Salesforce.com acquires Radian6: Implications for the Social Analytics Market

This morning, Salesforce.com announced its acquisition of Radian6, a leading social media monitoring platform, for $276 million in cash plus $50 million in stock.

This follows a spate of recent acquisitions by Salesforce, which continues to build on its vision of customer-centric business throughout the enterprise: in sales (the Sales Cloud), service (the Service Cloud), and throughout the organization (Salesforce Chatter). The impact of this acquisition looks very different depending where you’re standing.

Good news for Salesforce.com customers
This acquisition holds clear benefit for existing customers of Salesforce. The company has already been working with Radian6 to integrate social data into its Service Cloud, enabling users to see “which content is coming from their customers and prospects, and add new contacts, cases and leads with a single click.”

The capability to integrate social data and insight into enterprise applications will shift this year from a differentiator to a requirement for social analytics providers. As social engagement becomes more ubiquitous within the enterprise,  multiple groups will demand the ability to collect social data, interpret it for their own needs and respond in an informed and differentiated way to their stakeholders, ideally with a holistic philosophy and approach. Salesforce’s considerable assets will accelerate this process and enable it to deliver social intelligence at scale–a clear advantage for its customers.

Mixed news for the evolving social analytics market
The first question to ask is, “What exactly is the social analytics market?” The ability to monitor, collect, and share social data and insights throughout the enterprise is not confined simply to social monitoring tools, but increasingly to web analytics providers, market research, social media management platforms, business intelligence, a galaxy of channel-specific point solutions like those in the oneforty.com ecosystem, and elsewhere.

The acquisitions of Radian6 by Salesforce, Scout Labs by Lithium Technologies, and Sysomos by Marketwire creates a power vacuum among independent social monitoring vendors. This is actually mixed news for the market, which is still extremely immature.

Here’s why: the ubiquity of social data has democratized the practice of data analysis and spread it far beyond highly professionalized groups such as market research.

Today, everyone’s a data analyst.

The impact to the enterprise (now we’re talking people, not tools), is that many people without a traditional data analysis background (in-house and agency PR, marketers both on the product and communications side, and others outside marketing) are now expected to collect and analyze social data as part of their regular jobs. This is happening in pockets throughout organizations, as well as in outsourced teams such as agencies. They are required to deliver both longer-term analysis and quick insights.

At the same time, existing disciplines such as market research and web analytics are “socializing” their offerings to provide more insights into consumer attitudes, performance of social media programs and other functions. This brings companies like Netbase, Omniture, IBM/Coremetrics and Webtrends into the mix.

The net effect is a highly volatile and chaotic buying environment for enterprise customers. On the one hand, vendors like Scout Labs and Radian6 have accommodated the many new stakeholders of social data with a relatively lightweight and intuitive user experience that can deliver quick data, while other players such as Visible Technologies, Converseon and Crimson Hexagon offer a range of approaches and value propositions. The fact remains that, like the old Hindu fable of the blind men and the elephant, the meaning of social analytics depends on where you happen to be standing.

The touchstone in all of this, and what is so often lost, is business strategy: what is being measured, and to what purpose? Revenue growth? Brand health? Customer satisfaction?

So while these social monitoring vendors have made some very smart marriages, consolidation is occurring while the market is still quite immature. Now that each of these vendors is no longer solely responsible for its own product roadmap, their acquirers will be tempted to make decisions that serve the acquiring company’s business goals at the expense of pure social analytics innovation. Today we’re seeing large enterprise customers of these brands start to “grow out” of some of their existing social monitoring tools, just as these tools are being acquired by companies with complementary yet quite different agendas.

The concern is that social analytics vendors need to innovate on their ability to support strategy and deliver actionable insight as well as their ability to integrate and scale within the enterprise. There is still plenty of innovation to be done in this area, and brands need it badly.

Recommendations
Large enterprises considering a change to their social media monitoring/analytics solutions should use this opportunity to review their short- and long-term requirements.  Here are some points to consider:

