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