Salesforce Set to Snap Up Facebook Friend Buddy Media for More Than $800 Million
Enterprise, meet social: Cloud-computing pioneer Salesforce.com is close to a deal to acquire Buddy Media, the five-year-old company that helps brands manage their Facebook presence.
Context & Ripple Effects
Salesforce has been walking toward this for over a year: the March 2011 debut of Service Cloud 3 wired Chatter, Facebook and Twitter into its customer-service stack, and Buddy Media would hand it the brand-facing side of that same relationship — the tools companies use to run their Facebook pages.
The reported price of more than $800 million lands at a strange moment for Facebook itself: the company has shed about $35 billion in market value since its May 2012 IPO, shares dipped below $29 as options trading began, and GM has publicly walked away from Facebook ads. A cloud vendor paying nine figures for Facebook page-management tooling is a bet that brand activity on the platform outlasts the ad-market wobble. The story traveled widely on pickup day — TechCrunch, GigaOM, CNET, VentureBeat, Business Insider, Fast Company, Betabeat and Social Markets all carried it.
First-order effects
- If the deal closes as reported, Salesforce gains a five-year-old business whose customers are exactly the large brands its enterprise sales force already calls on, while Buddy Media's backers get an exit at a headline valuation above $800 million.
- Brands using Buddy Media to manage Facebook presences would find themselves owned by a CRM vendor rather than an independent shop, tying their social operations to Salesforce contracts.
Second-order effects
- Independent social media management firms become obvious acquisition targets for every other enterprise suite vendor that does not want Salesforce owning the brand-to-Facebook workflow, accelerating consolidation in a young category.
- For Facebook, deeper third-party investment in page management offsets some of the advertiser pressure from GM's pullout — brands locked into managing pages through enterprise tools have switching costs that pure ad spend lacks.
Third-order effects
- The pattern points toward social marketing being absorbed into enterprise software suites, with the CRM vendors rather than standalone agencies or point-tool shops controlling how large brands operate on consumer platforms.
- It also signals that enterprise buyers, not consumer ad markets, may be the steadier revenue base built on top of social networks if the post-IPO volatility around Facebook persists.
The trend: Enterprise software vendors are consolidating social media management into their suites, buying the brand-workflow layer on top of Facebook as its advertising economics remain unsettled.