3 Reasons Why VMS Failed, and 3 Lessons for Survival

 

The Paine of Measurement 

Between earthquakes and hurricanes, it’s not surprising that the demise of one of the PR monitoring industry’s oldest competitors might have been overlooked by the media. VMS, which started out as Video Monitoring Services, filed for Chapter 7 bankruptcy a week ago. While the specific causes remain a bit cloudy, it was, if not inevitable, hardly surprising. 

Let’s not forget that VMS did some great work. Its former Vice President of Integrated Media Angie Jeffrey is a very savvy lady with whom I’ve had the honor to serve on the IPR Measurement Commission for years. Thanks to her efforts, VMS morphed into a measurement company, conducting some innovative research and introducing some breakthrough product along the way.

But the problems they faced were insurmountable. My colleague Mark Weiner, who took over my company The Delahaye Group after I sold it to Medialink (now Cision), has listed many of them in his post here. I agree with some of his points, but I think there are more fundamental principles at work.

VMS’s problems were three-fold:

Problem #1. In an era of social media, they were measuring the speed of the pony express.

VMS and its peers in the monitoring business were created in an era long before social media, when marketers and communicators assumed that placing hits and reaching eyeballs were PR’s only goals. VMS captured your video spots on VHS tape and sent them off to you so you could get “credit” for the “placement.” (And you’d play a mashup of those placements at the next big management retreat.)

It provided not-necessarily-accurate “reach” numbers that assumed your mention was seen by everyone who might have been watching TV at that moment, as well as three or four other people who could have been in the room. And the implication was that the reach had the same impact on your audience as a paid ad (even if the mention didn’t contain your key messages). So, when the boss wanted to know the ROI of what you did, VMS could provide you with what it would have cost you to advertise in the same spot. (Otherwise known as Ad Value Equivalents or AVEs.) 

The problem is, when you can reach more eyeballs with an ad on My Drunk Kitchen than on CNN, it’s hard to know just how to value a “hit.” It’s even harder to understand the connection between those eyeballs and a desired outcome. Back in the last century, we all figured that reaching eyeballs meant selling stuff, because there was lots of research to prove it. But not so with the new media of today. Twitter has only been around for 4 years and the landscape hasn’t been constant enough to get any good comparable data.

Lesson #1: Follow the money, and measure what matters to the business.

Problem #2. They listened to their clients, not the marketplace.

The problem wasn’t just that VMS was stuck in the last century in terms of what it was measuring. The bigger problem was that its clients were. VMS and its other dead kin insisted that they had to provide AVE data and other bogus numbers “because the clients demand it.” Which worked only as long as the clients kept their jobs.

What happened was that a new and very smart generation of marketers and communicators came along and realized that customers talking amongst themselves were a much larger influence on purchasing than the media. So this nextgen client got busy using web analytics and counting leads and sales and engagement directly from customers. Too busy to bother with piles of clips or reels of tape. These new communicators look at those old-fashioned AVE or reach numbers and just shake their heads. Then they go to the market analytics folks and get some real data.

It was just one more demonstration that social media can topple the most entrenched regimes. I call it the “Meteorite for Dinosaurs Effect.” VMS was not a dinosaur, but their clients were.

Lesson # 2: Pay attention to what the market  is saying, not just the guy you’re taking to lunch. 

#3. They were a victim of the innovation/cost/price cycle.

When VMS was the only way to monitor TV coverage, companies were happy to pay $10 or more for that reel of tape. But with the proliferation of online news and the widespread availability of clips, clients got to choose from a new menu. When the CriticalMentions and CyberAlerts and CustomScoops came along, you could, for a few hundred dollars, monitor all the television stations in the country and grab all the video you wanted.

The upstart competitors with their automated systems took the profit out of the market. And as much as VMS may have delivered a higher quality product, there’s a point at which value/cost differential doesn’t work (as I have learned from my own business). Customers may be willing to pay a 10% or even 50% premium to get higher quality data. But they’re not willing to pay a 300% premium.

Lesson #3:  Benchmark against your perceived competitors (or alternatives), not just the ones you know about.  

