During the past year we have met with several SaaS-only PR research companies that offer capable social listening services to evaluate which ones to partner with—and which might even represent possible M&A candidates.
What we found is a segment of the media intelligence industry that is clearly in distress.
Many of the companies we met with reported receiving more than $10 million in investment capital and building a client portfolio of hundreds of clients. Yet despite that surface-level success, only a tiny number of them had broken through the $10 million revenue threshold. Profitability was a far-off hope, and many had lingering questions about payroll sustainability and long-term survival.
About that time we learned that one of our competitors, Meltwater, who are at the forefront of promoting SaaS-only solutions, was scrambling to buy print and broadcast monitoring, as well as acquiring social listening companies to meet basic informational needs of their clients.
Most importantly, we saw that virtually all big global media analysis RFPs required evidence of strong experts who can provide human insight to C-level executives. SaaS-only providers were no longer competing on these accounts, and their services were a footnote, at best, in client documentation.
What does this say about the pure SaaS plays in the media intelligence business?
First, SaaS-only products do not provide the full picture. If you want to measure your reputation and provide meaningful insights to the C-suite, you are going to need all sorts of solutions curated by human experts. This includes, for instance, coding individual tweets for meaning that cannot be discerned by a machine, and picking up an important TV program that isn’t available online.
Second, SaaS services are boxed into a low-revenue corner, hampering their ability to grow. That’s fine if you have thousands of clients who you retain for the long term. But so far not a single pure SaaS company out there has demonstrated growth and retention in its client base comparable to its integrated-solution competitors.
This trap is leading to less investment in technology, an obsession with hard sales, and a focus on the short term. Not exactly a recipe for long-term success.
Third, pure SaaS players overestimate their value, hurting their reputation and long-term prospects. The promises that a click of a button would provide C-level insights were exaggerated and often patently false. The market is onto this now, and serious PR professionals demand integrated solutions that make the most of both technology and people. Which is not a good thing if you are a pure-SaaS play.
Am I celebrating the serious challenges, revenue declines, and reputation loss of this segment of the media intelligence industry?
Absolutely not. We need the SaaS players—who’ve disrupted the monitoring and analysis business with great dashboards, big data capture, and bright engineering. But we need them to do a better job.
The many great talents that brought these companies and their SaaS services to the PR industry helped sparked a research revolution. The problem is that they largely overestimated what they could do and then failed to deliver what matters.
I see this as a very similar situation to the dot-com bubble of 2001: too much hype, not enough substance. But that will change, and I can see the Facebook, Google, and Amazon of the media intelligence business coming soon.
Keeping great tech talent in PR research is crucial
We need the folks behind these SaaS solutions to up their game and create new ways of capturing, processing, and analyzing big media data. For that to happen I suggest a few common-sense steps:
Sustain investment in technology
You would be surprised how little money most SaaS companies actually invest in technology once they have launched their platforms. To move forward they need sustained investment in disruptive technology, and more balance between innovation and hiring sales people.
Acknowledge what SaaS solutions can and cannot do
Keep it real: SaaS providers should stop promising the world. Instead, they should focus on delivering the value automation brings, namely capturing and semi-structuring big data. That in itself is good value—but it doesn’t finish the job when it comes to providing real insights.
Invest in people
SaaS players must learn how to adapt their information for better analysis, curation, and processing. The race is on for who will build the next generation of analytical coding that combines the best of technology and human insights.
I am confident that we are not far off from a new generation of media intelligence companies, with monitoring and measurement services that will bring unprecedented value to clients. Until then there are going to be many casualties. The winners will be those who deliver what matters by combining cutting-edge technology with the best minds out there.
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