Social Media monitoring solutions are all the rage right now

In the last two weeks the Social Media monitoring scene has been virtually lit on fire.

With Salesforce snatching Radian6 for approximately $276 million in cash and $50 million in stock and shelling out another $10 million in stock and $4 million in cash to Radian6′s founders, and Visible Technologies raising an additional $6m in cash, it seems that this space is ripe for consolidation and a lot more action.

A good question to ask would be whether this market is actually part of the “bubble” that is developing in Silicon Valley (or at least that is what experts are saying) or has some real substance to it – Does a price of $326 for Radian6 really makes sense? is the potential market this big?

My intuitive answer is no (for this market being part of the “bubble”) and yes (for the market opportunity). I think it makes sense to assume that this market will be as big, if not even bigger, than the Web analytics market is now (Forrester reports that Web Analytics spending are around $600m annually). There are some indications supporting those thoughts:

  • Jeremiah Owyang indicated that corporate willingness to pay for Social Analytics tools has gone up to $294,000
  • According to Salesforce, Radian6 was already at a run rate of $35 million in annual revenue and is expected to bring in $50 million this year. Omniture was at a run rate of ~$100 Million before Adobe bought them back in 2009 for $1.8B
  • Social analytic and monitoring are a growing requirement for multiple groups in the enterprise, including marketing, sales, PR, customer support and research groups and other. Social Media monitoring solutions would potentially be more widely used than Web Analytics tools and those integrated solutions would be essential to business operations in today’s social web
  • 79% of corporates are undertaking Social Media activities right now, but in terms of spending the have a long way to go and we can expect double digit growth, with Social Media analytics and monitoring nicely placed in the top of the stack
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