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Salesforce Buys Buddy Media For a More Social World

Stocks in this article: CRMORCLSAP

NEW YORK ( TheStreet) -- Salesforce.com (CRM) is buying Buddy Media for $689 million as the customer relationship management (CRM) giant eyes social media dollars.

Buddy Media, which counts Ford (F), HP (HPQ) and L'Oreal amongst its customers, help firms exploit their social media marketing with a technology platform that measures the effectiveness of firms' efforts and lets them test new initiatives.

Salesforce.com has announced a deal to buy Buddy Media

Rumors that Salesforce.com was eyeing Buddy Media have swirled for weeks, and the San Francisco-based firm is now flexing its social media muscle.

Salesforce.com, which is one of TheStreet's top tech stocks for 2012, is ramping up its efforts against cloud rivals Oracle (ORCL) and SAP (SAP). In particular, the company is charging hard around what it describes as its "social enterprise" strategy, essentially harnessing the power of social networking for the corporate world.

The Buddy Media deal follows Salesforce.com's purchase of Radian6 last year, which now forms the basis of its Radian6 social monitoring cloud, aggregating data from the likes of Facebook, YouTube and Twitter.

Other Salesforce offerings in the "social enterprise" space include Chatter, a private social network for companies which is being deployed by the likes of Verizon (VZ) and GE (GE).

The Buddy Media deal adds a key string to the Salesforce.com social media bow, according to CEO Marc Benioff. "Salesforce.com now has the number one players in social listening and marketing - Radian6 and Buddy Media," he explained in a statement. "With CMOs surpassing CIOs in spend on technology within the next five years, our Marketing Cloud leadership will allow us to capitalize on this massive opportunity."

The social enterprise message certainly seems to be resonating with customers at a time when businesses are attempting to harness the power of social networks.

Salesforce.com, which was recently upgraded by Oppenheimer on the strength of fast organic growth, shredded Wall Street's estimates in its fiscal first-quarter results last month.

Salesforce.com also delivered more than 52 billion social enterprise "transactions" during the first quarter, a 72% hike compared with the same period last year. The company's shares are up more than 26% this year.

"Salesforce.com's investment in social so far has reaped tremendous benefits as the company uses its 'social enterprise' message to engage with key decision makers and to drive much bigger deals," noted JMP Securities analyst Pat Walravens in a note released last week. "Buddy Media is a remarkable asset, in our view, that grew bookings over 200% in 2011 and would make salesforce.com the leader in the social marketing category."

Benioff's firm will pay approximately $687 million in cash and Salesforce.com equity for Buddy Media. The acquisition is expected to close during the third quarter of Salesforce.com's fiscal 2013, which ends on Oct. 31.

Salesforce.com shares were down 0.7% to $130 early Monday as the tech sector dipped into the red.

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

>To submit a news tip, send an email to: tips@thestreet.com.

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