At the inflexion point: how the current wave of M&A could transform the media monitoring sector

28 May, 2014

The hitherto dormant PR intelligence and software market has burst into action this year with a spate of M&A activity which could mark the beginning of the strategic transformation of the sector.

Currently, two listed businesses, Cision (Stockholm: CSN) and Vocus (NASDAQ: VOCS) are the subject of a take-private attempt by GTCR, a Chicago-based PE fund. In the UK the Private Equity exits of Gorkana and Precise are in process. At the same time rumours continue to surround the future of PR Newswire and iSentia, the Asian media monitoring business.

Defining the opportunity
The sector is not easily defined: simply put, PR or media intelligence comprises the monitoring and measurement of PR or earned media, targeting of journalists or influencers, distribution of content, engagement with audiences, and tracking and measuring the results. Or so the theory goes. Whilst there are a number of businesses which provide some of these services, there is yet to emerge a coherent offering which meets the full needs of communications professionals.

These are interesting times for the PR sector. There is a clear need developing amongst large organisations for strategic reputation management which goes beyond the realms of standard corporate PR. The agencies which have staked claim to this territory, such as Blue Rubicon and Portland in the UK, and the US’s Edelman are outperforming their peers. Budgets are being diverted away from marketing towards PR in recognition of the impact of reputation on business performance and shareholder value (and the downside of reputational damage).

Managing reputation is becoming both more important, and more complex, a mutually reinforcing dynamic as social media explodes whilst traditional media consumption dissipates. As PR continues its mutation from a linear, traditional media-based activity to a dynamic multi-channel one, there will be a need for tools which combine technology, data and services to monitor what is being said, target content to relevant channels, engage with audiences and track messages and their impact.

M&A strategies
The PR intelligence market is divided between businesses whose heritage is in traditional media monitoring  but who are moving into either software and contact databases (Cision, Gorkana) or monitoring technology (Precise), to pure technology businesses such as Vocus, Radian6 (acquired by Salesforce in 2011), Sysomos and Crimson Hexagon. Both groups bring advantages to the table, but a combination of two or more businesses will be needed to achieve the ultimate prize of owning the PR desktop, a strong rationale for the current wave of M&A.

This wave could play out in a number of ways:  Salesforce has already set out its stall with the acquisition of Radian6, whilst marketing software vendors such as Adobe could see acquisitions in this area as part of a wider play covering content marketing. The combination of some of these businesses, and their transformation from media monitoring to software-as-a-service (SaaS) and proprietary data, with the accompanying potential for uplift in valuation multiple, will require careful strategic thinking, but successful execution carries a significant prize. As we wait to learn the identity of the eventual winners and losers, the next eighteen months are likely to be pivotal.