• May 18, 2011
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Radian6 Deal Enables Salesforce.com To Monitor the Social Web

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After two or three months of speculation that such a deal might occur, Salesforce.com put an end to the rumors March 30 by announcing it plans to acquire Radian6, a provider of one of the top social media monitoring platforms, for $276 million in cash and $50 million in stock. The transaction is expected to close before July 31.

Founded in 2006, Radian6’s unique technology captures hundreds of millions of conversations every day across Facebook, Twitter, YouTube, LinkedIn, blogs, and online communities, and provides actionable insights in real time. The company’s products include a monitoring platform to help companies track and analyze their social media efforts, as well as an engagement platform to help companies connect with individuals and communities online.

With the combination of Salesforce and Radian6, companies will be able to bring the heart of the public social Web into other Salesforce.com offerings, including Sales and Service Cloud, Salesforce Chatter, and the Force.com platform.

“With Radian6, Salesforce.com is gaining the technology and market leader in social media monitoring,” Marc Benioff, chairman and CEO of Salesforce.com, said in a statement. “We see this as a huge opportunity. Not only will this acquisition accelerate our growth, but it will extend the value of all of our offerings.”

“Social media has made every business recognize the value of paying attention to the voice of the customer. Radian6’s technology is built for the new norm of customer engagement—real-time, two-way conversations that include social channels,” Marcel LeBrun, CEO of Radian6, said in a statement. “Joining the Salesforce team will allow Radian6 to grow faster to meet the demands of our rapidly expanding customer base.”

But Salesforce.com is the real winner in this acquisition, according to many industry watchdogs. Paul Greenberg, president of The 56 Group, for example, said the move makes Salesforce.com “a real powerhouse in social CRM.”

“What Salesforce is doing here is strengthening its position in the market significantly,” Greenberg says. “Salesforce becomes now even more the company to beat.”

Radian6, which is based in New Brunswick, Canada, also brings to the table a strong partnership ecosystem, a talented team and developer community, an enterprise focus, and a strong customer base. As many companies began adopting social media to engage with their customers, Radian6’s customer base expanded rapidly. Among its 2,400 customers are leading global brands like AAA, Dell, GE, Kodak, Molson Coors, Pepsico, UPS, and more than half of the Fortune 100.

“Radian6 has been growing like crazy,” Greenberg says. “They’re not necessarily filling a void for Salesforce, but allowing it to compete in an ecosystem that they’ve been trying to expand for a while.”

Denis Pombriant, founder and managing principal of Beagle Research, agrees. “Salesforce.com for a long time has been adding social media to its offerings,” he says. “Bringing in Radian6 for social media monitoring makes a lot of sense.

“As Salesforce.com builds out its application suite for the 21st century, it becomes vitally important that they have the tools and resources to address modern business needs. This gives them that,” Pombriant adds.

Though it’s too early to start talking about product integrations and roadmaps, Greenberg doesn’t anticipate a problem there. “If the integration of the Salesforce.com and Radian6 products goes as well as expected, Salesforce will be able to play in the areas where it’s traditionally excelled, but it will also become the dominant force in social media listening platforms,” he says.

For many others in the CRM industry, especially with regard to social media, the move by Salesforce is a shot in the arm for social CRM everywhere. That’s not to say that the market really needs a boost. In fact, Gartner has predicted that by 2013, spending on social software to support sales, marketing, and customer service processes will exceed $1 billion worldwide. This compares with Gartner’s forecast of more than $12 billion for overall spending on CRM software in 2012.

That means that social CRM will encompass approximately 8 percent of all CRM spending in 2012, up from approximately 4 percent in 2010.
Nonetheless, the Radian6 acquisition “further validates the explosive nature of the SCRM marketplace and the growing importance of companies’ not only monitoring what is being said about their brands, products, and services, but also being able to actively engage with customers over their preferred social channels,” says Jorn Lyseggen, chief executive officer and founder of Meltwater Group, which recently bolstered its own social media capabilities by acquiring JitterJam for $6 million.

Salesforce has made several acquisitions in the past few months, including its purchase of Dimdim, a provider of unified communications and cloud-based collaboration services, for about $31 million in cash, and Heroku, which provides the cloud platform that writes Ruby-based applications, for $212 million. Prior to that, other acquisitions included InStranet for $31.5 million; Sendia, a wireless application technology company, for $15 million; and Kieden, which provided the technology for what would become Salesforce for Google AdWords.

The Radian6 acquisition is Salesforce’s largest since the company was founded in 1999. Ray Wang, principal analyst and chief executive officer of Constellation Research, does not think the company will stop there. “Marc Benioff’s strategy reflects best on the five pillars of consumer tech entering the enterprise. The only key pillar missing in its acquisition strategy is unified communications and video. One can expect this pillar to be hot on the medium-term acquisition short list.”

News Editor Leonard Klie can be reached at lklie@infotoday.com.

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