Salesforce Buys Radian 6, Enhances Social Media Tools

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Showing social media's vastly increasing influence, Salesforce.com on Wednesday announced a deal to buy Radian6 for $340 million.

Radian6 specializes in social media monitoring tools that capture "conversations" across Facebook, Twitter, YouTube, and LinkedIn, among other online communities. It then tries to make sense of the chatter, and give clients -- including, Dell, GE, Kodak, PepsiCo, and UPS -- the necessary insights to execute social-marketing strategies.

"Social media has made every business recognize the value of paying attention to the voice of the customer," said Marcel LeBrun, CEO of Radian6. "Radian6's technology is built for the new norm of customer engagement -- real-time, two-way conversations that include social channels."

The deal "continues the consolidation of hundreds of social software vendors in the marketplace," Constellation Research principal analyst and CEO R Wang said.

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"This move is a deliberate push towards the elusive 'social CRM' concept," adds Forrester analyst Zach Hofer-Shall. "Social CRM isn't a technology you can simply install, but bringing together a leading listening platform with a leading CRM vendor could give the market the first end-to-end solution."

Forrester analyst Kate Leggett agrees: "Radian6 helps Salesforce extend its core customer service capabilities to social channels like Facebook and Twitter, which are becoming increasingly important for companies looking to offer a differentiated customer service experience ... Expect to see similar acquisitions by CRM vendors in the future."

In fact, despite the threat of greater competition, rival providers of social media monitoring tools welcomed the news on Wednesday. "The acquisition ... demonstrates the real value of social media and social media monitoring to the broader market," said Kelly Pennock, CEO of Visible Technologies. "It will accelerate awareness of social media's business value and the need for social media monitoring solutions to deliver improved business outcomes."

Salesforce, which provides software that manages companies' customer relationships, said the deal will not have a material impact on April quarter results, but will most likely boost fiscal second-quarter revenues by about $5 million.

Looking ahead, Salesforce said it expects the acquisition to hike fiscal-year 2012 revenue by $45 million to $50 million. The purchase price includes $276 million in cash and $50 million in stock up front, while an additional $10 million in stock and $4 million in cash will be issued to the founders of Radian6, subject to vesting conditions over two years.

To remain relevant, Salesforce.com has been more than willing to shell out large sums of cash. Nearly a year ago, the company bought cloud-based crowd-sourced data services provider Jigsaw for about $142 million.

The acquisition combined Salesforce's suite of CRM applications and enterprise cloud platform with Jigsaw's own cloud-based model for the automation of acquiring, completing and "cleansing" business contact data.

Investors in Radian6 included Summerhill Venture Partners, Brightspark Ventures and BDC Venture Capital. Radian6 is based in Halifax, Nova Scotia.

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