Tag: social media

The ever-increasing appetite of salesforce.com

Brenon Daly

Contact: Brenon Daly

Salesforce.com just keeps taking bigger bites. The company announced Wednesday that it will hand over $326m ($276m in cash and $50m in stock) for social-media monitoring company Radian6. Not only is it salesforce.com’s highest-priced acquisition, it also likely brings more revenue than any other deal the company has done, at least based on our estimates for previous transactions and the company’s guidance for Radian6. Salesforce.com indicated that the Canadian startup would contribute about $50m in sales during the current fiscal year, which is about two months old.

The purchase, which is expected to close by July, also puts an exclamation point on the changes in dealmaking at salesforce.com. The 11-year-old SaaS pioneer stayed out of the M&A market for the first half of its corporate life. And even when it started doing deals in 2006, the first half-dozen or so acquisitions were all small, valued in the low tens of millions of dollars. Salesforce.com only started announcing major purchases last year, with its $142m reach for Jigsaw Data followed by its $249m takeout of Heroku.

As sizeable as the deal is inside saleforce.com, it also looms pretty large inside the burgeoning social CRM market. Consider this: at roughly one-third of a billion dollars, salesforce.com’s pickup of Radian6 is more than 50 times larger than the acquisition of another social CRM startup just last week. Privately held Meltwater Group paid just $6m for JitterJam to bolster its social CRM offering, which the company hopes to be a $100m business within three years.

Virtual goods, real interest

Contact: Jarrett Streebin

It turns out there’s a real business around buying and selling make-believe items online. Although it’s still early in the so-called virtual goods market, companies have already begun positioning themselves for what looks to be a fast-growing market for personalizing and developing online games. On a small scale, e-Rewards acquired Peanut Labs last week, less than two months after Google announced a purchase of its own. Peanut Labs will become part of e-Rewards’ Research Now online sampling and data-collection business unit. We expect more activity in this nascent market, which is likely to be shaped by three main players: Facebook, PayPal and Google.

Each of these tech giants has shown serious activity around virtual goods, either through organic development or acquisitions, and each has a slightly different approach to the market. Earlier this year, Facebook unveiled its Facebook Credits, a payment system for the Facebook platform. These Credits can be used to buy gold or guns in games on the platform and are even sold in gift cards at Walmart. Meanwhile, PayPal currently handles roughly 50% of the volume for virtual goods. It’s a payment option for Facebook Credits and PayPal continues to improve upon developer relations with its payment platform X and developer conference. And finally, Google bought into the space in early August with the purchase of Jambool and its virtual goods payments processor Social Gold. We will have a full look at the approaches of each of these three companies, including where they might look to buy, in a Sector IQ on virtual goods in tonight’s Daily 451 and 451 TechDealmaker sendouts.

Twitter’s tiny transactions

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Contact: Jarrett Streebin

Even though it’s one of the biggest properties on the Web, Twitter has only done small deals. Over the last two years, it has been steadily strengthening its platform with small acquisitions. The pace has picked up notably in the past half-year, with Twitter announcing four purchases in that time. Thanks to its shopping spree, the company has added search capabilities, location to tweets and mobile capabilities via an iPhone app and an SMS service.

Twitter’s latest move, the acquisition of Smallthought Systems earlier this month, continues the trend of tiny technology transactions. The target’s main offering is Dabble DB, which provides database software for managing large pools of data. At a rate of 65 million tweets per day, Twitter is overflowing with data. We see the Dabble DB buy as an effort to bolster the vendor’s still-nascent attempt to actually ring up some sales.

Twitter recently rolled out promoted tweets, through which advertisers will be able to place ads on the site. Along with its deal with Google, this is one of the firm’s first attempts at revenue. Smallthought’s Dabble DB should help Twitter to manage and interpret the massive amounts of user data, which should lead to better ad targeting. In that way, the deal flow at Twitter makes sense. The company’s first few buys were about building up its service and broadening its base of users. Now, it’s time to make money.