With the combination of Buddy Media and Radian6, Salesforce executives said the company is well on its way to building its collection of marketing services into a fourth cloud-based business with billion-dollar revenue potential, complementing its sales, service, and development-platform (Force.com and Heroku) businesses.
By integrating the capabilities of Buddy and Radian6, Salesforce said it will be able to unite a disparate collection of activities now being pursued by a variety of departments and functions within enterprises--including public relations, marketing managers, social community managers, and e-commerce teams--and extending those capabilities to external creative marketing, advertising, and social media agencies hired by those enterprises.
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"All of these disparate organizations are working with these [social media] marketing materials and they all need to log into systems to deal with challenges like rights management, workflow, and corporate asset management," said Salesforce.com CEO Marc Benioff during a conference call on the deal. "It's an information-management problem involving the data and metadata around these objects, and it's a perfect match for what we do every single day."
Buddy's tools for managing Facebook, Twitter, Google+, and YouTube applications, pages, and marketing campaigns will support the trend of increased spending on social media, Benioff said. But with Radian6, he said, Salesforce can add the crucial return-on-investment measurement that companies are looking for.
The deal will also help Salesforce tap into the growing buying influence of chief marketing officers (CMOs), a group that Gartner has predicted will be outspending many CIOs on technology by 2017. CMOs may be tightly partnered with CIOs, Benioff granted, but "the CMO is the buyer, pure and simple" where marketing tech spending is concerned, he said. He compared the CMO influence on marketing tech buying to the dominant role that line-of-business sales executives have on sales-related technology spending.
Salesforce.com's combined cash-and-stock deal is its largest to date, and it shows "how big this space is and how big people like Benioff think it's going to be," said Rob Bailey, CEO of DataSift, a data aggregation company that works with social media monitoring firms.
Bailey was reacting to the a report last week that Salesforce would offering more than $800 million for Buddy Media. The final price turned out to be lower, but it's still a step up from the reported $300 million price of Oracle's purchase of Vitrue, a Buddy media rival.
Before making the deal for Buddy Media, Benioff said Salesforce reviewed every major social media marketing firm and that he personally met with at least 10 CEOs.
"We went through all the architectures and all the platforms and they absolutely had the best product, the most complete product," Benioff said, noting Buddy's inclusion of advertising management and social media management in a multi-tenant services architecture. "None of the companies I saw were doing transactions larger than Buddy Media because they have a true enterprise-quality product."
Buddy Media currently has nearly 1,000 customers, including manufacturers Ford, Hewlett Packard, L'Oreal, Mattel, and large marketing agency groups such as IPG (Interpublic Group), Omnicom, Publicis, and WPP. Salesforce.com chief operating officer George Hu said Buddy Media would help Salesforce.com crack more business-to-consumer companies while Salesforce.com business-to-business depth would extend sales opportunities for Buddy Media.
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