Salesforce Acquires Radian6–Quick Analysis

Salesforce.com this morning announced plans to acquire social media monitoring company Radian6 for around $330M in cash and stock. In a move somewhat different from previous acquisitions, salesforce is reacting to quiet criticism from the community and indicating a clear integration path with this deal. Salesforce is intending on utilizing Radian6 across three distinct areas;

  • Sales and Service Cloud: Integrated with SalesCloud and ServiceCloud
  • Salesforce Chatter: Integrated with Chatter to deliver social media insights in real time
  • Force.com Platform: Forklifted onto the platform to allow developers to create different offerings

This seems to me an entirely logical acquisition. While Radian6 was already integrated into Salesforce’s application, the acquisition makes things much, much deeper. Salesforce founder and CEO Marc Benioff has long waxed poetic about the new paradigm for business – he seems to be a poster child for the “Facebooking of the enterprise” and is a real proponent and user of social media himself. He’s also an astute businessman and realizes that after the initial hubbub of social media wears off, organizations are going to want to track some hard results form their social media investments. Services like Radian6 that give companies real time and deep insights into their reach fit well with that story.

I have some concerns around how Radian6 will be integrated, I’m hoping that it won’t add any more bloat to the already burgeoning UI that salesforce users have to deal with – I’d hope that salesforce was smart and gave a high degree of customization to the look and feel of Radian6 within the core salesforce applications.

In terms of bottom line results for salesforce themselves from this deal, I believe social media monitoring is very much nascent within general business. I don’t see this acquisition as adding significant value in the very short term, but believe it will ramp up over the medium term and, more importantly, is another string in Benioff’s bow and will allow him to continue to evangelize this brave new world he inhabits. Indeed in the press release announcing the deal, Salesforce expects no financial impact in Q1, a very small $5M revenue gain in Q2 but, most interestingly, a $45M to $50M increase in revenue FY12 – indicating the acceleration that social monitoring will enjoy moving forwards.