The two online operators will jointly develop a new software service, Salesforce Group Edition featuring Google AdWords, whereby the AdWords platform has been built into Salesforce.com as a core part of the system.
The alliance also means Salesforce.com will become the first on-demand application company authorized to resell the Google AdWords platform globally in the 43 countries where the two companies both operate. They alliance also covers joint distribution, technology and marketing efforts.
There are several aspects to the alliance. On the application front it integrates AdWords with the Salesforce.com CRM application, making it easier for organizations to use AdWords in their sales and marketing campaigns. Users will have direct access to Google AdWords to create ads that are linked to Google search keywords or displayed on Google AdSense partner web sites. The application aims to encapsulate every element of the customer lifecycle — advertising, lead creation, deal closure and customer retention and dashboard-based analysis.
The sweet spot for the new application is the small business sector, with Lindsey Armstrong, co-president of EMEA for Salesforce.com, describing it as enabling them to enter the small business market in a new way.
It will open up the market to much smaller customers, she said.
The small business focus in somewhat ironic given Salesforce.com’s efforts to be seen as a player in the large enterprise market over the past few years but for both Salesforce.com and Google, volume is the name of the game and the small business sector and the rise of online advertising represents volume in terms of potential revenue and subscribers.
It is estimated that $17bn was spent on online marketing during 2006 and that the sum represents just the tip of the iceberg.
In addition, the new application has been developed to appeal to small business with limited budgets, IT, and marketing resources and expertise, aiming to provide an all-in complete click to cash solution in a single packaged service.
The universe of potential users has expanded for both of us dramatically, said Armstrong.
Despite the small business focus the two also see the application playing a part in the enterprise sector, although its role and development potential have yet to be revealed. It is a Trojan horse into the enterprise marketplace, said Armstrong.
Although she would not comment on the future of the relationship between the companies Armstrong did indicate it was the start of something long term: It is the beginning of what we expect to be a long and fruitful relationship. The direction will be driven by customer demand, captured through user communities such as IdeaExchange. We prefer that way of developing products, rather than having half a dozen developers in a hot house, she said.
Prior to the announcement there was widespread speculation that the strategic alliance would relate to some sort of merger of Google’s business productivity applications with Salesforce.com CRM, or even that the two were planning a merger. The price of Salesforce.com’s stock rose by around 4% based on the speculation but fell by around 1% during pre-market trading in the US when the extent of the partnership was revealed.
AdWords capability is not new to the Salesforce.com environment as the company acquired the enabling technology in August last year, with the acquisition of privately owned software house Kieden. The resulting Salesforce for Google AdWords application was available from the AppExchange and allowed users to create, manage, and measure search engine marketing campaigns from directly within Salesforce. It was one of the most downloaded applications and this evidence of demand was the driver for the creation of the new product.
The main differences between the two applications is that where AdWords capability was an add on is is now a core part of the application and the latest offering provides stronger tools create and track AdWords campaigns. It also includes dashboards so users can analyse marketing spend against results.
Our View
The announcement may have fallen short of overblown expectations but it is still significant and holds the promise of plenty more to come. For starters, it brings the most influential proponents of SaaS closer together in an anti-Microsoft alliance at a time when Microsoft is still in the early stages of its own SaaS strategy and application work. Together they can attract subscribers and revenue from multiple communities that Microsoft would like dominate (or continue to dominate).
The partnership also represents a small step up on the SaaS maturity ladder. With the exception of NetSuite and a few open source projects, SaaS applications tend to be point products yet the market is calling for integrated suites. The Salesforce.com/Google AdWords combination expands the footprint and demonstrates the first step on a long road from single application to application suite.
This is the first time Salesforce.com has jointly developed a product with a fellow on demand player which is important in itself. However, it is also the first time any on demand developers have got together to jointly develop a product, yet this is a trend we expect to see develop as the market matures and customers call for more broad based, integrated applications.
