RMP Media Analysis

GTCR Math: Vocus Plus Cision Equals…

In General Analysis, PR Vendors on April 9, 2014 at 12:59 pm

Usually an acquisition generates questions that we can all see coming a mile away because the move is  readily apparent. The synergies are right there on the table and there is no mistake; it could be to break into a new market, to expand into an existing market, to enhance current service offerings with complimentary products or dominate market share.

There were whispered conversations over the last year that both Cision and Vocus were looking to sell. This came out into the light in Q1 this year and almost as quickly they were both snapped up by GTCR.

When the two heavyweights in Public Relations software solutions arena are owned in whole or in part by the same PE though the questions surrounding the acquisition become very pointed.

This got me thinking about GTCR math.

VocusPlusCision

Let’s start with Vocus: shareholders* were doing back flips when the all-cash transaction was announced April 7th at approximately $446.5 million. This represents a premium of 48% over Vocus’ closing share price on April 4th. GTCR sees something here.

Compared that to the Cision bid from Blue Canyon Holdings (sub of GTCR) of 20.1 per cent of shares and votes in Cision along with Fairford Holdings Finance AB, Cyril Acquisition AB, Lannebo Fonder and Accendo Capital SICAV-SIF with 43.3 per cent of shares and votes in Cision for a grand total of 63.4 per cent of shares. The total bid is approximately $125.7 million.

So What Happens Now?

$446.6M + $125.7M = Over half a Billion, that’s Billion with a ‘B’ invested in two companies with some very similar offerings and a huge part of the market share in the same.

Vocus clearly comes out on top nearly doubling their valuation. Kudos to them for swinging such a high price. This was achieved in large part due to the iContact acquisition made in 2012 for $169M which has been instrumental in Vocus’ pivot to the cloud marketing space. Cision on the other side of the equation is priced much more reasonably, albeit with a less diversified offering, and kudos to Blue Canyon Holdings on their savvy purchase.

Vocus sees it this way: “For our shareholders, this agreement provides an opportunity to realize cash value for their shares at a significant premium to historical share prices,” said Rick Rudman, CEO of Vocus. “For our employees and customers, we believe that joining forces with GTCR creates a significant opportunity to utilize each other’s strengths and move even faster toward our vision of creating innovative software and making our customers successful.”

Cision has remained tight lipped so one can only speculate. It’s obvious Meltwater’s offer is a no go at this point, and it doesn’t appear that Cision wanted that marriage anyway. Although it would have been a fantastic move on Meltwater’s part had it been successful.

Customers

In the near term (next 3 months), nothing really changes for the customer base. Once everything is finalized though customers will be offered to move to the “new solution” and given the benefits and incentives customary with such a change. With limited options of other comparable platforms it is highly likely they will renew their subscription. Where there may be some drain is on the lower usage and lower budget clients who may opt to go with a product that focuses on a targeted part of their workflow.

Employees

The very word acquisition gets all employee’s thinking “What happens to me now?”. Those resumes are getting updated, LinkedIn recommendations are going to get requested, suits are going to need pressing and interviews will begin. The hard fact is not everyone survives the acquisition. In this case anyone working in Sales, Support, Development, Training, Professional Services, Research, well pretty much everyone has a target on their back. Don’t think so? Take this into account. When Vocus purchased iContact in February 2012 one-third of the 250 iContact employees were pink-slipped  only 10 business days later. It was all about redundancies and Vocus increased the quota carrying sales reps to 489 by year end compared to 270 the previous year which was core to the cloud marketing  suite go to market strategy.

The Industry

Here is what the numbers tell us if these two are combined. The Contact Management space would be dominated and the Monitoring space could easily overtake Meltwater with a bit of innovation and salesmanship.

VandCisionnumbers

From where I sit the fact that one company will own the two largest PR software companies means there will be a only one version of both standing when everything settles. The logical outcome is to pull apart those successful components from each and create the defacto PR solution. Now if GTCR still has an appetite and really wants to close this market up all they need to do is pick up PRNewswire to round out the offering and fund some further investment into the social media engagement/listening/monitoring component.

Vocus’ cloud marking suite would offer the growth that can no longer be found in the PR space. PR has changed and the budgets that support the PR effort are increasingly under the Marketing P&L. This doesn’t mean PR’s don’t need a tool for their workflow, it just means that the workflow offered has to take Marketing and PR into account in that order.

 

*I own a handful of shares in Vocus from way back when I worked there.

5 Predictions About Influence Marketing

In General Analysis on April 2, 2014 at 9:13 am

Gina Gulberti of Augure, recently interviewed me for a post she was working on regarding Influence Marketing, read it here. A fantastic cross-section of marketing experts (talk about being in great company!) were interviewed for the piece which makes for good reading :

Augure’s defined mission is to “provide PR and communication professionals with a software to help them Understand, Identify, Improve and Measure their efforts” and is based in Europe. With 1,500 customers and over 20,000 users  and 96% of their customers renewing their subscription each year Augure is poised to make a big impression here in the US in the near future.

