Diversification at Saleforce.com

Salesforce has not been an historically diverse firm. As a dominant-business firm, between 70 percent and 95 percent of its total sales comes directly from its cloud-based CRM platform. However, with its acquisition of Radian6, a social media monitoring platform, in March of 2011 and its subsequent purchase of Buddy Media, a social media marketing platform, in June of 2012, Salesforce has increased its diversification into the advertising industry. The two services were combined under the name of Saleforce Marketing Cloud to provide customers with the world's biggest social media analytics and ad-buying platform.

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Together, these acquisitions signal a strategic shift for Salesforce. In the press release announcing its deal to purchase Buddy Media, Marc Benioff, chairman and CEO, Salesforce.com was quoted as saying that “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 "massive opportunity" the Benioff is banking on continued increases in social media advertising spending as estimated in a 2013 BIA/Kelsey study and outlined in the chart below. 

In my next several posts, I will outline the benefits and risks of Salesforce's diversification strategy by examining these acquisitions more closely.