The industry has been abuzz for months with rumors of a merger between sample giants Research Now and SSI, and last week this “open secret” finally became public fact.
There were many reactions to the announcement both publicly and privately, running the gamut from concerns about monopolization (silly based on the immense number of competitors in the industry) to the impact on human capital in mergers like this (a realistic concern since you can bet there will be layoffs due to resource arbitrage) and concerns about panel duplication and data quality (silly again since most studies use sample blending from multiple sources, including Research Now and SSI). However, some of the conversations I had with folks quickly moved to the more far reaching and strategic implications, which is what I want to focus on in this post.
Coming in at numbers 30 and 38 respectively in my recent ranking of the Top 150 companies in MR, the combined company is around $500M in annual revenue (assuming my size estimates are accurate!), moving them easily into the Top 20 and likely with a market cap putting them close to “Unicorn” status in value. It’s important to recognize this fact. This company has larger revenues than not only most of the sector, but they are far larger than some of the most influential companies in our space: Qualtrics, SurveyMonkey, Google Surveys, Zappistore, VisionCritical, Medallia, etc… In fact, their revenues are larger than Qualtrics and SurveyMonkey combined. Few would argue that those companies are not centers of gravity in our industry and bellwethers of where things are going. The new entity is large enough that they will become another center of gravity and the industry will begin to morph and adapt around them. In short, they are now a catalyst of accelerated change by sheer virtue of their size, reach, and influence.
Outside of the obvious financial aspects of the deal, in the press release issued by the two companies they were far more open about their intentions than announcements of deals usually are:
Because of accelerated adoption of automation and digital and social technology by both brands and consumers, considerable opportunities exist for delivering solutions for data-driven consumer engagement. The combined assets of the two companies – in first-party data, technology platforms, and partnerships with major brands, publishers, and ad tech providers – will position the integrated organization to enhance its product offerings to include new services such as audience activation and engagement, paths to purchase, measurement and AI-based insights.
Together, the companies will be able to serve customers better and faster, while developing innovative marketing solutions based on technology and data. The companies’ complementary capabilities – in data integration methodology, automated and DIY research, cross-channel ad and audience solutions, panel recruitment/management technology, mobile market research and geo-location solutions, multi-mode data collection and operational platforms – will provide the foundation for leveraging first-party data beyond traditional market research as well as accelerate development of innovative client solutions based on data, technology, and real-time consumer sentiment. In addition, the new entity will have expanded global reach, allowing worldwide delivery of existing and new solutions.
Chris Fanning, president and CEO of SSI, says, “Combining our capabilities and talents creates accelerated synergies across products, services, and operations. The combination will also enable accelerated investments in the development of new markets and data solutions that will ultimately help our customers grow their businesses more successfully.”
Gary S. Laben, CEO of Research Now, says, “Together, we can advance the state-of-the-art in automated research, delivery and solutions as well as in research-enriched data integration to give our customers increased competitive advantage. We will be better able to serve existing and new customers with a range of solutions for data-driven marketing and decision-making informed by research-based direct consumer engagement.”
Let’s parse this out a bit.
First both companies have been developing a suite of automated solutions, and they very rightfully point out that part of the motivation for the merger was driven by “accelerated adoption of automation”, which would apply to both the sample segment (Lucid, Cint, Pureprofile, Prodege, P2 Sample and other sample automation players) but also in data collection and reporting (Zappistore, Gutcheck, Wizer, Methodify, AYTM, QuestionPro, DiscussIO, Remesh, and many more). If the flood of VC funding into those companies that have been pioneering automation in insights was not signal enough, the merger of two large entities driven by the same trend should be the final sign that not only is automation the future, it will be one of the defining drivers of this industry for the next few years.
Second, they boldly announce that they are no longer simply a research company: “…considerable opportunities exist for delivering solutions for data-driven consumer engagement…leveraging first-party data beyond traditional market research….range of solutions for data-driven marketing and decision-making informed by research-based direct consumer engagement.” Again, many of the newer entrants in the automated sample market I listed earlier are ahead of them here, but make no mistake, the merger of Martech, Adtech and Research is about to accelerate significantly. Last year my good friend Peter Orban wrote on this topic several times, and his take then, based on the available evidence at the time, is worth repeating:
Whether Martech eats Adtech, they merge or continue to coexist one thing seems to be clear – we are looking at the new, data & software fueled marketing world order. We know software is eating the world and it is certainly eating every aspect of marketing.
But here is the scary thing: in this new world order there is no mention of Marketing Research. Pour through any of the landscapes and there is not a single utterance of the word “research”. Yes, there are research companies mentioned under various different headings, such as: “Customer Experience”, “Performance Attribution”, “Audience & Market Data” and “BI, CI & Data Science” but there is no ‘bucket’ called research.
It is clearly the intention of Research Now and SSI to move as quickly as possible to correct this and be a major player in staking their claim in the world of DMPs that drive the Martech/Adtech industries. The wall between research and marketing has been crumbling for many years and assuming they can pull it off, and assisted by the already significant strides their smaller competitors have already made, this should be the blow that knocks it down completely.
