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The conventional wisdom about Salesforce.com (NYSE:CRM) is that in order to grow, it needs to continue to acquire bigger customers. The on-demand CRM provider isn’t doing badly at landing larger engagements — as well as small engagements at bigger enterprises, which could lead to continued penetration and more seats.

But it has another growth area: online marketing. While the company continues its core focus in customer relationship management, it’s quietly moving to add more and more marketing and advertising campaign management functionality to the core product.

Last October, the company brought campaign management for Google AdWords into the basic product. Now, it’s working on doing the same for Yahoo Search Marketing, as Yahoo gets its new Panama platform up to speed.

Says Kraig Swensrud, who oversees marketing programs for Salesforce.com, “The dream scenario for customers is that marketers can generate demand and nurture prospects, customer service can support them, and sales can process and track transactions, all within Salesforce.”

Salesfore.com will focus on email and search marketing, plus tracking interactions with the company website. Customers can use the application to execute, track and measure the response for email, search and direct mail campaigns. It will stay away, for now, from the more trendy media, such as blogging or video. Swensrud says most Salesforce.com customers aren’t yet doing all they can to create and nurture leads via these three established media.

The Interactive Advertising Bureau says spending on internet advertising in 2006 rose by 30 percent to $12.6 billion, and the industry is hoping for even greater growth in 2007.

Salesforce.com has close to 30,000 customers for its SaaS offerings, while an estimated 500,000 to 750,000 businesses use Google AdWords. An estimated 300,000 to 400,000 companies use Yahoo Search Marketing (although there’s likely plenty of overlap between Google and Yahoo search marketers).

Says Swensrud, “With advertising budgets shifting onto the web, it’s a great time for us as a company to be doing what we did for salespeople over the last decade: giving marketing automation tools to marketing people.”

Salesforce for Google AdWords is based on technology developed by Keiden, formerly a Saleforce.com ISV. The CRM provider thought Keiden’s technology, which lets companies buy Google AdWords from within Salesforce, and then to track exactly which ads and keywords turn into leads, deals and revenue downstream, was important enough to acquire.

The Keiden team, which came along with the acquisition, will develop the Yahoo Search Marketing integration, either independently or in collaboration with Yahoo’s engineers.

Salesforce for Google AdWords complements and extends Google’s own analytics product. Swensrud says that 90 percent of Salesforce customers use it in conjunction with Google Analytics. Google considers it a conversion when a searcher clicks on an ad and goes to the advertiser’s website. Salsforce.com lets the company follow the searcher’s interaction with the website, and also keep track of the lead to determine whether the person returns to the site a future time to make a purchase.

Swensrud says that Salesforce.com prioritizes its projects based on customer demand. In marketing, that demand so far has been overwhelmingly for Google integration. He expects demand for Yahoo integration to pick up in 2007, as Panama rolls out. So far, there hasn’t been a flicker rest in Microsoft AdCenter, he said. “It’s massively dwarfed by Google and other marketing initiatives.”

Source: Salesforce.com's Overlooked Growth Area: Online Marketing