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“DIY” Gets Empowered: A Quick Analysis Of The SurveyMonkey/MarketTools Deal

Yesterday, DIY was a pejorative term used to denote some type of substandard process for non-professional market researchers. Today, with the news that SurveyMonkey is acquiring MarketTools, the whole concept just gained legitimacy.


Wow, what a difference a day makes. Yesterday DIY was a pejorative term used to denote some type of substandard process for non-professional market researchers who dare to play within our demesne. Today, with the news that the 800 lb Gorilla in the space (pun intended) SurveyMonkey is acquiring MarketTools the whole concept just gained legitimacy. Why? Well, partly because of the valuation of SurveyMonkey that was disclosed as part of the deal.

Under the terms of the complex deal, TPG will transfer some MarketTools assets to SurveyMonkey and take a minority stake in the service. TPG’s investment — which represents less than 10 percent of SurveyMonkey’s total shares — values the company at roughly $1 billion, according to a person with knowledge of the matter, who spoke on the condition of anonymity because the deal terms were private.

It’s kind of hard to dismiss something as “substandard” when it has a value that places it as an equal with the absolute upper echelon of “traditional” players in our industry. On top of that, it’s hard to be dismissive of their growth:

Over the past three years, the company has ballooned in size.

Its head count has grown from 12 to more than 100, while monthly unique visitors have roughly doubled, to 40 million, during the period. According to a statement issued on Wednesday, the company claims 99 percent of the Fortune 500, a list of America’s largest corporations, are clients.

With the addition of the ZoomPanel, Zoomerang, and TruSample (as well as the human capital resources that will come with those properties) SurveyMonkey has to be taken seriously and given the respect they deserve within our industry. The core argument about DIY should be more properly positioned as “Insourcing” vs. “Outsourcing”; let’s drop this assumption that it is somehow less than other methods (Dana Stanley has a great piece on this at the ResearchAccess blog) . The reality is that one of the major outcomes of most any disruptive technology is disintermediation, and the sector that is on the receiving end of that is never happy about it. That is what MR is experiencing now, and SurveyMonkey was one of the early forces behind that trend. Now they’ve moved directly into our “neighborhood” and we better stop complaining about it and learn how to leverage it to our advantage.

What does this mean for the “DIY” space as a whole? We’ve already seen most every panel provider building self-service tools into their product suites as well as self-service tech providers launching their own panels. Look for a wave of additional consolidation and investment in this arena in the months to come. It wouldn’t surprise me to see the next wave of acquisitions coming from IBM, Google, Facebook, Adobe or Yahoo. Remember, each of these have publicly stated that they are in the “insights” business, and for the social players integration of their data with panelist or survey data should be pretty darned attractive. Combine that with picking up reach into consumers, revenue, and more technology and the value prop for such deals becomes hard to dismiss.

I also would expect to see an acceleration in new linkages with social media/text analytics solutions, crowdsourcing providers, and of course mobile platforms. Pay attention to what we’ve already seen this year from those companies as well as Confirmit, SAP, SalesForce, etc..; the movement is towards data access and convergence and everyone wants a piece of that pie. It’s a particularly good time to be Vision Critical, USamp, Cint, Survey Analytics, Toluna, and e-Rewards; all will be attractive targets now. The ultimate goal will be a “Big Data” play based on predictive analytics using all of these data streams together to produce real business impact.

I and others have been trumpeting the same message for quite some time now that data collection simply cannot be the core revenue driver or value proposition of the market research industry, or at least not for any firm that doesn’t have syndicated data, proprietary methods, or technology products. The trajectory of firms like SurveyMonkey, as well as the BI industry, social media analytics, the mobile app players, and a host of other new entrants clearly indicate that MR is just one of many (and not even a big one at that)  sources of data for clients. For sure there is a lot of money to be made within the data provider model, but MR doesn’t really have the experience playing in these other arenas and it seems to me that in order to play to our strengths we need to focus on what we do with the data vs. where we get it. The insourcing trend wont be all encompassing and there will always be a place for full service providers that deliver real value and impact to clients, but we may see the massive growth of a new hybrid model where many MR firms have to work in conjunction with internally sourced data collection rather than providing it themselves.

This requires a pretty massive shift in terms of business model and human capital strategies for many companies and obviously they are not thrilled by it. History is littered with examples of whole industries that disappeared because they could not adapt to new paradigms and it is entirely possible (although I hope not true!) that MR could join the dustbin of history if we don’t figure out how to evolve past our fixation on the being the keepers of data. We offer so much more value in a myriad number of ways. If we want to approach the success of SurveyMonkey and other emerging legitimate players in market research we would be best served developing a strategy that capitalizes on these trends.

