Fellow stockholders and change agents,
Bazaarvoice is more committed than ever to our mission of changing the world one authentic conversation at a time, and we thank you for your trust and passion to help us make commerce far more efficient and effective for consumers, retailers, and brands. One thing we love about our business is how quickly people say, “I didn’t realize that there was a company powering those customer conversations I use when I shop.” We like to say that “we are the company you might not have heard of but provide you with the most important information you use to make purchase decisions when shopping online or offline.” As a result, we believe that Bazaarvoice is having a profound impact on commerce around the world. Let me step back to the beginning of our company.
Seven years ago, we founded our company with a bold vision: to enable retailers to build their businesses through the voice of their customers. We named the company Bazaarvoice – the voice of the marketplace – to symbolize that word of mouth had always been the most important consideration for consumers since the earliest bazaars. People have an innate desire to help each other and have done so since the formation of the earliest tribes, and altruism drives people to share this word of mouth. We were inspired by a number of thought leaders, but we were most inspired by Chapter 4 of The Cluetrain Manifesto, “Markets Are Conversations”. The authors advanced a novel idea at the time because very few retailers allowed their customers to talk openly – positively or negatively – on the retailer’s online property.
The landscape looked very different at the inception of our company as well. Facebook was closed to the public, and Twitter, iPhones, Android phones, and iPads did not exist. Very few retailers had word of mouth on their websites. The fear of negative content was especially hard to overcome with our prospective clients, and we received questions such as, “What if negative customer reviews hurt my sales?” and “How will we react to what our customers say?” We overcame these fears by proving that not only positive but also negative online word of mouth drives increased sales and customer acquisition and decreased product returns. In other words, consumers demanded authenticity.
Further, we enabled a new form of market intelligence that is far more insightful than the traditional customer surveys and focus groups. Early clients, such as Golfsmith, PETCO, and Wal-Mart, experienced strong results, and our business took off. We quickly built a blue chip client base within retail, which later attracted the brands that sell through these retailers as clients.
Online word of mouth is now cited as the most important source of content by those that matter most: consumers. We regularly document this impact on our blog and in our quarterly Conversation Index. Bazaarvoice is driving nothing short of a revolution in market transparency and efficiency, having served more than 330 billion impressions of authentic word of mouth content across the world since our inception. Our clients are using this data to enhance their businesses, changing age-old processes in marketing and merchandising for the better to be more customer-centric in a new era of disruptive, global competition.
The impact that we are having on commerce is at the heart of our business opportunity. This annual report is an opportunity to evaluate how we are doing with regard to achieving our objectives. As CEO, I am extremely pleased with what we accomplished in fiscal year 2012; it was truly an extraordinary period for us on multiple fronts.
In June, we acquired PowerReviews, which increased our global client base to more than 1,800 clients, including 108 of the Fortune 500 and nearly half of the Internet Retailer 500, and in fiscal year 2012, we delivered over 125 billion impressions of online word of mouth in 27 international languages. Fiscal year 2012 revenue grew 64.6 percent year-over-year to $106.1 million, and revenue per employee increased to approximately $187,700 in fiscal year 2012, up from approximately $151,900 in fiscal year 2011. We reinvested these productivity gains back into the business, particularly in areas such as research and development. We concluded this fiscal year as a public company, having finished our initial public offering in February 2012, and we are proud to have each of you as fellow stockholders.
Fiscal year 2012 also marked the most innovative year for our company as we significantly increased research and development efforts and focused on building out the global network effect inherent in our business model. We continued to enhance our platform, Bazaarvoice Conversations, and rapidly adopted innovations in mobile, Facebook, Twitter, Pinterest, and in-store digital. We also built out many new capabilities around authenticity and fraud protection to ensure that the content we serve on behalf of clients represents the authentic voice of consumers. Protecting our industry from fraudulent content in this highly trusted medium of online word of mouth is paramount to all participants on the Bazaarvoice network.
We launched Bazaarvoice Intelligence to deliver insights for brands and retailers as our clients mine the authentic and commercially relevant social data that we collect, moderate, curate, and analyze from their consumers. The operational leverage offered from this data allows our clients to identify batch-level manufacturing defects earlier, launch new products more quickly, focus more acutely on the needs of distinct consumer segments, and make marketing messages more customer-centric.
