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May 10, 2016 3:29 PM ET

Archived: Press release distribution industry in motion – disruptive changes in search engines affect visibility, competition consolidation in full swing and no growth in the number of corporate customers in well over a decade

iCrowdNewswire - May 10, 2016

The 60-year-old press release industry which has largely worked behind closed doors returning huge profits and avoiding much innovation over decades is now facing is toughest challenge since inception – is it part of the Fintech disruption of financial markets or is it just time for a change?

Let’s start with the size of the customer base. Our estimate is that Business Wire, PR Newswire, Cision, Meltwater, Globe Newswire, Marketwired, PR Web and a list of other smaller wires combined have about 300,000 customers – this is probably a very good estimate since Cision publishes numbers, and Marketwired, PR Newswire and PR Web have been acquired in the past couple of years and their numbers are out there. The problem is this number should be 10 times that, there are millions of SMEs (small and medium size businesses), millions of NGOs and millions of global SMEs that are big enough to have corporate communications needs. In fact, our estimate is that there 40 million companies that could use corporate press release service and they don’t. So even 10% of the addressable market would mean 4 million customers. So why not?

The answers are very simple. The industry has priced itself out of the larger market, business models that push long term contracts and other requirements and complicated platforms are all impediments to reaching the much larger opportunity. But don’t get me wrong, these are companies with sales into the hundreds of million dollars and EBITDA of + – 30%. The attitude is why bother, raise prices on an annual basis and maintain a high EBTDA to keep shareholders and investors happy. That is until the day Google decides to jump in the business and bring on board one or two million SMEs, offers monster distribution with very profitable prices under $100.

Commencing in 2014 with the Cision acquisition of Vocus and PR Web and following with a half a dozen other smaller acquisitions leading to the December 2015 acquisition of PR Newswire and the 2016 acquisition of Marketwired by NASDAQ, the number of players has shrunk – or at least, the potential for reduction in the number of players is there but it could be that some of these companies will continue to operate independently under new ownership. So what will be the net effect of 2 billion in M&A in an industry with a small amount of players to begin with? Less innovation. More bureaucracy within these companies. A greater focus on maintaining market share and high profits. My guess is the 0 – 60 mad dash of M&A will take years to sort out, regardless of the acquisition and integration teams the buyers may have, I seriously doubt we will soon see clear signals of the long term operational map of Cision and Globe Newswire/Nasdaq. Maybe the least burden is on NASDAQ as my feeling is the Marketwired acquisition is probably driven by NASDAQ plans on Canada expansion – and Globe Newswire (the NASDAQ news wire) is squarely focused on public companies so this is fairly straight forward.

The picture does not get any better for the industry when it comes to visibility, Google’s algorithm changes in 2014 have affected visibility on a platform frequently used by customers to evaluate performance – that said, a Google search is not any way to judge a news release newswire but it is frequently used by customers. So whether it is a fair way to evaluate a press release service or not does not matter, to some perception becomes reality.

If you have not guessed by now I will tell you that I am in the industry and have been for close to 20 years working with some of the name brands listed in this article. The industry has been very good to a lot of us, investors, shareholders, contractors and employees – and will continue to do so for the foreseeable future which is in no way a reason not to step back and examine the industry, talk about the thigs we can do better and point out how we can grow.

Contact Information:

Hector Boteronhbotero@icrowdnewswire.comnTel.: (305) 851-2068

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