Oct

24

Processing PR into a New Age

Filed Under B2B, Big Data, Blog, data analytics, Industry Analysis, internet, news media, online advertising, Search, social media, Uncategorized, Workflow | Leave a Comment

There is, to the really ardent enthusiast, a sort of poetry about a sequence of acquisition deals in a sector which results in the emergence of a company large enough and technically adroit enough to challenge not just the pre-existing market leaders but the way in which business is done by practitioners in the sector. The announcement this week of the purchase of Gorkana (formerly Durrants) by Cision, now enhanced by Vocus, gives me a frisson of this feeling. From the dawn of the great age of newspapers in the 1880s, getting things into them and measuring the results became a business in its own right, nowadays abbreviated to “PR”. There is, of course, a lot more to it than that, and the things placed could range from advertising to editorial briefing, and more media opportunities widened the scope, but in 1880 PR was hunch and artistry. When William Durrant and Henry Romeike formed their press clippings agency in that year and named it after the former (Romeike seceded to form his own) the measurement was needed to demonstrate, and no doubt sometimes defend, the campaign strategy. Today, as we know well from other sectors, the ability to measure, and then analyse, can easily become more important than the inspired hunch. While the latter lives on in the industry legend, planning an effective launch campaign is increasingly a desktop activity in the marketing department which once employed those wizard PR consultants. Automating workflow, introducing unprecedented levels of accuracy and comparability, adding software tools from predictive data analysis through to automated campaign booking tools, and we have a revolution in process. And it came not from the PR industry itself, but from its ancillary, mechanical component, the clippings agency. If we look at many other industries entering the digital age, this is very often the case.

But between 1880 and 2000, very little happened. In that year August Capital acquired Discovery Group, which contained Durrants,for £14m in an MBI and installed a strong team of ex-Thomson executives led by Steve White. I can recall my own initial visit, in what is now London’s white hot high tech Shoreditch, and seeing the long desks of clippers with their shears and piles of newspapers. Did they seek consultancy, I wondered, or the Last Rites? And then very quickly came the idea that if all of that clipping could be automated and made searchable very great things could be accomplished. I know less of the history of Cision (once Sweden’s Observer Group, who sold Romeike’s agency, ironically, back to Durrants in the post MBI period), but I suspect that they followed a similar trajectory. Under the CEO, Peter Granat, who has brought first Cision and then, earlier this year, Vocus, together in deals funded by the Chicago private equity player, GTCR, they have created a powerful technology base in the US in parallel to the UK development at Durrants. August Capital sold on to the British PE player Exponent, which enabled an acquisition programme which included buying aligned software players Metrica and Gorkana, and the renaming of the company after the latter. Exponent’s exit at £253m (according to MergerMarket – others say rather less) demonstrates the value added through these activities and looks to me like a X12 multiple at least.

So here is a very satisfying story for those of us who still believe in Progress. Three private equity houses have brought in appropriate technology and management, and at each stage have made acquisitions that added value. Bringing all three together in Chicago could well be transformative for the new group, and for the global industry within which they are embedded. Over time usage will move out of PR agencies and into end user corporate marketing, a vastly larger marketplace. As this begins to happen, so will GTCR be able to leverage its position and get the right exit price. I do not imagine that the major advertising and PR agencies will allow this process automation without an attempt to own it. WPP, through its Kantar data unit, already bought Precise Information as a way of testing the waters. WPP’s major competitors have aligned interests. How often have we seen this in the networked world? You own a very profitable media franchise. This becomes threatened by digital transformation. So you are forced to buy one of the disrupters. Then the legacy business declines. Then you can enjoy life again as the proprietor of a much smaller and slightly less printable business.

The story of Gorkana, however, is a good one. And the final credit should rest where it so seldom does, with the management. Steve White and his initial 2000 team and their successors were able to see where users wanted to be, as well as grasping the impact of transformative technology. While they had to contend with both the active and passive resistance of some of the players in the process (for instance, newspaper management were deeply suspicious of any attempt to database their content, for whatever purpose), they completely changed the mechanics and analytical output of an activity which had hardly changed during the previous 120 years. Reflect that while this work was going on the dimensions of media monitoring were widening all the time, and including web presence and then social media analysis. And reflect as well that the management of these companies started without a content-based intellectual property valuation – they owned none of the content that they analysed. In the information industry in particular it is important that we remember what people accomplish, as well as software.

