Why Enterprise Social Media Firms Are Being Gobbled Up

June 20th, 2012

FAKE NEWS for the Zionist agenda

For a handful of enterprise social media firms, 2012 has been a version of 1999.

The Great Cash-Out got under way in May when Oracle paid $300 million for Vitrue, a cloud-based firm that mans social media communications for McDonald’s, American Express and Gillette, among others. Oracle followed that acquisition by gobbling up social media monitoring firm Collective Intellect for an undisclosed sum in early June.

Meanwhile, Salesforce.com paid $745 million for Buddy Media, a Vitrue competitor that counts Ford Motor and Hewlett-Packard among its clients. Soon after, reports circulated that Microsoft was interested in buying Yammer, a provider of a Facebook-type solution for businesses, for $1 billion or so. Just last week, the smallish Syncapse bought a smaller social media firm, Clickable. That flurry of activity came after Adobe bough Efficient Frontier, another player in the social CRM space, back in November. Don’t expect things to die down, either — the latest industry rumor is that Facebook is going to buy Wildfire Interactive.

Why now? The blue-chip companies providing growth for Buddy Media and Vitrue — to name two — have known for years now that social media is important.

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One factor is Facebook’s IPO, which signaled for some that social media had reached its zenith of positive attention and it was a good time to sell. “We’re at the top of the hype cycle in social,” says Adam Sarner, CRM research director at Gartner, who compared it to the dot-com era. “Companies are saying ‘We have to be social.’ Why? ‘Because the CEO says we have to.'”

The post-IPO, stepped-up pace of innovation at Facebook is another reason. Just this past month, Facebook has introduced real-time bidding and mobile ads, two technologies that some thought would take much longer to implement. To keep up, the firms must consider whether to staff up their engineering departments or just declare game over.

However, it’s not just founders who are making the calls. As Dave Williams, CEO of Blinq Media, another player in the space, notes, VCs are looking to cash in on investments they made five years ago.

Peer pressure also plays a role. Oracle looked at Adobe, Salesforce looked at Oracle and Microsoft looked at each of the others and may have concluded that a land grab was under way, so it became a self-fulfilling prophecy.

The real change, though, appears to be on the client side. McDonald’s and other industry behemoths not only realize that social media is important, but, as Sarner notes, are finally allocating the funds to execute ambitious social media strategies. Gartner, for one, predicts that by year’s end, more than 60% of Fortune 500 companies will “actively engage” customers with Facebook marketing, up from 20% in the fourth quarter of 2011. Gartner also predicts that by 2017, the average chief marketing officer will spend more on IT than the average CIO. “People are really starting to realize the power of it,” says Ben Tregoe, svp of business development at Nanigans, a Boston firm that buys Facebook media on behalf of clients. “It’s not just something that their kids screw around with.”

Household brand names are realizing for the first time that they can own audiences, rather than rent them by buying ad time, says Darren Herman, chief digital media officer for The Media Kitchen.

Giants like Oracle and Adobe, sensing the demand, are “buying their way into social media competence,” in Sarner’s words. “Companies are on Twitter, they’re on Facebook and they have a bunch of fans, but they don’t really have a process around it,” he says. “They need to come up with the next step.”

Whether they will is an open question — takeovers often don’t go as planned. Also, as Herman notes, brands might have an issue trusting, say, Oracle with their marketing outreach. Yet such acknowledgment by Adobe and Oracle has validated enterprise social media, leading to what Williams hopes will be another renaissance for the category. As larger players exit, VCs appear to be rushing in to bolster smaller ones. Hence, the recent $14-million infusion for Unified, which came right around the time of the Buddy Media buy and GraphEffect’s recent $12 million funding. Says Williams: “VCs are a little scared of this market because there hadn’t been big acquisitions in this space. This will reinvigorate those venture firms to look at this space once again.”

Image courtesy of iStockphoto, KaeArt

This story originally published on Mashable here.