  1. Use Cases. Be very clear about how you will be using this data, who will be responsible for using it, and with what frequency.  Is it for brand monitoring? Customer service? Evaluating campaign success? Identifying engagement opportunities?  Competitive analysis? Ask vendors to walk you through those use cases and how they would approach them. Conflating use cases can lead to poor decisions.
  2. Data quality. Start by taking a good look at the quality of the data you require. While some solutions are better than others, all have significant challenges in the areas of sentiment analysis, spam filtering and relevance, to name a few. While it might be tempting to choose the vendor that offers the biggest “thud factor” when counting impressions, remember that having a lot of noise in the mix will set unsustainable expectations for future programs and interfere with your ability to deliver insight at speed.
  3. Data integration. Many vendors irrespective of their ownership structure are working on integration with other enterprise applications such as CRM and web analytics. This may not be a primary requirement today, but it should be within a year. Make sure to ask about plans in this area, even if it’s not an immediate need.
  4. Ease of use. The best tool in the world is useless if you don’t have people who know how to use it. If you opt for one of the more specialized tools, make sure you have appropriate resources and that the vendor includes training. If you’re going for a simpler tool, have your team pilot it to make sure it really is as intuitive as the vendor claims, and that it addresses all your critical needs.
  5. Scalability. As demands for social data increase, so will demands for scalability. If you’re a large brand with many data stakeholders, scalability should be a major concern.  How many simultaneous queries can you run? Does that affect what you pay? Again, possibly a concern down the line, but larger organizations are seeing this now.

Salesforce’s acquisition of Radian6 is yet another proof point that, as Jeremiah Owyang has said, the social business stack is maturing and becoming a more pervasive requirement for the enterprise.  Brian Solis elaborates on that point from an organizational design perspective, saying, “In order for a business to become a social business, it requires the creation of bridges between business functions and social customers and bridges between existing silos.”

Salesforce’s acquisition of Radian6 is a positive step for Salesforce customers. But there is quite a way to go before this industry truly delivers on its promise to deliver insight–not just data–to the enterprise.

About susanetlinger

Industry Analyst at Altimeter Group
This entry was posted in Social media, Social media measurement. Bookmark the permalink.

19 Responses to Salesforce.com acquires Radian6: Implications for the Social Analytics Market

  1. Paul Dunay says:

    I love your question of – So what exactly is the Social Media Analytics space – I spent about 2 months studying that space and created this great infographic on it if you are interested click here http://pauldunay.com/monitoring-vs-analytics-infographic/

  2. ecairn says:

    Thanks for this great analysis.
    I noticed that in your description of the enterprise you mentioned sales and services and not marketing.

    To me, Radian6 was very good at coining the “social phone” analogy. However, different people use the phone for different purposes and one size fits all solution in such an immature market , as you pointed, cannot work.

    R6 and monitoring solutions in general are a good fit for sales and service, they are very good at grabbing tons of opportunities (and noise) for brand to solve customers/prospects problems.

    Marketing has different objectives and marketing without segmentation does not make sense. This is where Seth Godin comes to the rescue with the concepts of Tribes. Social Media has enabled the emergence of Tribes (like Mommy bloggers and their audience) and marketers have to rethink their strategy to address these new “organizations of customers” who comes in with influencers, powers, places and rules.

    To me monitoring, as long as it does not provide capabilities to uncover, analyze and engage with these tribes, does not do the job for marketing.

    For CRM sure ! So to me it’s quite natural to see Radian6 going the CRM/ Salesforce direction.

    Best

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  5. I am that person you are talking about…the PR person given the unenviable task of tracking our company’s social reach and analytics. I like Radian6 and thought they offered a great tool..I also like SalesForce..will be interesting to see what the marriage will bring!

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  7. thoughtelf says:

    Excellent analysis that addresses many of the questions I’ve been considering since the announcement.

    I am hoping that this forces many changes within practitioner communities. Everyone is a data analyst, but not all are able to span the gap between traditional and social.

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  10. Tom Eldridge says:

    Great and well thought out article. With reference to Jeremiah’s Owyang’s Business Stack presentation, it’s telling that the No 1 internal goal for corporate strategists is creating ROI investment.

    2011 will be the tipping point for corps, digital agencies and Social Media Platforms to move away from the fuzzy thinking around Return on Engagement and embrace tangible goals and objectives.

    As you mention, consolidation in Social Media Platforms can have a positive or negative impact, but it’s inevitable that such activity was going to take place, given the potential revenue involved.

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  14. Fabio says:

    I join other people congratulating for the analysis, very interesting and to the point.
    Any serious business should be doing some “social analysis” nowadays and the further we go the more important this will be, up to the point where the holy grail of proper social CRM will be nailed down. In the meantime I guess that some consolidation in the market wouldn’t be bad, since there are 500+ players of all sorts in the monitoring space.
    It will also be interesting to see whether SalesForce will change Radian6 in any way or will just make it more integrated with their other tools.

  15. Thank you for the analysis of our exciting news! You definitely outline valid points all organizations should ask themselves despite their social media maturity.

    Lauren Vargas
    Director of Community at Radian6
    @VargasL

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