Salesforce Dives Into the Mash Pit

by Steve Hamm

One sure-fire way for a tech company to generate excitement is to link up with Web search king Google. Salesforce.com, the high-profile seller of on-demand services, hardly needs the Google glow, but it’s getting it anyway. On Aug. 22, Chief Executive Marc Benioff is set to announce a new service, Salesforce for Google AdWords, that combines his company’s easy-to-use interface with Google’s powerful advertising engine.

Using the new program, Salesforce.com customers can manage their advertising campaigns from beginning to end. They can create advertisements, place bids with Google’s targeted advertising service, monitor the performance of the ads, and track all further interactions with the customers who click on them. “It helps eliminate click fraud,” says Benioff. “Now there’s a closed loop, so you know who clicked on your ad and what they bought”.

Salesforce.com’s application is part of the so-called mashup phenomenon, where two or more online applications are combined to create something more powerful than either is by itself. Until now, most mashups have been used on consumer Web sites—most of those used by businesses do very simple things, such as combine Google’s maps with business locations. The Salesforce.com application thoroughly integrates its core customer-management program with Google’s AdWords service. “Until now, I haven’t seen a lot of business value in mashups,” says analyst Rob Bois of AMR Research. “This is a real business value you couldn’t achieve without it.”

ALL IN THE FAMILY. The new application comes at a time when Salesforce.com’s fortunes are soaring. Its most recent quarterly earnings report on Aug. 16 blew the doors off analysts’ expectations. It added 57,000 new subscribers, bringing the total to 501,000. Meanwhile, revenue grew by 64%, to $118 million, putting the company on track to achieve nearly $500 million in revenues this fiscal year. After the earnings report, Credit Suisse upped its revenue estimate for the year to $489 million, from $487 million (see BusinessWeek.com, 8/16/06, “Salesforce.com Posts 2Q Loss, Raises View”).

The new service will carry an initial promotional price of $300 per customer per month. Long-term pricing will be set by the time of the service’s official release in October. Since only Salesforce.com subscribers can use the new application, it feeds the company’s core business, as well. “It’s like having our parents become friends with our in-laws,” says Benioff.

For now, Salesforce.com only plans a Google version, since Google has an 85% share of the targeted search advertising market. However, Salesforce is evaluating Yahoo!’s upcoming new paid search technology, too. A Google spokesperson says, “We are pleased to see third-party developers using the Google AdWords API to create new applications that extend the reach of Google’s advertising products. Equipped with more information, businesses can make better decisions, create more value out of their marketing efforts, and ultimately reach more customers.”

BETA RUN. The foundation for the company’s new offering is a service introduced in March by Kieden, a small startup that participates in Salesforce.com’s AppExchange directory of online applications. Salesforce.com bought the smaller company in early August and is beefing up the service before its October relaunch.

“AppExchange has become a viable lead generation and marketing tool, and now Salesforce.com is incorporating the very technology that is being built in the ecosystem,” says analyst Erin Traudt of market researcher IDC. “It will be interesting to see what else Salesforce.com may look to incorporate from the community in the future.”

Already, about 45 customers have been using the Keiden service in what Salesforce.com considers a test version. But even the early version is attracting kudos. Among its fans is Avideon, an online marketing consultancy based in Baltimore. It uses Keiden on behalf of its advertiser customers. “This is a tremendous application,” says Avideon Chief Executive Rich Wiklund. “Marketing has been the last bastion of unaccountable spending in corporations. By having this connection, marketing can at last be held accountable.”

Source: www.businessweek.com

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