Anthea Stratigos – May 4, 2016
The sale of JD Power made me think of the day when I picked up the phone and a financial services exec called me to disagree with our Insight on the JD Power sale to McGraw-Hill. We wrote about the firm as a long-established market research firm, challenged the synergy, and figured that unless they did something with aviation, construction and other verticals, it was going to be a decent asset but not particularly accretive strategically. His beef was that we were looking through the wrong lens. That JD Power was bought on the basis of being a ratings firm. I thought it was clever- I saw his point, but I also said I didn’t agree. JD Power was born a market research firm, it did customer satisfaction studies. Yes, the outcome was to rate car manufacturers, banks, airlines and hotels, but that’s a long way from S&P and what turned out to be The Big Short.
About that same time, we also took heat about TechTarget and KnowledgeStorm for calling them IT research firms. I picked up the phone to another client who said we didn’t know what we were talking about because these were MEDIA companies and not in the ITR space. I told him he was debating the merits of his revenue model, not the merits of the content to the ultimate consumer – the end user who consumed both for similar purposes. When looked at thru the lens of the IT professional, one was a free service with scale and tons of content on the open web. The other largely behind a firewall and with hefty subscription fees. Today they co-exist but in a world of convergence we were spot on in calling these classes of firms competitors.
I’ve had debates along these lines over the years. Outsell took heat in our early early days from the large paid content aggregators – especially Dialog, Factiva, and Lexis-Nexis because we called Google competition. They said no way. Google was search. It was free. It was paid ad/lead-gen model. They were large enterprise database collections for researchers and end users in the enterprise. We politely disagreed. In fact, as trusted advisors we took a stronger stand and said, here again, if we worship at the table of the end user then it all looks the same – access to big honking collections of information. Just because one was ‘free’ or subsidized by advertising and one paid didn’t matter. We were prophetic and correct. One went so far as to commission a study and have us test the data quality between their asset and Google and Yahoo!. We designed a methodologically sound study, made it bullet proof so the results would speak for themselves, ensured it was defensible and executed it. Their hypothesis: that the outcomes of searches on their high-end service would yield better and more correct results and in fact that wasn’t the case. They buried the results which never saw the light of day.
Gartner bought Tech Republic and then tried to turn it into something it wasn’t. IHS bought GlobalSpec and did the same thing. Both gave up and sold their assets because they couldn’t see that you can’t make users pay for something they are used to getting for free. At the end of the day, convergence means we are competing for end user attention and productivity – either to save money, make money, mitigate risk or reduce hassle. It’s not the revenue model, it’s the business model that counts. Who can deliver faster, better, results and with the right ROI. In a world of cognitive computing, machine learning and predictive analytics, another wave of business models are coming. Customers are getting into the game in almost all sectors and the pace of change is accelerating. This time around, our advice? Keep those blinders off.
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