Here is my full interview:

How are new online Influencers (bloggers or Tweeters) changing PR professionals dynamic?

The dynamic between traditional PR practitioners and online influencers has been evolving on an almost equal footing with social media usage. PRs and Marketers recognized that social media is the most effective platform with which to communicate with their publics thereby engaging in a participatory conversation.

The online influencers are a valuable resource for the PR’s  company. They are a primary component of earned media, which is a PRs domain. The dynamic for the PR doesn’t change at all from the journalist dynamic. The journalist is paid to write and while they should be objective, that is not always the case. Online influencers aren’t paid, they don’t have a stake in the company, they aren’t influenced by deadlines or editors. The online influencer should have the same access to PRs. The successful PR will have to take the time to identify key online influencers and cultivate relationships with them.

How can these influencers be of help to their brands?
Influencers can help promote or damage a  PRs and Marketers brand. The fact that they typically do not have a stake in the brand, but perhaps in the industry, the public put more stock in their viewpoint.

Is the Influencer Marketing measurable? How?
The benefits of influencers is measurable just the same way traditional efforts should be measured and evaluated. The ability to link the results of media efforts earned and otherwise to business goals and outcomes. Establishing a strategy that is in line with the company goals makes this an effective way to demonstrate success and areas that may need refinement.

5-predictions-about-influence-marketing-infographic1

Cison, Vocus & Meltwater Oh My!

In PR Vendors on March 25, 2014 at 1:43 pm

UPDATE April 7, 2014: SOLD! or rather Acquired! Reuters reports Vocus will be bought by GTCR for $446.5M. The deal is expected to close in Q2.

UPDATE April 5, 2014: On April 3rd, Blue Canyon Holdings published a press release which noted “shareholders representing in aggregate 10.04 per cent of the shares and votes in Cision have accepted the Offer. As previously communicated, Blue Canyon Holdings has in addition thereto, through acquisitions on NASDAQ OMX Stockholm, acquired shares in Cision representing in aggregate 10.06 per cent of the shares and votes in Cision. Together with the Cision shares tendered in the Offer, these shares represent in aggregate 20.1 per cent of the shares and votes in Cision.

…Fairford Holdings Finance AB, Cyril Acquisition AB, Lannebo Fonder and Accendo Capital SICAV-SIF, representing in aggregate 43.3 per cent of the shares and votes in Cision, have undertaken to accept the Offer… As Blue Canyon Holdings has declared the Offer unconditional… As the Offer is unconditional, shareholders do not have the right to withdraw given acceptances.”

So there we have it. According the the Offer by Blue Canyon and the total shares which have already accepted the offer, 63.4 per cent of the shares have made it known Meltwater will not be acquiring Cision.

UPDATE April 3, 2014: It’s offical Meltwater published a press release which notes their offer is now SEK60 in cash per share for Cision. This brings their offer to SEK895M. With the Blue Canyon offer of SEK55.10 per share expiring on April 4th, Meltwater is well positioned to come out on top. Unless Blue Canyon changes their offer to over SEK65 the Meltwater Cision union will move forward. 

UPDATE March 31, 2014: Meltwater now owns 15.3% of capital and votes in Cision AB following the acquisition of 768,702 shares at SEK60 per share. This raises Meltwater’s stake by 5.2%. This move further demonstrates the powerful interest in the pursuit of Cision’s future. It would not be surprising if Meltwater raises their current offer from SEK55 cash per share to over SEK60.

The first quarter of 2014 has proven to be a real keep on your toes situation with regard to the PR landscape. Several big names are on the selling block:

January – Gorkana, Precise  – The original FT.com story is behind the paywall. The article notes that the backers for each will be seeking a sale in the coming months.

FebruaryCision – Blue Canyon Holdings AB makes a cash offer to the shareholders. In March this is followed by Meltwater making their own bid.

MarchVocus  – With a reported market cap of over $235.3M Vocus is said to be working with Stifel Financial Corp to find a suitable buyer.

In a post earlier this year I talked about Gorkana & Precicse going on the market, where I speculated about putting the two together. Many of my counterparts said they though of that too and how nice it really would be for the customer if done right. Alas I don’t see any movement there but one can hope.

CisionLogoLooking from the outside in Cision has been struggling in the last year couple of years. Once the undisputed market leader for contact database and monitoring for public relations, the market share has steadily eroded. Why else would the prices be dropped so low without even having to ask for a discount or deal when working with a sales representative? Direct and indirect experiences bear this out, especially if there is another vendor being considered. You get the sense that sales have been told to get the deal no matter what the margin loss turns out to be. One only has to look at the numbers from a global perspective to see how Cision stacks up to the competition for market share.

