Salesforce Will Acquire Buddy Media for $689 Million

Can Salesforce translate its Buddy Media acquisition into profit?

In a move that should surprise exactly nobody who followed the rumors from last week, Salesforce has agreed to acquire Buddy Media for approximately $689 million in cash and stock. The transaction will be completed during Salesforce’s fiscal third quarter, scheduled to end October 31.

Buddy Media’s platform allows companies to create and manage customized content on social networks such as Facebook and Twitter. Its tools also include analytics for monitoring user engagement across social networks. The acquisition marks Salesforce’s second big Facebook-related buy in little over a year: in March 2011 it purchased Radian6, which built tools for monitoring activity on Facebook and other social networks, for $276 million in cash and $50 million in stock.

“Salesforce.com now has the number one players in social listening and marketing—Radian6 and Buddy Media,” Marc Benioff, Salesforce’s chairman and CEO, wrote in a June 4 statement. “With CMOs surpassing CIOs in spend on technology within the next five years, our Marketing Cloud leadership will allow us to capitalize on this massive opportunity.”

Presumably, that means that Salesforce will integrate Buddy Media’s products into its cloud-based offerings, most notably its customer-relationship management (CRM) platform.

But in reality, Salesforce doesn’t exactly have an open field when it comes to social marketing platforms. In May, Oracle entered in an agreement to acquire Vitrue, described as a “cloud-based social marketing and engagement platform.” Terms of that deal went officially undisclosed, although TechCrunch pegged the sale price at around $300 million.

“Social media has caused the biggest transformation in marketing since the Mad Men era, causing CMOs to completely re-think their strategies,” Marcel LeBrun, senior vice president of Salesforce Radian6, wrote in a June 4 statement paired with the Salesforce announcement.

However, it’s a big question whether Facebook and other social networks can boost product sales. For example, General Motors recently decided that Facebook ads were an ineffective way to sell cars, and pulled its advertising on the network (although it continues to maintain an “official GM fan page” on Facebook, along with other content). Coming a few days before Facebook’s IPO, GM’s announcement drove analysts into a flurry of questioning whether Facebook was overhyped as an advertising platform.

“Facebook’s ad model is nascent, its utility to brand advertisers mostly still unproven,” read a June 4 piece on Ad Age, “and no one really knows how to measure effectiveness on Facebook beyond valuing a ‘like,’ a share or a click-through.”

In light of that, it seems a little more debatable whether social marketing will pay off in a blockbuster way for Oracle, Salesforce, and other companies leaping into that game.

 

Image: Buddy Media

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