modules for learning marketing theory.

A Two-Part Solution

The marketing simulation would provide students with the opportunity to compete against each other in an online game that mirrors real-life decisions made by marketing executives. Simulations are highly effective in promoting the real-life decision making used in economics and finance courses; examples of such tools include the Fishbanks simulation used by the Massachusetts Institute of Technology and Stock-Trak markets simulation used by the University of Waterloo. Hence, the Hootsuite simulation would provide a practical way for students to navigate and learn social media tools and analytics.

Features of the analytics tool would include detailed social media reports on the reach, engagement, clicks, and page previews that real-world marketers would analyze. Students will be challenged to make decisions in uncertain market conditions and face pressure from “competitors,” their peers in the simulation. Winners will be selected based on how well they analyze the data provided from various social media platforms and how well they react to changes within the environment. To supplement the practical application, Hootsuite could also curate videos to teach relevant theoretical concepts. Features that would be valuable to professors who teach the course include video training for managing the class, access to the simulation platform, comprehensive teaching materials, and user support.

Introducing Hootsuite into the post-secondary education market would allow future professionals to familiarize themselves with the platform, thereby building brand awareness and loyalty early. This would give the company a stronger market position and higher adoption later on. With a large base of marketing professionals on Hootsuite, the company becomes much more valuable to large social media platforms such as Facebook and Twitter, who would want a seamless experience for marketers who spend money on advertisements.

Hootsuite Academy’s New Customer Journey

A Practical Approach

The key to a successful rollout of this program will depend heavily on the buy-in from post-secondary institutions. Hootsuite’s key selling point is its ability to deliver practical learning and leading industry experience to students.

License fees charged to each school will vary based on the expected number of students who will use the simulation. Competitors for Hootsuite’s simulation program include MARGA Business Simulations, priced at €2,960 per team (approximately $3,400) and SimVenture, whose price begins at £4,500 (approximately $6,500) for an annual higher education license. Based on Hootsuite’s comprehensive offering, the company can price its product at approximately $5,000 per year, given that additional multimedia resources are packaged in with the simulation product. The offering would give institutions a choice to purchase a one-day trial before committing to a full six-week program. As with many online education tools like Top Hat and SABRE, schools could also pass on the cost of the product to their students. Moreover, Hootsuite’s existing capabilities in customer support and relationships with educational institutions could be used to provide responsive support for educational clients.

In 2017, the U.S. had 3,895 independent universities and colleges that could purchase a license for the Hootsuite offering. Furthermore, Hootsuite already offers its free program to more than 880 institutions who would serve as potential customers for this full offering. Altogether, this provides a market opportunity of $19 million per year for Hootsuite. Success in the higher education space would allow Hootsuite to gain credibility with its platform and position itself well to diversify into other ancillary and high-margin services like executive education, workforce training, and marketing consulting.

Soaring to Success

Hootsuite’s business and enterprise solutions have proven immensely successful as social media has become an ever-present part of modern life. In its unique position as a facilitator working with businesses, social media companies, and marketers, Hootsuite developed unique expertise in a growing and dynamic industry. A foray into the educational space would allow Hootsuite to take advantage of its student program and reduce its dependency on partners. Education would allow Hootsuite to deliver on its value proposition of enabling individuals to better use social media while achieving the firm’s goal of revolutionizing the way people communicate.


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