MarketSegmentation

The business mix at Cision is almost evenly split between Media Monitoring and Contact Management with Measurement, PR Distribution and Social Media take a serious back seat.

Cision Business Mix Closing 2013

Data from Burton-Taylor Public Relations Information & Software Global Share & Segment Sizing 2013 & Annual Report

In the recent past Cision has tried to shift more focus on Content Marketing (the latest buzzword for Marketing which involves the creation and sharing of published content to acquire customers.), however the company isn’t viewed as a Marketing partner and is relying on the Public Relations contacts to move them in front of the folks with the money in Marketing.

Blue Canyon Holdings has put forth a cash offer to the shareholders of Cision back in February for SEK52 and increased that offer in March to SEK 55.10 cash per share. The  later was in response to Meltwater throwing their hat into the ring with an offer of at least SEK55. Meltwater disclosed on March 20th that it has acquired more than 1.5M shares of Cision equivalent to a 10.1% stake in the company.

That Cision is going to go through an acquisition is not the question. The big question will be what will Cision look like on the other side. If Blue Canyon Holdings wins out then I don’t expect much of change in the day-to-day offerings of the company. If Meltwater wins out then there will be a big shift in the competitive landscape for PR and a minor one for Marketing.

In PR Meltwater has a 50/50 reputation as some customers love the inexpensive nature of the offering because it hits their needs. For enterprise organizations however Meltwater can fall short depending on the business needs and Cision would fill that slot nicely. It would also get Meltwater into the Content Marketing space as described above. Depending on how Meltwater integrates the offerings of both companies there wouldn’t be a deal they couldn’t win. This is where customer service and minor feature differentiation will dictate who wins an new client when up against a competitor. The question will be who is left? That would be Vocus who is also on the selling block.

 

vocuslogo On the other hand Vocus put all it’s chips into the Marketing suite over a year ago and re-branded themselves as a company “providing cloud-based marketing and public relations software…”. Don’t let the word cloud blurry the picture all that means is the company is following the same marketing as everyone else. Cloud = Cool. Vocus has been a SaaS company for over 15 years and has been using cloud services for nearly as long.

The business mix at Vocus is nearly 50% Contact Management due to the move to the Marketing space in 2012 with the purchase of iContact. This is followed by Monitoring (News on Demand) and PR Distribution (PR Web acquired in 2006) which are dead even with Measurement and Social Media bringing up the rear.

Vocus BM

Data from Burton-Taylor Public Relations Information & Software Global Share & Segment Sizing 2013 & Annual Report

There is no word publicly on who might be interested in purchasing Vocus just yet. But let’s think about this, when Vocus has been approached in the past they gave anyone courting them The Heisman. Now they are open and there is no blue ocean in the space. So it will come down to an investment firm who are not looking for huge returns but see the Content Marketing vision the company has based the long-term strategic road map upon.

Possibly a direct competitor? NASDAQ (nope, they have MyMediaInfo), PRNewswire (nope, they have everything but the Content Marketing piece already), Marketo (Nope, they are all Marketing which is where the budgets live), SalesForce.com (maybe, if they want a PR solution. It would round out the Radian6 offering and Vocus already has a SF integration!).

Possibly a non-direct competitor? Adobe (nope, they just expanded their own marketing cloud with predictive tools and iBeacon support), NewsCred (nope, they are doing just fine in the content marketing space on their own thank you very much)

 

Last Words: When you look at the three major integrated public relations tools side by side the numbers show Meltwater is growing a very respectable pace by comparison to the two long-time industry leaders.

 

Integrated Solution Comparison

The three major integrated Public Relations tools as of YE 2013

Public Relations is not going away. It’s just getting absorbed on some level into the Marketing. For years Cision and Vocus have traded customers. There is no more blue ocean in this space. Innovation will have to come in the form of multifaceted solutions. Meltwater has positioned itself as  major market player in PR but has no presence in Content Marketing; and really at this point unless Meltwater can trim down the behemoth that is Cision what they would be buying are customers and brand recognition.  However, now Cision and Vocus have an element of uncertainty until the selling is finalized and the dust settles.

What I know for sure is this. A solution or suite of solutions that offers an integrated response to public relations and marketing business needs with an eye towards allowing major third party plug-ins is what will have long-term staying power and profit. Acquisitions are going to continue across the board not just with these competitors but with others not evaluated here. The market continues to consolidate but the important aspect of that is how well those acquisitions are integrated into the company and meet market demand. The answers are with the customer. Whoever is going out there and asking, evaluating and providing solutions to the market problem will come out on top.

What will April, May and June bring? I’m staying tuned because whatever the changes the landscape is going to look completely different than it does today.

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