Aug

18

Forever Blowing Bubbles

Filed Under Blog, eBook, Industry Analysis, internet, mobile content, online advertising, Publishing, social media, Uncategorized | Leave a Comment

It must be mid-holiday season again. While our minds are elsewhere, journalists are licensed to inflate and selectively invoke evidence of boom and bubble, to the point where we have all lost sight of reality in our wonderment that investor X has valued the start-up Y at $15 billion, before it has earnt a cent or its founders used a razor. Charles Arthur, a very knowledgeable technology journalist, set off down this track on Sunday in The Observer (17 August 2014).”New tech bubble – or new business model?” argues that bubbles may be harmful, but Arthur is too clever to do exactly what the silly season demands and write an article that gets liberal-minded readers pursing their lips and wondering if we really want all this new media technology, and whether bubbles threaten the economy just when the Brits have restored growth through a consumer housing purchase bubble. He knows as well as the rest of us that neither boom nor bubble nor bust accurately describe what has happened since the mid 1990s.

When we look back on the post-internet investment scene we will see that future technology became the bargaining card of present technology. In each five year period those who had succeeded in the previous period were forced to buy into the next generation in order to persuade investors post-IPO that they were not going to be overtaken by events. This inevitably involves paying silly prices for as yet undeveloped assets. Some of those bets will work, others will only work after constant re-iteration and when the market is ready for them. Some will fail and be quietly buried in the place where Mr Murdoch put My Space. But this is not bubble culture – it is building value in the only way that this market understands. This is never going to become “more realistic”, since by its nature it has to be unrealistic to persuade us that it is serious.

But blow away the bubble talk and serious things really are happening. For a start, the UK football (soccer) authorities have suddenly discovered that users are recording highlights (you know, those rare moments when someone actually scores a goal in the beautiful game with the ugly manners) and putting them on social media, where they are passed from hand to hand to no pecuniary advantage to the authorities. These administrators must be related to Rip van Winkle – where have they been dozing all these years? And waking up and saying this must stop is not an answer. On the other hand, making it easier to do legally within a package offered by football to enhance user enjoyment could be a great move. Yet, this is happening in the context of a shrinkage in the revenues generally earned from video, as the same network-invoked sharing capacity does to video what it has done to every media form. I was very excited by an article by Liam Boluk in Media Redefined (http://www.mediaredefined.com/a-redef-original-if-video-is-b-668292818.html?curator=MediaREDEF) kindly drawn to my attention by Neil Blackley. This demonstrates in great detail the revenue decline in video, and shows us the inflationary and deflationary trends we really should be watching. Not who is paying over the odds for what, but what are users doing with this media avalanche that their networks now provide, and how do they value it.

So it is simply not enough to look at the video market and say it is all down to Netflix spoiling the party. Netflix was one of the over-valued start-ups a few years ago that journalists in mid-summer page fillers called empty bubbles. Liam Boluk points out how cheap US TV, wherever you tap into it, now is – and how very unproductive the licensing deals done by Disney et al have proved to be. He might have said how commoditized it now seems – unless you actually want a seamless palimpsest of low value advertising and entertainment, without the effort of selection, most channel based offerings in many parts of the world feel the same. Mr Boluk points out that the average US home spends less on video entertainment today than it did in 1998, although volume consumed has risen. He says that the value of consumer rentals and purchases,”which are critical to profitability for almost all content owners”, have fallen by a third in this period. Are we sure that the bubble is in the pricing of Snapchat, or in the Murdoch bid for Time Warner?

Is there a solution to all of this? Having stood, like old Tiresias, amongst the burning towers of Fleet Street and the regional press, having observed the desperate attempts of the book world to innovate without changing the business model, having watched the humbling and consolidation of the music industry, having witnessed the decay of business and professional media in print and the decline and fall of value in advertising markets universally, it is tempting to say No. But clearly that would be very wrong. Mr Boluk says the way forward for video is to find new ways of telling stories. And to find it in new forms in fields like mobile, and not just by reheating the archive product.

And how right he is. He cites the Virtual Reality player Oculus Rift (http://en.wikipedia.org/wiki/Oculus_Rift) as an example. While no one yet knows whether the Rift headset will succeed, the Facebook purchase, worth up to $2 billion if it earns out, will underline Facebook’s determination to stay a front line player as it too becomes commoditized – and to re-assure its investors of that intent. And VR is one of those many areas where huge promise is recognized, but constant iteration is needed to get closer and closer to the awakening pulse of the user. What we are watching here is a ceaseless beating of waves on a shoreline as a tide comes in, and a hugely exciting “after media” marketplace is revealed. No bubbles here at all.

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