There's intelligence, and then there's intelligence. PR firms happy
to provide stats on market share or industry personalities are ten a
Those peddling Fleming or Smiley-style intelligence are thinner on the
Their ranks were, however, swelled last week with news that Incepta, the
FTSE 250 holding company for operations such as Citigate Dewe Rogerson,
Marchcom, Lloyd Northover and Albert Franks, had joined the fray.
Incepta became the latest to buy into the competitive intelligence (CI)
market with the acquisition of Global Intelligence and Security, an
outfit founded by eight former staff from security consultancy's market
leader Kroll Associates.
While the move by Incepta breaks new ground for UK PR companies, it sits
within a tradition of PR and marketing agencies attempting to diversify
revenue streams. And although it has so far proved a largely US-based
phenomenon, the global nature of the backer networks is allowing these
operations a London foothold as well.
Other groups to have entered this field include global Edelman
subsidiary PR21, a host of small regional agencies in the US and
Omnicom. The last of these seems the most keen, having both a subsidiary
in the market and an offering of its own.
Fleishman-Hillard, until last year the world's largest PR firm, has a
strategic alliance with the 75-strong Boston-based Leonard Fuld and
F-H insiders play down the 'dark arts' aspect of the tasks this
affiliate performs, but accepts that they might, say, investigate the
executives of a client's rival: 'We prefer to call this research than
investigation because we are just getting data to help clients make
decisions about communications,' insists F-H European president Jack
In addition to the F-H experience, Omnicom late last year invested in a
more avowedly security-conscious outfit led by outgoing New York police
chief Howard Safir. Omnicom linked this launch to the events of 11
September and suggested clients had become increasingly aware of the
ability of security issues to damage corporate reputations since the war
on terror began. Safir's key partner is also ex-Kroll and a former IBM
security director, Joseph Rosetti.
One reason for the spate of comms firms muscling in on this terrain are
the higher fees that can be charged. According to one source with a
close-quarters view of this sector's finances, while banks and law firms
need not fear for their fees supremacy just yet, the rates charged by
the new breed of CI consultants compare favourably with the high-end of
the PR world: they outcharge lobbyists and financial PROs alike.
This may account for the mouth-watering terms of the Incepta deal.
Although the company is paying GIS just £2m as an initial
consideration - itself a healthy downpayment for a firm with barely two
dozen staff - the earnout provides for a final maximum of over £30m.
And yet even this is a small part of the global CI sector - estimated to
be worth more than £1.3bn annually. Average-sized Fortune 500
companies spend in the region of £500,000 on external CI each
But questions remain as to what this service - or set of services, since
CI is a diverse bag - contributes to the marketing mix. For Incepta CEO
Richard Nicholls, the case is clear: 'In an M&A, it is vital to size up
a company and make sure they are what they say they are. This is about
knowing where to look for that killer fact.'
Yet ethical questions remain. At a time when PR is trying to clean up
its act, branching into the potentially murky world of CI may not be the
best way of doing it. Indeed, there are pitfalls ahead for those at
companies with institutional shareholders to satisfy.
The extent to which this work can shade into the unacceptable was
illustrated last year when Procter & Gamble and Unilever fell out over
the former's exuberant use of CI in a spat over haircare products. Waste
bins were sifted through - as they were in a similar duel between Oracle
and Microsoft - litigation followed and the cause of fair play to which
PR seeks to contribute was not best served.
Needless to say, those in the PR world go out of their way to stress the
valid nature of the work they will take on. The suggestion that
integrating CI with PR means digging the dirt on the opposition and
leaking it to journalists is hotly denied. There is, say CI's defenders,
a difference between (on the one hand) searching securities filings and
pumping rivals' staff for information and, (on the other) the sort of
shifty behaviour one would immediately identify as corporate
For companies such as Incepta, Omnicom, WPP and Interpublic, this is a
fine line. But if trodden with caution, it could be a lucrative one.