Wednesday, June 20, 2012

Why Companies are Acquiring Social Media Start-ups


Recent days, acquisition of social media start-ups by the public listed companies are increasing. This trend started early 2012.

Microsoft is acquiring the social media company "Yammer" that has tool for the easy collaboration among employees and increase the productivity.  This is one of the biggest acquisitions in social media start-ups. Microsoft pays around $1 billion as it is looking for a major change to come out of its stagnation.

Facebook acquires Instagram a photo sharing mobile app company for around $1 billion is cash and shares.

Salesforce.com acquires Buddy media a social marketing company that has facility to publish content, provide marketing Ads and measure the effectiveness of its marketing activities. This acquisition also involves major money i.e. around $700 millions.

Oracle has acquired Virtue a social marketing company for $300M. 

How are these social media acquisition helps the companies? Will it improve their business or this is also one kind of .com bubble?

Today, the social media sites are getting more users and very frequent visitors. After the gaming sites, these sites are getting more traction from all groups/ages. So users are familiar with the usage. By bringing in similar approach in the business apps and bringing in the collaboration as a part of the business applications, the productivity will be increased. Also the traditional marketing is not bringing enough business and conversion tracking is an issue, by moving to social media these difficulties are eliminated. 

Why do companies going for acquisition instead of using their services? Is it adding value to these companies?

As the CRM, Social Media and Marketing getting more traction, all the businesses wants social media marketing and monitoring the marketing activities. If the business applications like salesforce.com etc. integrates their services with the social marketing and monitoring tools, the value addition to their customers will increase and the growth of their customers will increase. This will be one more marketing value addition they can propose.

We have to wait and watch how this strategy works for these companies. 

Saravanan

6 comments:

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