Salesforce.com has agreed to buy social media monitoring vendor Radian6 , whose technology tracks conversations occurring on social networking sites like Facebook, Twitter and LinkedIn.
Radian6's technology gives companies insights into what people are saying about their brands and products, as well as competitors. Its customers include Kodak, PepsiCo and greater than 50 percent of the Fortune 500, Salesforce.com said.
Salesforce.com will pay roughly $276 million in cash and $50 million in stock for Radian6. The transaction is expected to close by July 31.
Salesforce.com plans to meld Radian6's capabilities with its own growing array of software for sales and customer service, as well as its Chatter social networking platform. Developers will also be able to use Radian6 technology when building applications on Salesforce.com's Force.com platform, the company said.
While Salesforce.com already has completed integrations with Twitter and Facebook, Radian6's capabilities will give it a much broader reach into the social web. Radian6's products can "track mentions across over 150 million social media sites and sources and returns the results for exploration, understanding and action," according to its website.
The deal will "extend the value of all of our offerings," Salesforce.com CEO Marc Benioff said in a statement.
Forrester analyst Zach Hofer-Shall said, “This move is a deliberate push towards the elusive “social CRM" concept. 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.
According to Ray Wang, founder of analyst house Constellation Research, this acquisition "does not solve the lack of a good analytics platform in Salesforce.com today, social media monitoring delivered by Radian6 provides the first step in the journey to engaging customers in social channels. Because Salesforce.com customers have proven to be more cutting edge in adopting disruptive technologies, natural synergies will emerge among these CRM pioneers.”
Wang said that Salesforce.com has been successful at integrating previous acquisitions and said Radian6 customers could expect most of the team including R&D, service and support, marketing, and sales teams to remain in tact.
However he warned customers of to review existing contracts and lock-in beneficial terms and conditions. He also urged users to Secure feature requests and product enhancement promises in writing and, if possible, to attend next weeks’ Radian6 Social 2011 customer event and use it to get their voice across.
Rumors had swirled for months that Salesforce.com was planning to buy Radian6, which will be the latest in a string of Salesforce.com purchases that include online meeting and collaboration vendor DimDim and Heroku, maker of a cloud-based platform for building Ruby applications.
Radian6 competes with a number of similar vendors, including Converseon and Alterian. Larger vendors such as IBM, Microsoft and SAS Institute have also gotten into the game.
So-called "listening platform" technologies matured in 2010, according to a Forrester Research report released in December.
For one, "data collection became an arms race," analyst Zach Hofer-Shall and his co-authors wrote. "In the past, many vendors relied heavily on third-party data aggregators, but now, the leading vendors recognize holes in this syndicated coverage and race to build their own crawlers or scrapers."
Data processing has also become more sophisticated, Hofer-Shall wrote. "Many of the vendors in the listening platform space started small, with basic Boolean filtering -- creating complex search strings to identify relevant content. But, as the volume of online conversation grows and spam becomes more prevalent, simple filtering fails to pass muster."
Now vendors are using more advanced process to analyze natural language, as well as beginning to focus on multilingual support and better analysis of audience "sentiment" and segmentation, the report adds.
Salesforce.com chose to buy Radian6 for a number of reasons, Benioff said during a conference call Wednesday.
"They have the best technology, they also understand the business, and they have the customers," he said. "There's a lot of companies in social media because it's the hottest trend in the world, but this is the company that has monetized it."
Those factors justify the price Salesforce is paying for Radian6, which will be its largest acquisition to date, executives said.
The deal will give Salesforce.com access to a new customer base, namely marketing executives, Benioff said. Right now, Salesforce.com's core customers are in sales and service.
However, "this company will span all of our customers' interests," Benioff added. "What's happening on the social web is important to them."