Through Bazaarvoice Intelligence and other innovations to come, we believe that social data will lead to an unprecedented lift in productivity. Social data will impact the entire organization. After all, it is a structured and digital representation of consumer sentiment, and marketers and merchandisers constantly seek to better understand the thoughts, preferences, and beliefs of consumers.
We formed Bazaarvoice Connections to facilitate the sharing of content from brands to retailers. Through Connections, brands can monitor and answer consumers’ questions to the benefit of all consumers as they shop online or offline. This is enticing to brands as they could not afford to physically staff each retailer’s store to answer consumer questions, but now they may do so digitally. Consumers love this as well, often voting the answers from brands to be more helpful than the answers from other consumers. Retailers and brands both benefit when consumers have their questions answered, and we have directly seen the results, leading to as much as a 53 percent increase in conversion.
Bazaarvoice Media, another important launch this year, allows our clients to leverage this authentic data in emerging word of mouth advertisements. While still in its nascent stages through our partnerships with our clients and their agencies, we hope to ultimately crack the code on a new level of marketing effectiveness.
We opened our platform to more than 100 partners, such as Salesforce.com and SAP, so they can use the data captured through our technology to power applications for enhanced workflow, as well as offline and online marketing applications. The broad impact of this data will occur in many unexpected applications, and we are excited about how the ecosystem will benefit our clients.
Our culture is very important to us; we really want to make our work count. As we strive to achieve our mission and to grow our business, we must hire the most passionate and talented people. We have been as innovative in developing our culture as we have been in developing our products, and we are proud to be consistently named one of the best places to work in Austin. For the first time, we were recently named one of the best places to work in London, and we hope to achieve similar honors in each of our global offices – from Amsterdam to Sydney. We expanded our footprint in the United States with a new office in New York and a new office in San Francisco through our acquisition of PowerReviews. We also continued to invest in the communities in which we live and work around the world through our employees’ financial contributions and volunteer hours and through the Bazaarvoice Foundation. The soul of Bazaarvoice is growing stronger every day.
We are optimistic about our long-term market opportunity and believe that we are in the early stages of a rapidly evolving, nascent market. The $12 trillion retail channel represents a staggering opportunity globally, and brands spend $550 billion on advertising, promotions, and market research to reach consumers and grow their businesses. As brands’ spending continues to shift from traditional to digital channels, and as we grow our vast network of retailers globally, we will all benefit from this shift. Our clients will win in this new age of channel convergence and consumer connectivity.
Today our focus is clearer than ever. We will become indispensable to global brands by launching thousands of retailers on the Bazaarvoice platform. We will connect the brands to retailers across the Bazaarvoice network, and we will build a greater number of brand-specific solutions. These solutions will allow brands to leverage our consumer reach to influence consumer decision making immediately prior to point of sale within the digital shopping aisle.
This combination will generate the greatest value that we can deliver for brands, retailers, and consumers. This is, in large part, the reason for our acquisition of PowerReviews, which is part of an effort to further enhance the growth of our retail client base and serve retailers of all sizes around the world. Simply put, as retail clients join our platform, we attract the brands that sell products through those retailers, benefiting our entire network of global commerce as we capture and syndicate the most trusted and authentic consumer content across our network.
We have envisioned many ways in which to make commerce more efficient for all Bazaarvoice network participants, consumers, brands, and retailers. We believe that, together with our clients, we are collecting and using some of the most valuable, structured data in the history of commerce. This is a most exciting time with mobile, social, cloud, e-commerce, and data colliding in a spectacular way, creating many opportunities for our clients and for us. We are at the intersection of these game-changing trends, and we are committed to lead in social for our clients, just as we have done during the past seven years.
I would like to close by thanking our clients and employees around the world. Together, we are writing the new marketing textbook in an age where consumer sentiment is structured, digital, and easily accessed by retailers, brands, and consumers alike. We are honored to work with such innovative clients.
Together, we will change the world one authentic conversation at a time. As fellow stockholders, you are also change agents, and you are on this very important mission with us. We thank you again for your trust in us, and we look forward to a bright future together, one in which commerce is far more efficient and effective for all.
Brett A. Hurt
Founder, Chief Executive Officer, and President