So ultimately, what’s the answer for those of us left standing?

The answers are in the marketplace. Clients and prospects are constantly asking for help in LinkedIn, on Twitter, on Quora, and in conference Q & As. They are asking for help moving beyond AVEs, to design better measurement programs that align with business goals and further the missions of their organizations. 

Here’s a sign of these times: I recently gave a measurement workshop for a large non-profit. There were five public affairs officers in the room. Part of the exercise was to get them to prioritize the stakeholder groups they wanted to measure. The criteria for ranking was how important the relationship was to the success of the non-profit’s mission. The exercise asked each of them to “spend” a virtual $1 million communicating with various key stakeholder groups.

The results might surprise you. Of a possible $5 million that each group of stakeholders could receive, the two highest priority groups were Employees and Customers, each receiving around $1.5 million in virtual dollars. I asked them why. They said that those two groups had the greatest impact on their organizational goals. The lowest priority group? The Media. Collectively they only wanted to spend $165,000 building relationships with the media, even though media relations was in their job description. Why? Because the customer and employees had more impact on their goals. 

The point is that smart PR people everywhere are finally realizing that media is a means to an end, and social media may be a faster route to the same end. Either way, the measurement is the same. You evaluate your success based on your contribution to that end. Did you solve or avoid a problem? Did you get the outcome you wanted? Did you make a real difference? Unfortunately, too many organizations in the measurement business are not geared up to measure these things. --KDP

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Katie Delahaye Paine is CEO of KDPaine & Partners, a company that delivers custom research to measure brand image, public relationships, and engagement. Katie Paine is a dynamic and experienced speaker on public relations and social media measurement. Click here for the schedule of Katie’s upcoming speaking engagements.

Comments

[Angela Jeffrey]

Katie - first - thanks for the shout-out about my work with VMS. Very kind of you.

Second - your analysis of our failure at VMS is sound. We missed the social media tidal wave. We (like most of our competitors) could only deliver "output" measurement, which wasn't enough today. And we were too darned expensive due to the cost of premium service (human-edited video, human analysis of clips, etc.). We had some terrific products in the wings, but didn't get out there fast enough.

My most thrilling moments with VMS, and with SDI before that, were those that focused on correlating outputs to outcomes. For our sophisticated clients who were willing to be transparent with their sales or survey data, we gleaned some wonderful results.
It was also amazing to work on our Vantage product, which brought PR, advertising and social media together in one place and automatically correlated the integrated score to outcomes. Without question, that was one of the most innovative products in the market, but we didn't have time to ride it out. Of course now with social media measurement, we can link directly to outcomes, so correlations will be of less importance as time marches forward.

I do want former clients to know that all of us at VMS are sorry for what you are going through as a result of our demise. A trustee should be appointed any day now and your data will be retrieved.

It was a privilege to serve VMS and its clients for the last six years. I have great respect for all our management and employees tried to do to meet our clients' needs.

Onward and upward!

[KDPaine]

Angie, I know whatever you do next, you will be doing great stuff. You bring energy and smarts and most importantly your overwhelming care for your customers to whatever you do. I'm sure you will have lots of options. And as my favorite cousin tells his boys "Make Good Choices" :)

[Erin]

How long before Burrelles tanks now? Home of the pay per clip service.

[Johna Burke]

Katie makes instructive points in her analysis, especially in connection with the strategy and the mindset that a PR service provider must possess to survive today. Unfortunately, Erin’s comment misses those points.
“The answers are in the marketplace,” Katie says, and BurrellesLuce has adhered to that time-tested axiom since 1888. It's why we remain a major (a debt-free) industry force in 2011. For example, we have long recognized that one of the answers most valued by the marketplace is our human-editing capability. Human intervention in media monitoring and qualitative measurement assures that the social media, web, print and broadcast coverage we track and expeditiously deliver is the most accurate and relevant obtainable from any single provider. This includes so-called “free” services, which aren’t truly free because users must spend too much time—and money—sorting out the stories, comments and posts they actually need