Tonight, this blog post summarizing year 1 of the Salesforce acquisition of Buddy Media. The numbers, if taken on face value, are brutal as the endeavor is a big money loser so far.
The picture painted is probably a tad on the pessimistic side. If your Salesforce, you don't buy a Buddy Media to harvest but rather capture market share. I'm sure a conscious decision was made to spend whatever necessary to win share asap -- so costs are going to be higher in the short-term than revenue. This is why people invest in Salesforce.com, for the prospect of future cash flows and the benefit of capturing share now at the expense of optimizing short-term financial results.
Remember also that this particular business is super competitive with Salesforce, Adobe, Google, and Oracle all competing in the SMMS space against a few independents (Sprinklr, Spredfast). Keep in mind also that a lot of SMMS work is still being done manually by service businesses from IBM to digital agencies to traditional agencies now competing aggressively in social marketing.
But I do think there is a lesson lurking in here -- that social is still an unproven commodity in the short-term. Folks like us and others are doing what we can to find value in social media. Investors who get into social media plays, whether through publicly traded companies or those selling privately held stock, do so on the belief that their picks will help the marketing ecosystem in some way. But it's still the wild west when it comes to delivering real value.
Whether it's Buddy Media struggling or Facebook ads struggling or folks like Mark Cuban questioning whether or not he should pay for Facebook News Feed visibility, it all comes down to one critical and unanswered question -- what is the value of social marketing for marketers?
When the answer to this question is as simple as it is for search... i.e. Google Adwords... billions of dollars of new shareholder value will be unlocked. Now where exactly will that be, and when?