As PRWeek reported on Friday, integrated media intelligence solutions provider VMS has filed for bankruptcy and shut down.
The company laid off all of its near-200 employees and said its financial troubles were born out of the combination of a rough economic climate and a competitive marketplace.
Additionally, company CEO David Stephens said the company made a misstep with social media and simply waited too long to offer social media monitoring solutions, which clients heavily demand and is where the growth is in monitoring.
These comments beg the question of whether the company's management simply made errors in deciding what services to make available for customers, or whether the closure is instead a sign of problems in the monitoring and intelligence solutions sector, and points to further shrinkage of the market for those services.
Stephens can't shoulder all the blame. He was only parachuted in last October when VMS parted company with longtime CEO Peter Wengryn, having already said goodbye to other senior executives earlier in 2010 as it attempted to reshape its business.
Many PR firms have started to provide in-house social media monitoring platforms and solutions, so it is possible there may simply be less of a need for monitoring and intelligence companies.
Sean Morgan, CEO of Critical Media, a real-time searchable broadcast content provider, doesn't think monitoring and intelligence providers have anything to worry about, but believes the market for social media monitoring services will likely shrink and become commoditized in the future.
“There's really no defensibility or hurdle to getting into offering social media monitoring platforms,” Morgan said.
However, he added that even as PR firms increasingly offer their own monitoring services, he doesn't believe most big clients would ever bring their monitoring in-house.
“PR firms look to build some of their stuff in-house to drive margins and revenue above and beyond the typical engagement with their client,” he said. “I don't think you'd ever see a Goodyear or FedEx bringing it in-house.”
Though VMS cited its lack of a social media monitoring offering as a critical factor in its downfall, Morgan confirmed Critical Media does not offer social media monitoring, does not have plans to do so in the near future, and is still performing well and growing.
The company is “focused on continuing to deploy more video and TV” capturing, Morgan said, adding that he believes it is possible to stay relevant without social media monitoring capabilities. In fact, he mentioned that VMS' struggles were actually born earlier than the advent of social media, when the broadcast monitoring landscape changed from simply providing clients with VHS tapes the day after a segment aired, to delivering digital content in real time.
Peter Granat, president and COO of Cision, agreed the economic climate and influx of competition and disruptive business models in the broadcast monitoring market likely did combine forces to create a perfect storm situation that VMS was unable to weather.
He added that shifting digital and media environments combined with an economic recession have created a tough market for monitoring services and intelligence solutions providers in general.
“We've seen some recovery and we're optimistic about the future, but it's been slow,” Granat said.
He pointed out, though, that the changing media landscape and increasing convergence of PR and marketing have created a continuing need to develop products, tools, and services that deliver on the changing media and communications marketplaces.
“As the technology continues to shift and go mobile, it's actually becoming a more complicated landscape,” Granat said. “So we are seeing a larger need not just for broadcast, but for all platforms.”