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11 responses to ““DIY” Gets Empowered: A Quick Analysis Of The SurveyMonkey/MarketTools Deal

  1. I’m a client-side researcher and didn’t even consider using tools like SurveyMonkey or Zoomerang until last year when I noticed that I could do A LOT more with those pieces of data than I could with online panel surveys through 3rd parties or traditional studies.
    I think important questions like “How can the telephone or online survey data interact with other data points?” is something that MR will need to seriously consider and show leadership around.
    At the moment, I see that being led in-house but I think there’s a place for MR agencies to play a strong, strategic role there – particularly with expertise in a given market vertical.

    1. Thanks Chris. Obviously you’re not alone in finding the value in using these tools internally and the decision to use them just got a whole easier. I totally agree with you that one of the major possibilities for MR (client and supplier sides) growth is to focus on data convergence and analysis. The possibilities there to drive real ROI are simply breathtaking and it’s early enough in the emergence of that field for us to stake a claim as the owner of strategic insights.

  2. Great piece Leonard, as always. I also firmly believe that the future value-add of MR as we know it lies in what we do TO data, not HOW we collect it. This is actually not different to what I see as the current essence of (qualitative) MR: interpretating data to distill its meaning in light of certain objectives, and translating this into useable advice for clients.

    To do this well MR firms need to thoroughly understand both people (behaviour and decision making, psychology, sociology etc) and marketing / policy development.

    It is precisely in these two areas that there is ample scope for improvement – if we are to live up to our (new) future we need to invest more in honing our skills in psychology (including behavioural economics) and marketing than in running groups or managing other data collection processes, be in off or online.

    In my experience most qualitative researchers master the PROCESS well enough, but many lack the skills to take data to a higher level and tell clients what it means for their business (= our PRODUCT)

    1. Thanks you Kees, and great comments from you. I agree with you wholeheartedly. It was interesting that when Ray Poynter and I chatted with Eric Salama on Radio NewMR earlier this week he mentioned qualitative as a growth area several times. I believe that the skill sets of “connecting the dots” and telling a story inherent in qual is a vital skill for success in the new research paradigm, but agree with you that we’re going to need a create a hybrid skill sets that combines some elements of the qual skill set with traditional quant analysts, data scientists, and creative, strategic thinkers to fully capitalize on the opportunity.

      I also concur that ethnography, psychology, behavioral economics, etc.. will become more foundational to our approaches; the challenge there will be to develop methods that are scalable and engaging; social gamification may be the path forward there.

      I think the bottom line is that we need to re-examine our human capital strategies and start building new models. BrainJuicer, Join The Dots, Insites Consulting (see the trend of European firms?) are great examples of companies that are leading the charge on that angle.

      Thanks again for the input!

  3. Survey Monkey valued at roughly $1 Billion, wow! That does speak volumes on the explosion of DIY. Who’s laughing at the name Survey Monkey now?

    Lenny, I think you said it best with “we need to focus on what we do with the data vs. where we get it.”.

    MR needs to focus on the top right quadrant of business intelligence and play the role of explaining what it all means. That’s a noble pursuit and with the continuing explosion of data sources, it’s a need that will only grow.

    Time to seek the higher ground!

  4. I am not sure what % of SurveyMonkey’s revenue is, in reality, from “diy”. I know agencies (research and marketing), government agencies, educational organizations and others who use it. Some of these tools (SurveyMonkey, Zoomerang, AYTM, etc) have gotten pretty darn good over the years–more scale options, better automated reporting, easy sample access….and all at a great price. The big $$$ survey platforms will find themselves increasingly at risk from these lower-cost options. The real angle here to me is that survey research is NOT dead!!!!

  5. Nice article Lenny. I too have written about the positive aspects of “hands-on” research – aka DIY. – Friend or Foe blog.
    As to this acquisition – I think the investors had too much holiday punch when they estimated the valuation. Let’s not get too excited before we do a reality check on the numbers and push back on the multiples.
    As to the sale – I find it interesting that the whole package – Zoomerang, TrueSample, MarketTools Research Solutions, and – was sold for so little. In the end, Survey Monkey got a nice deal for sure. The rest of the firm (the larger revenue of the total package) is now left to find it’s way in 2012.

    1. Thanks again Beth. I think it’s hard to tell what drove the valuation more: the revenue or the potential revenue due to their extensive consumer reach. I think it is a very safe assumption that they achieved something like 5-7x which is the same model applied to the large social platforms, and that should give us a clue as to where Survey Monkey will be heading in the near future. It’s certainly very different than MR (or any service industry really) is used to. It may be a bubble, but I predict that in Q1 we’ll see at least one if not two more deals in the DIY space that will be comparable in terms of the valuation model, if not the size of the valuation.

      I wonder how much revenue those MarketTools assets actually contributed? I suspect what SM really wanted was Zoomerang; the rest was a nice to have. $100M ain’t bad if they contributed $20M, which feels about right to me. Hopefully the remnants of MT was able to negotiate some sweetheart deals on sample and tech usage and will do great as they reposition themselves for the next wave of their growth.

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