Salesforce Buys Buddy Media to Boost Enterprise Cloud System

By Small Business FOXBusiness

Enterprise cloud computer Salesforce.com (CRM) has inked a deal to buy Buddy Media, which helps brands manage their social media platforms, for $689 million.

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The transaction, which is Salesforce.com’s biggest and is expected to be paid in cash and equity, is slated to close in the third quarter ending Oct. 31, subject to customary closing conditions.

The move follows Salesforce.com’s March 2011 purchase of Radian6, which provides social media monitoring tools, such as the ability to “capture hundreds of millions of conversations” across Facebook (FB), Twitter, YouTube and LinkedIn (LNKD).

The service helps businesses' manage their social media platforms and gauge the effectiveness of their ad presence online.

"Salesforce.com now has the number one players in social listening and marketing – Radian6 and Buddy Media," Salesforce's chief executive, Marc Benioff, said in a statement.

Buddy Media, which is only 5-years old but has some big-name clients like Ford Motor (F), Hewlett-Packard (HPQ) and Mattel (MAT), allows customers to publish content and measure the effectiveness of social media efforts, determining which content drives the most engagement and test different strategies that provide the greatest return on investment.

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The combined platform will deliver “the first comprehensive marketing cloud that will allow customers to listen, engage, gain insight, publish, advertise and measure social marketing programs,” the companies said in a joint statement.

The purchase, which follows Oracle’s (ORCL) buy of social media marketing company Virtue last month, further cements the growing importance of social media on enterprise marketing, as businesses continue to move farther away from traditional ad campaigns.

"Social media has caused the biggest transformation in marketing since the Mad Men era, causing CMOs to completely re-think their strategies," Salesforce Radian6’s senior vice president, Marcel LeBrun, said.

The acquisition, he said, doubles down on the Salesforce's marketing cloud to provide chief marketing officers the ability to “manage the entire social marketing lifecycle.”

Salesforce will pay $467 million in cash and $184 million in stock, and $38 million in vested options and restricted stock for Buddy Media.

Salesforce said the deal is not expected to have any material impact on its fiscal 2013 second-quarter earnings per share or revenue.

But it is expected to increase revenues by $20 million to $25 million and reduce non-GAAP earnings by about 14 cents to 15 cents a share in the second half of the year ending Jan. 31.

San Francisco-based Salesforce cut its fiscal 2013 earnings view to a range of $1.45 to $1.49 a share, from $1.60 to $1.63 a share. It lifted its revenue target to $2.99 billion to $3.025 billion, from $2.97 billion to $3 billion.

Analysts in a Thomson Reuters poll are looking for higher earnings of $1.63 on sales of $3 billion.