CMOs will soon be spending more on technology than CIOs at the world's biggest marketers, which is why Salesforce.com added social-measurement firm Radian 6 last year, and now Buddy Media, in a $689 million deal announced Monday.
With the deal, Salesforce is looking to build out tech tools for marketers as they increasingly use social media to listen to and connect with consumers. Salesforce was built on providing tools to sales operations but CEO Marc Benioff sees marketers as the company's next billion-dollar business.
"With the social revolution, the marketing industry is undergoing its biggest transformation in 60 years," Mr. Benioff said. "Facebook has become the new corporate home page."
The deal is Salesforce's largest to date and comes on the heels of Oracle's $300 million deal for Vitrue, Buddy's fiercest competitor, last month. In a call Monday morning, Mr. Benioff said he looked closely at all of the companies in the space and determined that Buddy had the best technology and the largest transactions among its competitors.
The sales price is a huge multiple of Buddy Media's actual revenue, and the largest of a New York-based tech company since Yahoo bought Right Media in 2007. Mr. Benioff noted that Buddy booked $25 million in revenue last year, and he expects it to bring in between $20 and $25 million in the second half of 2012 after the acquisition is finalized.
The organizational structure was not announced, but Mr. Benioff said he expects to retain Buddy Media co-founders Michael and Kass Lazerow and top execs for three years. Buddy's tools will be integrated closely with Radian 6, whose senior execs are still running the company within Salesforce.
"Social has gone from the thing CMOs are experimenting with to the central core of their marketing strategies," said Radian 6 CEO Marcel LeBrun.
While two of the biggest players in the social-media management space are now off the table, there is still a multitude of smaller companies such as Wildfire and Syncapse that are potentially on the auction block.
Agency holding companies have long been expected to buy a Buddy Media or a Vitrue, but they've so far stayed out of the acquisition game (though WPP is an investor and it recently named Buddy its preferred platform for Facebook ad buying).
"I expect acquisitions to continue," wrote Forrester analyst Melissa Parrish in a blog post. "When I talk to marketers about their requirements for these (social-media-monitoring) platforms, integrations with other enterprise systems are high on the list. The two most frequently requested integrations are with an analytics suites (usually Omniture and Google Analytics) and a CRM system (usually Salesforce; sometimes Oracle and SAP)."
In a blog post, Mr. Lazerow said he expects business as usual at Buddy until the deal closes in October. "Buddy Media plans to continue to innovate and build new product," he wrote. "We plan to build our sales team like crazy. And we plan to continue our global rollout, which is just starting."
He also shared his moving personal story: