Murphy's Law

Tom Murphy

Consolidation and Fragmentation in the Analyst World….

You go away for a couple of days and the biggest analyst story of the year breaks. 

As you have probably already read, a year after Forrester acquired Giga Group, it turns out that Gartner is acquiring Meta Group for $162 million.

One of the signs of a maturing market is consolidation and this move from Gartner has a major impact on the number of large standalone analyst firms. They’re dwindling.

However, while the bigs boys merge, the absolute number of industry analysts continues to grow rapidly.  Just like the PR business, the analyst business has seen a huge growth in the number of small boutique firms.  These are typically one or two people businesses  – this category doesn’t include well established firms like Aberdeen, Yankee, Nucleus, Current Analysis etc.

Many of these boutique firms focus tightly on specific markets and are generating a lot of revenue from their specialization.

The problem for PR practitioners of course (I include Analyst Relations practitioners in the Public Relations category) is that this fragmentation in many ways makes effective communication with relevant influencers more difficult, particularly if the boutiques in your market segment have attracted a strong end user client list.

Some boutiques provide real independent advice, whilst others have a business plan around attracting revenue from all the vendors in a given market: pay-for-play.

The best advice I can give is that it is more important than ever to understand your market, clearly define your audience and be pragmatic.

The likelihood is that unless you’re a very large company you have a lot of potential firms and very limited budget to share between them. Focus on the firms who can give you value and firms that are successfully reaching your target market. Unfortunately there will always been some boutique firms that will insist on pay-for-play and while these firms are typically fantastic self promoters, if they’re not retaining clients in your target market you may have to turn the other cheek.

These decisions are difficult and important, but like any other business decision they should be based on a clear understanding of your business objectives. That at the end of the day is the most important consideration.

So to finish in full Gartner style:

  1. Absolute number of industry analysts to be reduced by this merger (0.2 probability)
  2. This merger to reduce the total number of analyst firms by more than one (0.1 probability)
  3. Number of small analyst firms to continue to grow (0.8 probability)

Stories on the Gartner-Meta merger:

Written by Tom Murphy

December 30, 2004 at 10:20 am

Posted in General

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