The Year of PRtech
My prediction for 2015 is that we will see the emergence and flourishing of the PRtech category. Over the last five years have seen two major waves of marketing SaaS innovation in the form of social media marketing (Buddy Media, Wildfire, Radian6, Lithium Technologies, Hootsuite etc) and marketing automation (Marketo, Eloqua, Hubspot, Pardot, ExactTarget, Neolane, Silverpop etc). Most of these companies have now provided significant returns to their investors through either a trade sale to the leading technology companies Oracle, IBM, Salesforce.com, Adobe, Google or carried out successful IPOs. Indeed in 2014 $11.4 billion was raised in total across 246 marketing tech organizations (IPO, seed, erly stage, growth), and that takes into account only those that raised funding. In addition to those investments, 71 businesses, including Tibco, Conversant,Digital River, and BrightRoll, were acquired in the last 12 months with a total valuation of $21 billion.
There is currently much buzz and significant investment activity within the emerging content marketing SaaS segment but I believe that it will the marketing tech sub category PRtech category that will surprise many in 2015 and beyond. Public Relations unlike content marketing is not a new practice or function fitting into the greater marketing organisational context. It is an industry going through somewhat of an identity crisis but with social media, corporate social responsibility, content creation and distribution and individual advocate relationships at the centre of modern brand building PR is set to take on an ever more important role and like other parts of the communications mix will need effective technology to support its success.
What is PRtech?
Earlier this month one of the innovators in this space AirPR and their content hub PRtech.co developed their view on the PRtech ecosystem which I believe is the best effort to date to define this space. Of course as COO of Mynewsdesk, a leading PRtech innovator which has expereineced very strong growth over the last few years, I am pleased to see ourselves in the ever expanding ecosystem.
For me PRtech is any technology platform or service which supports the digitalisation and data driven approach to PR. This could range from publishing, newsroom, influencer marketing, analytics, content distribution, creation, licensing or the legacy newswire and media monitoring platforms.
The Industry Perspective?
PR as global industry is worth $12.5 billion according to the World PR Report conducted by the HolmesReport and ICCO . This figure which only represents the spend on PR agencies and consultancy services and so the industry as a whole is worth considerably more when you add in all the in-house resource that is in place to execute PR and communications activity. In any case it is an industry that is in good shape displaying 11% global growth in 2013 and in the eyes of arguably the most powerful person in marketing communications, WPPs Martin Sorrell PR has a great future.
“I like the PR business. It is a good business. The margins are on a par with an advertising agency. Yes PR/PA can be more fragmented; yes it can be more difficult to scale; but there are some things happening in digital and data that can make it much more contemporary, more interesting. I would like to do more in PR.”
But why is Sorrell so keen on PR as it only currently makes up 10% of WPPs revenues. Well its all due to the integrating nature of marketing communications and the importance of digital and data, the exact same thing that PRtech is looking to support. Sorrell’s WPP put it’s money where his mouth is and invested in the PRtech sector in 2014 with the $108m acquisition of the UK’s Precise Media Group by WPP’s Kantar Media.
The Investor Perspective?
Both the private equity and venture capital community have been active in 2014 in the PRtech segment. Chicago based GTCR have potentially built the first billion dollar PRtech company spending over $800m on the acquisition and merger of Cision, Vocus, Gorkana and Visible technologies. The combined company has a revenue of approximately $400m and with valuation multiples of between 1 and 3 x revenue it is clear these investors have high hopes for this newly created category leader although the jury remains out on whether the integration of these 4 companies organisations, technologies and customer bases will play out as hoped.
On the venture capital front the likes of Mohr Davidow Ventures have invested in young innovative players like AirPR and Onespot who have together now raised over $16m to fund growth and plenty more innovative player across the globe are preparing their investor decks and are currently testing their products hypothesis in hope of market fit. As Bryan Stolle, general partner at Mohr Davidow Ventures has said
“With the Ad Tech ecosystem now solidly in place, wouldn’t we be wise – as investors and innovators – to look to another critical frontier of the marketing automation puzzle: PR?
But does PR, known for lagging behind its marketing compatriots in terms of technological innovation, really have the opportunity to be “the new Ad Tech?” Will the PR Tech ecosystem — comprised of everything from agencies to retargeting solutions to newswires to analytics to publishing platforms – prove to be the final marketing automation frontier?
In my opinion, there are significant opportunities for early adopters who choose to innovate in this space; and as an investor, if you believe in PR as a key driver of brand awareness and sales, the opportunities to make early-stage investments in PR Tech ecosystem companies are quickly growing.
While PR Tech may seem like the unsexiest investment since IT Security, my belief is that when an industry begs modernization, somebody’s going to build some valuable companies”
What Problems is PR Tech is Trying to Solve?
Whilst the PRtech segment is new the problems that it is trying to solve have been around for decades. Along with the ever present organisational challenges of scarcity of resources (financial, human, time) the digital age has added new problems for todays communications professionals such as creating engaging content, choosing the right platform, challenges with measurement, evaluation and proving ROI which leads to varying levels of management support and keeping up with the sheer pace of change which has never been quicker. The Digital PR Challenge is a great piece of research that outlines many of these challenges. The good news is that with the emergence of the PRtech category all of these problems will be matched with technology which helps overcome them.
So todays PR professionals and communicators are about to get a great bunch of technology in their hands which will help them become more important to their organisations than ever before, investors are set to build some very valuable companies alongside some spectacular failures and a whole bunch of employees are set to join some really exciting industry changing technology companies serving the PR segment. 2015 will certainly be a great year for PRtech.