Why Did Apple Really Buy Topsy?

Topsy would not be Apple’s first social media play. Topsy could help Apple better monitor the social-media conversation around its products including targeted advertising on iTunes radio or the iAd platform. But, nonetheless, the pairing of Topsy and Apple was definitely not obvious or expected. 

Apple isn’t quite ready to compete with the social media giants, but that doesn’t mean the consumer electronics titan isn’t looking for more social intelligence. Apple has acquired Topsy for more than $200 million, according to a Wall Street Journal report.

Topsy offers Twitter insights that promise to detect and follow breaking news, drill into any new event, and get instant results. The social insight company will let Apple analyze competitor’s Web traffic and sets the stage for making better decisions through analyzing billions of Twitter conversations in real time.

Apple could not immediately be reached for comment, but a spokesperson told the Journal, “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.” Neither Twitter nor Topsy was immediately available for comment. 

What’s Apple’s Plan?

We asked Greg Sterling, principal analyst at Sterling Market Intelligence, for his take on the reported deal. He told us it’s an unlikely acquisition but it may have several objectives. Topsy claims to have the only full-scale index of the public social Web and can instantly analyze any topic, term or hashtag across years of conversions on millions of Web sites.

“Among them Topsy may help Apple improve search and social recommendations for content. There may also be a Siri angle. And Topsy analytics  -- the company has the entire Twitter search archive and ‘firehose’ -- may be useful in a number of ways,” Sterling said.

“This may also partly be a pricey ‘acqui-hire’ as well. I suspect the technology and Twitter access will be deployed in a number of ways by Apple over time. But the pairing of Topsy and Apple was definitely not obvious or expected,” he added.

An Advertising Play?

Topsy would not be Apple’s first social media play. The company previously launched Ping, a music-sharing service, that quickly shut its doors. Apple has also invested into other search tools, including Chomp for searching mobile apps. But this could have more to do with iAd.

iAd lets users stay within an app they are using and still engage with an advertisement, even while watching a video, playing a game, or using an in-ad purchase to download an app or buying digital media. 

Apple generated strong interest in its iAd mobile advertising network in 2010. The network launched on the iPhone and iPod touch devices and attracted the likes of AT&T, Best Buy, Campbell Soup, Unilver, Geico, GE and Target. Indeed, Apple reported it posted more than $60 million in iAd commitments in 2010. That represented almost 50 percent of the total U.S. forecast for mobile-ad spending for the second half of 2010, according to J.P. Morgan.

The Journal speculated that Topsy could help Apple better monitor the social-media conversation around its products including targeted advertising on iTunes radio or the iAd platform.