Monday, June 13, 2016

Microsoft Buys LinkedIn for $26.2 Billion: Get Ready for Software Vendors as Data Owners

Microsoft surprised pretty much everyone today by announcing a $26.2 billion acquisition of LinkedIn. This is fascinating since Microsoft intersects with LinkedIn in several areas: Dynamics CRM software, Office productivity software, and Bing online advertising. It gives Microsoft access to a rich trove of personal and company information, something it didn’t have before (although Microsoft probably collected more personal and company data than most of us realize).

LinkedIn is primarily a social network with revenue from subscriptions, recruiting services, and advertising. But Microsoft’s announcement suggests it is primarily interested in using LinkedIn’s data for other purposes, such as enhancing the effectiveness of Office and CRM users by showing information about their contacts and potential contacts. This puts Microsoft at the center of the “third party data revolution” (a term I just made up and will probably never use again) that makes detailed information about everyone easily available from commercial sources. This is a trend that’s been clear for some time; it’s a big part of the intent data and predictive data excitement of the past year or two. It's also one foundation of the MadTech vision I offered last year.

It still feels odd to think of a software company owning a data business, although bought Jigsaw (now in 2010 and Oracle purchased the BlueKai and Datalogix in 2014. The prospect of seamlessly integrating third party data with a company’s own sales and marketing products is intriguing, although neither Salesforce nor Oracle has done much with it. Other vendors like Nimble and HubSpot have done a better job of simplifying access to third party data about an individual or company. Those features are immensely appealing and become even more important in the world of Account Based Marketing, where knowing who to reach at your target customers is everything. Done correctly, integration of LinkedIn with Dynamics CRM could provide a major boost to that product’s utility while creating a new barrier to competition.

We’ll see what happens next: Microsoft might be able to reset expectations among CRM (and Outlook) users for having prospect and company data immediately available. That would force other CRM and marketing automation vendors to follow suit, although it's hard to imagine them matching the depth of LinkedIn's data.

If nothing else, this confirms the foundational role of data and data management in marketing and sales technologies.  That's important because companies that start by planning a stable data layer are best positioned to manage the accelerating changes in decision and delivery systems.

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