Shakeups

Following New Details of Buddy Media Acquisition, Salesforce Marketing Cloud Lays off Employees [Updated]

Given Buddy Media’s financials and the layoffs at Radian6, could Salesforce be looking to shutter—or at least phase out—its fledgling social marketing arm?
 Following New Details of Buddy Media Acquisition, Salesforce Marketing Cloud Lays off Employees [Updated]

Salesforce CEO Marc Benioff. (Photo: Wikipedia)

After rumors began swirling on Twitter about layoffs at Salesforce, the cloud-computing company confirmed to Business Insider that it has laid off a fair chunk of its Radian6 employees. Salesforce says that less than 100 employees were impacted, but considering that Radian6 boasts only 320 employees total (according to Crunchbase), that’s still almost a third of the staffers being shown the door.

Radian6, a social media monitoring platform, is an integral part of Salesforce’s big play for a piece of the social marketing space. It acquired Radian6 back in March 2011 in order to build out the Salesforce Marketing Cloud.

In June of this year, Salesforce also acquired New York-based social media marketing company Buddy Media for a reported $689 million. We noted then that an acquisition of Buddy Media made sense following Facebook’s bungled IPO. By hiring an “IPO-friendly CFO,” Buddy had signaled its desire to go public, but after Facebook’s shares dove following its own IPO, that left less room for social marketing companies to successfully follow in its footsteps.

Radian6 and Buddy Media offer complementary products within the Salesforce Marketing Cloud. Radian6 provides a way for companies to listen to how people are talking about their brands on social platforms, whereas Buddy Media offers a full-scale social marketing dashboard—including publishing and analytics—for brands.

The layoffs at Radian6 also come on the heels of Salesforce filing documents with the SEC regarding its acquisition of Buddy. Though many noted at the time of the acquisition that the purchase price seemed a little high for the social media marketing company, details revealed in the SEC filing show an even grimmer financial situation.

First, the actual acquisition price was even higher than originally reported, at $745 million. The filings also show that Buddy Media lost $20 million in the first six months of 2012, up from $3.5 million in January to June of 2011.

According to Business Insider:

Buddy Media does not appear to be scaling toward profitability. Rather, it’s going backwards — losing more money on its revenues as it grows….

In 2011, its losses were 34% of its revenues. In 2012, they’re 114% of revenues.

In 2011, Buddy Media spent $12.8 million to make $10.2 million in revenues; in 2012 it spent $35 million to make $18 million.

Given Buddy Media’s financials and the layoffs at Radian6, could Salesforce be looking to shutter–or at least phase out–its fledgling social marketing arm?

Competitors like Adobe Social (where this reporter used to work) are ramping up with massive advertising campaigns in an effort to assert their market dominance. Or perhaps the solutions offered by Radian6 and Buddy Media had too much crossover, and Salesforce is attempting to trim the fat while honing the Marketing Cloud.

For its part, Salesforce argues that it’s simply “rebalancing its resources,” according to a statement sent to Betabeat:

With the combination of Radian6 and Buddy Media, the Salesforce Marketing Cloud is the undisputed leader in social marketing and the only suite that allows brands to unify social listening, engagement, advertising and measurement. With the integration of Radian6 and Buddy Media, the Salesforce Marketing Cloud is re-balancing its resources to support its growth, including moving from a hub to a distributed model for certain customer-facing roles, consolidating marketing and dramatically increasing investments in R&D. Fewer than 100 people were impacted globally.

Update:

A Salesforce representative has clarified that the layoffs were not concentrated solely on Radian6, but instead spread throughout the Salesforce Marketing Cloud (which could include Buddy Media employees).

Follow Jessica Roy on Twitter or via RSS. jroy@observer.com