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For those questioning Salesforce.com’s $326 million purchase bid for social media monitor Radian6 last month, stop and consider the accelerated market landscape.
The enterprise social software market has evolved to the point where niche markets within the sector, which Gartner said could hit $769 million this year, are seeing consolidation.
There are several companies like Radian6 specializing in the niche of social media monitoring and analytics software. These widgets and reporting tools help social software providers get a good grip on the pulse of what consumers, partners and competitors are saying about their product, service or brand on Facebook, Twitter, LinkedIn and blogs.
Such information is important to influence how marketers shape their brands in an age where the real-time status update has become a chief medium used by consumers to describe their experiences with companies. Naturally, this provides great value to social software providers such as Salesforce.com, which enables salespeople to make connections and drive leads.
Altimeter Group analyst Susan Etlinger said the capability to integrate social data and insight into enterprise applications will shift this year from a differentiator to a requirement for social analytics providers.
That’s why Salesforce.com agreed to buy Radian6 March 30. It’s also why Jive Software picked up Filtrbox, Lithium Technologies acquired Scout Labs, Attensity bought Biz360 and MarketWire grabbed Sysomos last year.
Salesforce.com Chief Marketing Officer Kendall Collins told eWEEK that social has become table stakes for CRM deals, and if “you don’t have a social strategy, you’re dead in these CRM deals.”
That’s why Salesforce.com fashioned its Chatter social collaboration application, which has 80,000 customers using it to collaborate on sales leads and other projects.
Chatter already connected with Facebook and Twitter, but Radian6 will help Chatter customers draw a bead on their market perception across LinkedIn, YouTube and thousands of blogs, photo and video-sharing sites. It also helped that Radian6 was standardized on Java and Dell servers, both of which Salesforce.com also leverage for its swath of software.
“Radian6’s technology is by far and away the best,” Collins said, noting that is why the company has racked up 2,400 business-to-consumer customers. “You are either going to build or buy, and to build something the quality of Radian6 would have take multiple years to get something that’s not even close.”
Lithium Technologies CEO Lyle Fong told eWEEK that Salesforce.com’s purchase of Radian6 points to the emerging importance of social customers in brands’ overall customer relationship strategies.
“These are tools that are like search engines. They go out and scour the entire Web to try to find any mentions of a brand and try to provide analytics around it,” said Fong. “It’s one small piece of it, and everyone has a different take. Companies are buying them and using them in different ways, so it’s become more differentiated.”
Back Story Behind Salesforce.coms Radian6 Buy
Fong said Radian6 will funnel tweets, comments and other pieces of sentiment to call center agents using Salesforce.com. These agents can then respond in kind. Scout Labs provided a more general social sentiment analysis, making it a better fit for Lithium, which helps other companies build customer communities, Fong said.
One would think Jive Software would have had a great shot at buying Radian6, considering that the companies helped launch Jive’s market engagement tool in September 2009.
But then, curiously, Jive turned around and acquired Filtrbox, a relative bit player in the social media monitoring space, in January 2010.
Jive did consider acquiring Radian6. Jive CEO Tony Zingale called the company a good partner and a good group of people. Ultimately, Zingale told eWEEK, Radian6 was overkill for what Jive needed because its specialty was catering to social media experts at PR agencies.
“While we were interested in agencies as a potential advocate for the Hive Social Business Platform, it just seemed like there was such as heavy product there that was way more than was needed and consequently was way more expensive than was necessary for us to put that cash and stock outlay at that time,” he said.
Jive picked Filtrbox because it could be easily integrated into Jive. “It just seemed like a much better price/performance, return-on-shareholder-value kind of equation.”
Zingale said Radian6 is five times more product than even Salesforce.com needs, adding that he doesn’t think Salesforce.com salespeople call on PR agencies.
But Salesforce.com knows what it is buying; it’s already been leveraging Radian6 to integrate social data into its Service Cloud to help users see what their customers and prospects are saying.
To wit, Salesforce.com had no such economic or conformity qualms in paying a premium that Susquehanna Research analyst J. Derrick Wood said was six times the startup’s projected $50 million run-rate.
“We believe value-add feeds from a platform such as Radian6 will give CRM the ability to up-sell new services on the Chatter platform that should help better monetize this Collaboration service,” Wood wrote.
Altimeter Group’s Etlinger noted that as social engagement becomes more ubiquitous within the enterprise, multiple groups will demand the ability to collect social data, interpret it for their own needs and respond to their stakeholders.
“Salesforce’s considerable assets will accelerate this process and enable it to deliver social intelligence at scale-a clear advantage for its customers,” Etlinger wrote in a blog post March 30.