Why Online Giants Woo Twitter

Marketing has changed.  Now it’s all about real-time analytics, artificial intelligence and feeding both with massive amounts of data.  To succeed you need all three.

Twitter (TWTR) shares surged 39.7% in about three months after several news outlets reported the social media company was engaged in takeover negotiations with a number of big technology and media firms.

It’s not a surprise founder Jack Dorsey attracted suitors.  Twitter has a huge trove of real-time information.  A year ago, it became the lone reseller of that data through its Gnip subsidiary.

By putting the company up for sale a year later, Dorsey put all of his customers on notice. A new owner might raise prices or even refuse to renew existing contracts.  Suddenly bidders came knocking.

The bidders have included A-listers such as Alphabet (GOOGL), Microsoft (MSFT), Verizon (VZ), Disney (DIS) and Salesforce.com (CRM).

You never really know how much something is worth to you until you’re faced with the threat of losing it.      

Alphabet saw this coming long ago.  Twitter’s real-time data is a perfect fit for its Google subsidiary.  Yet two years ago, the price was too high and no other bidders lined up. It could wait, so it did.

The emergence of Salesforce shows just how much things have changed.  Salesforce is a cloud-computing company. It’s major claim to fame is a product to help companies execute better customer relationship management, or CRM.

Salesforce needs data to optimize the AI platform it named after Albert Einstein (above, circa 1921).

And while the customer relationship manager might not seem like a logical fit with Twitter, Salesforce bet the farm on Einstein, an artificial intelligence platform that its customers can apply to sales, service and marketing.

Now Salesforce needs data to make Einstein work. It’s in a bind.  Brent Leary, co-founder at CRM Essentials, told TechCrunch:

“Salesforce’s competitors are snapping up [data sources] and will integrate them into their platforms to add additional perspective and intelligence. If this deal with Twitter happens, it’s to add a constant flow of information into their AI platform, to marry it with their transactional and customer information.”

Such a deal seems even more pressing after it lost out to Microsoft in the LinkedIn (LNKD) sweepstakes.

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Like LinkedIn, Twitter offers a suite of real-time analytics.  Sentiment analysis, brand analytics, trending topics and key influencers would all mix well with Salesforce’s Marketing Cloud.

The problem for Salesforce in particular is that Twitter will not come cheap and the other suitors have deeper pockets. Twitter has more than $2 billion in sales and, according to ReCode, any deal is likely to carry a big multiple to sales.

Salesforce was willing to stay in the bidding war for LinkedIn, but that deal offered more obvious synergies. Selling shareholders on what could be a $30 billion deal for a slow growing social network targeted at consumers might be tough. No wonder Salesforce shares have slipped in the past two weeks.   

The best option is simple licensing. That would provide Salesforce with everything it needs at a more reasonable price.   Unfortunately, that option may become more much expensive or even a pass with the sale of Twitter to a rival.     

It’s an amazing turn of events that a failing social network could be so valuable to so many technology companies, but that’s where we are now in the Big Data revolution.

QUICK TAKES

Apple (AAPL) is working on an Internet of Things device that will use its Siri digital assistant to control lights, connected home appliances and other things. The electronics company is far behind Amazon’s Echo in this effort. … Audi is building a sport utility vehicle to take on Tesla’s Model X and it’s a real looker with an impressive range of 310 miles.   … Elon Musk’s solar roof panel will hack your utility bill. You could call it fiddling with the roof…  The founder of Oculus Rift – a virtual-reality hardware company bought by Facebook (FB) – is funding a group of Internet troublemakers.  … A Stanford humanoid robotic diver recovered sunken treasure from a King Louis XIV-era wreck…  Facebook says it inadvertently overestimated average video views by up to 80% due to a metric miscalculation. And it only took two years to discover the error… Snapchat has more than 150 million daily users of its mobile phone product. Now it is branching out into sunglasses with cameras, and they look crazy!

Snapchat’s new designer sunglasses come complete with built-in cameras.

AT&T (T) plans to make its Direct TV Now unit the primary source for video-streaming delivery in as little as three years. Direct TV Now will offer 100 channels.  … Mercedes-Benz’s Urban eTruck is an electric truck designed for short-haul transport with a 124-mile range, interchangeable batteries and ETA of less than 10 years … Chinese-made Anbots are autonomous robots designed for the security industry.  The bots are about 5 feet tall, egg-shaped and armed with a Taser-like device.

Best wishes,

Jon Markman