Third, if it was ever in doubt based on their movements over the past few years, they will join insights-technology player Toluna as a former “sample company” that unabashedly serves both research suppliers and direct clients with a whole host of technology-based research solutions. ” The companies’ complementary capabilities – in data integration methodology, automated and DIY research, cross-channel ad and audience solutions, panel recruitment/management technology, mobile market research and geo-location solutions, multi-mode data collection and operational platforms…” clearly says they will double down on continuing to develop solutions that can capture end-user budgets directly. Their competitive set has been redefined to effectively include every sample, technology, and agency in the world. The good news is that as they integrate, scale and re-position the business they will very likely shy away from any aspect of service so as to not impact their drive towards a “tech company valuation”. The upside for agencies is that this will also further accelerate the necessary shift to consulting-based business models vs. data collection and will further solidify the bifurcation of the industry into tech and service segments.
Lastly, I think this may finally be an opportunity to begin to fundamentally re-think our relationship with consumers. I wrote a few weeks ago that ” Personal data has been described as the “new oil” that will drive the economy of tomorrow, but it’s currently being treated as a commodity rather than a precious resource. We need to start developing models that both incentivize and reward individuals for contributing to the data economy — and here’s how.” If the new company truly wants to be in the consumer engagement and activation business, then the single best way to do that is to transform their relationship with individual panelists from a purely transactional one to something that fits in the “personal data economy”. I am not as willing to bet on this outcome as I am on the previous three, but I sincerely hope the leaders of the organization can realize that a path to to this model could be the real keys to unlocking their growth and valuation.
My overall net is that in the short run there will be some upheaval in terms of their internal operations, staffing levels, competition and pricing but it will also push the industry into new markets and create more jobs eventually. They are pivoting to being a DMP for Martech and Adtech and will invest in technology to make that happen (AI and automation), and as a likely Unicorn in terms of valuation they will be able to influence the direction of the industry as a whole in a very significant way. This has to happen for us to thrive, and this deal is big enough that it will be a very meaningful catalyst. It will also help smaller players already going down similar paths as validation for their models and will add even more energy to investment dollars flowing in.
Just to double check my thinking, I reached out to a few folks to ask their opinions. I didn’t ask their permission to attribute their comments publicly so I won’t do that here, but they are some of the smartest people in the industry who have deep insight into macro trends. Here are a few:
My initial guess is in the next 6-12 months we’ll see prices up a bit, quality up a bit, operating costs down, and then they need to pick the right extensions. Oh, and a bunch of clients are going to moan, and a number of people who hoped for sponsorship will be disappointed for a while!
Good to see this is now official news. Think it’s good for the industry, will create openings and opportunities for many, and will shift clients. Time will tell if it’s a good merger, but not sure either company had much choice or too many other moves they could make. Good luck to them though. Big company after the merger, with scale, and known brand, so they will be a serious player regardless.
Interested to see how well they execute. SSI’s recent acquisitions have been executed very well in my opinion, though this is a very different beast. If executed well I think this will add significantly more value than the sum of its parts — SSI has built competitive advantage in tech to integrate other panels + sample distribution, RNs self-service platform is decent and they are positioning themselves well in the programmatic space as a premium data provider — self-reported data matched to other 3rd party / offline data and connected to client 1st party data. One thing I think you’re missing is that service will likely drop in the short-medium term as staff retention will falter as the merger negatively impacts culture. Opportunity for other panels to pick up top talent, and bring clients with it.
Long term I see the battle between SSI/RN, Cint, Kantar’s data division (though they will struggle to win outside of WPP), with YouGov nipping at their heels, and a few dark horses like us that if can execute can quickly grow and mount a significant challenge.
My prediction is that in the short-medium term you’ll see the players that can connect, productize, and sell their data offerings will perform the strongest. Cint, RN, and to a lesser extent Kantar, YouGov, Lucid seem to be making the most waves at the moment on this front. I wouldn’t be surprised if you see survey programming (qualtrics/survey monkey), mar tech/programmatic tech platforms (Adobe/Oracle/etc, and data companies (Data Logix, LiveRamp, Neustar) with a war chest start buying panels for similar reasons.
Long term it will be the businesses with the best connections to the end-consumer that will win. This will be driven by having access to better and more scaleable data, if not driven by regulation. For this reason I think Cint and Kantar with current strategy is shaky long term. RN / SSI still need significant improvement in their consumer prop to reach the necessary scale to win in media (once we move past predictive modelling to scale trainer sets).
So there we go. I may be wrong, but if so I am in very good company. The consensus definitely seems to be that this merger may be one of the more significant events to occur in our industry in the past few years and will have far reaching implications for not just Research Now and SSI, but for the entire insights space.
One last note, and a personal request to Chris Fanning and Gary Laben, the CEOs of SSI and Research Now.
Earlier in this post I mentioned that many jumped to worries about the security of their jobs, and it’s a reasonable concern. Normally I would think that whatever talent you shed during consolidation would be snapped up by others, but I’ve heard much over the years about the Non-Competes you have in place for your teams. Non-competes are absolutely appropriate in many employment transition situations, but in my opinion not in scenarios of involuntary downsizing or layoffs.
Since so many folks expressed concern about this issue, I am publicly asking that you reconsider your Non-Compete policy for any employees who are not sufficiently “packaged out” to allow them not to worry about working during the term of such an agreement. Your new company is a major force for good in this industry and will only bolster your reputation and brand by being known as an organization that puts people on the top of their list of concerns. Plus, as you move more into the realm of tech you will need to recruit good people to support that vision, and restrictive Non-Competes without commensurate compensation clauses tend to be counter-productive for attracting great talent.
To put skin in the game myself, I promise to use my resources to help anyone caught in the transition to make the needed connections to potential new employers; just email me at [email protected] and connect with me on LinkedIn.