Wildfire, a pioneering social media management software application that specialized in contests and promotions, announced today that it has been bought by Google for a smooth $250 million. (Happy day for Gary Vaynerchuk, who was an angel investor in Wildfire).
It was just a matter of time, as given that Buddy Media, Vitrue, Involver, and Context Optional had already been snapped up, Wildfire was one of few remaining independent players with an enterprise client list. Even though Wildfire had been courted for weeks by multiple suitors, most observers – including me didn’t view Google as a potential acquirer. But it’s brilliant.
4 Reasons Google Bought Wildfire
1. Access to Social Signal
This gives Google an end-run way to get Facebook and Twitter and Pinterest and Linkedin activity signal into the Google search algorithm, since they’ve been unable to keep that stream alive via biz dev deals. You may recall that Facebook never signed a deal with Google to incorporate behind-the-password activity into Google, which is why Facebook activity doesn’t show up in Google much, and also why the Facebook/Microsoft (Bing) alliance was theoretically a counter-balance.
Twitter used to have a “firehose” deal with Google, whereby all tweets were indexed, but that deal expired over a year ago, and led (at least indirectly) to the rollout of Google + so that the big G could have their own source of social signal.
What’s driving this is the fact that “pages” and “links” are no longer the primary way we vote for the accuracy and reliability of online content. Now, we vote with tweets and +1s and likes and shares, and Google doesn’t have a good source for that information (until now), which puts the mothership of search result accuracy (and thus, Google Adwords) at peril. I wrote a whole piece on that called “Why Google Has the Hammer to Make Us Use Plus” if you’re interested.
2. Undercover Brother
Google and Facebook aren’t exactly pals. It’s basically the cold war, with Google as the Soviets; Facebook as the USA; and Twitter as….I guess the British.
What better way to reverse engineer Facebook and take the best of it and improve/incorporate it into Google + than to buy a company (Wildfire) that has under-the-hood access and Facebook favored nation status? Will be VERY interesting to see if Facebook kicks Wildfire out of its Preferred Developer Community, or revokes some measure of access. They might just learn a lesson from Twitter, who recently started cutting off Instagram users from accessing their friends lists on the service.
3. Launch Adwords for Social
Increasingly, social advertising on Facebook and Twitter use mechanisms that are strikingly similar to Google’s Adwords system (which it in turn copied from Yahoo! which bought it from Bill Gross who pioneered the concept at GoTo in the way back days).
Google has got to be thinking, “We already have the platform, the advertisers, and the track record. Why let an entire, parallel industry spring up?”
Wildfire isn’t known for their social advertising prowess, but could Google use this acquisition as a springboard to create a social advertising platform without rival, a one-stop source for Google, YouTube, Twitter, and Facebook ads?
4. Kill the Category
Google may want to kill the social media management software business in the nest, so Salesforce, Oracle and the other acquirers of the big players don’t get too much of a foothold in the “platform of the future” and social CRM. If they make Wildfire free, and also make it the best or only way to do Google + well for companies, what does that do to Buddy, Vitrue, Syncapse, etc?
There is most definitely a precedent for this, as Google bought web analytics company Urchin (which was approximately third in the market, the way Wildfire is now). Google then added a bunch of features, changed the name to Google Analytics, dropped the price to ZERO and proceeded to all but kill Webtrends, Omniture and every other expensive software package companies were using for analytics. Interestingly, Webtrends for big sites cost back then about what Vitrue and Buddy cost today.
Google doesn’t need to make money on Wildfire. But it sure as hell can prevent Salesforce and Oracle from making money on Buddy, Involver, and the rest.