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August 22, 2006

Salesforce.com Partners With Google To Attack SMB

posted by MR WAVETHEORY at 8/22/2006 05:28:00 PM
Salesforce.com has announced a deal with Google to enable users of Salesforce.com's CRM software to manage keyword bidding directly using the Salesforce portal. This deal is significant because it opens up the market opportunity for customer relationship management software from merely being a tool for large enterprises to one that can be used by small businesses. Salesforce.com for Adwords was created by a team of 4 developers in a mere 2 months, before Salesforce.com acquired the company.

Why does Salesforce.com want to partner with Google?
Google has several hundred thousand Adwords advertisers and these accounts are a gold mine. Keep in mind that the average small business spends several thousand dollars each year on advertising, and you get an idea of the size of the market opportunity. By last count, Salesforce.com had about 24,800 paying customers (and a total of 500,000 users) and you get an idea of the order of magnitude difference in market size. Google on the other hand has several hundred thousand. Compares the size of the enteprise application market to the search marketing market and you get an idea of the opportunity.

What is the benefit of the Google deal? I believe this deal means that Google wants to partner more closely with CRM vendors like Salesforce.com, Oracle, and traditional big enteprise app vendors. While Salesforce.com benefits by getting access to Google's small and medium sized business accounts, Google gets the reverse benefit - access to larger corporations who currently use CRM and will start to regulate and monitor their ad spending online.

Is this a good deal? I believe it is a great deal for both Google and Salesforce.com. Keep in mind that both Google and Salesforce.com were backed by Kleiner Perkins so there is a bit of enlightened self interest for this deal. It benefits Kleiner to keep both boats afloat.

Mr Wave Theory

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