Last week, rumors swirled about Salesforce.com gobbling up social media marketing provider Buddy Media. Well, it seems this time the rumors were true. The software-as-a-service giant has released an official statement confirming a definitive agreement to acquire Buddy Media.
Little Buddy Media Attracts Attention From Big Boys
Buddy Media is pretty popular lately. At last week’s D10 Conference, when the tech CEO everyone loves to hate, Larry Ellison, was asked if Oracle had considered purchasing Buddy Media, he responded,
“We did. But we looked at other companies as well. And we bought the one we wanted. If you don’t keep your technology current, you’re going to lose your customers to a competitor. For every Facebook, there’s also a Splunk or other companies doing interesting things.”
(I love how he always adds that little extra bit of Ellison vitriol to even a yes-or-no question involving Salesforce.) Ultimately, Oracle decided to acquire Vitrue, an alternative social-media marketing company for US$ 300 million. I’m sure Salesforce.com is more than a little pleased it did not have to get into a bidding war with Oracle led by Ellison.
Instead, Salesforce picked up Buddy Media for US$ 689 million in cash and equity broken down as - US$ 467 million in cash, US$ 184 million in common stock and US$ 38 million in options and restricted stock. It’s no Facebook/Instagram, but it’s not too shabby for a company founded in 2007.
The acquisition of Buddy Media is certainly not the only purchase that Salesforce has made lately. The company purchased Stypi, a collaboration platform, earlier this month. The deal still has to receive regulatory approval, but analysts expect everything to be finalized by the end of Salesforce’s third fiscal quarter.
What’s Going On?
Why are companies such as Oracle and Salesforce buying companies like Buddy Media? It’s not a sudden spirit of benevolence. In the case of Salesforce, it is augmenting its Marketing Cloud. For almost every modern marketer, social media plays some role, and Salesforce wants to ensure it can support this need. Adding Buddy Media with the purchase of Radian last year positions the Marketing Cloud as a an end-to-end cloud-based marketing solution.
What about Oracle? The company is poised to introduce its own public cloud offering this week. Like Salesforce, Oracle is positioning itself as a single source for software in the cloud, which happens to be the same strategy Ellison championed at Oracle for on premises data center solutions -- one vendor for everything.
No matter what your position is on this approach, it has clearly worked for companies such as IBM, Salesforce and Oracle. Cloud vendors may tout flexibility and freedom, but purchasing service from multiple vendors always involves some level of integration challenge, which is something some organization don’t want to stomach. Well played, Salesforce. Well played.