industry analysts

Industry Analysts: Can You Buy Coverage?

I had a B2B startup founder ask me if it was possible to buy placement in a Gartner Magic Quadrant. The question shows a fundamental misunderstanding that the big industry analyst firms like Gartner Group and Forrester are “Pay for Play”. That simply doesn’t make any sense.

You care about analyst coverage because customers care. Customers care because vendors can’t purchase it.

The only reason marketers care what some industry analysts have to say is because some customers respect their opinion. The moment customers suspect that this opinion can be bought, they would stop paying for their advice. These markets where an analyst opinion really matters are often those where the decision is made by a purchase team that doesn’t have the time/skill/money/risk tolerance to perform a complete evaluation of every vendor in the market. They trust analysts to educate/advise them enough to quickly get the vendor list down to a more manageable size. It varies by market/geography/company size of course but if you are selling to a Fortune 500 IT buyer in North America, you may not get on a short list if Gartner doesn’t cover you (if you are selling to consumers, you probably should stop reading this right now).

You can’t buy love. But you can purchase a date.

So the entire business model of an analyst firm depends on customers trusting that the analysts are not biased for or against certain vendors. Vendors cannot purchase coverage in a report, nor inclusion on a Quadrant or Wave. Analysts do cover companies that don’t pay for their services. So does paying an analyst firm increase your chances of getting favourable coverage in their research. Heck yes it does! But it doesn’t guarantee they will write nice things about you. Purchasing a contract gives you their attention. It gives you the ability to interact with them regularly (the biggest mistake you can make is pay for the contract and not establish regular meetings with the analysts, more on this later). This leads to several things:

  • A better understanding of how the analyst firm views the market
  • An opportunity to educate the analysts about the value of your offering and your point of view on the market
  • The opportunity to influence their thinking about how the market is evolving
  • Advanced warning about upcoming research and the ability to respond to questions and surveys before the research is published
  • The opportunity to introduce them to your customers, further illustrating your offering’s value and increasing your chances of coverage.
  • The ability to establish the credibility of your company and your depth of knowledge of the space, increasing the credibility of your offering in the eyes of the analysts.
  • The ability to establish relationships with the analysts (hey, they are people too and it never hurts if you all know and like each other).

So buying the contract is a bit like buying your love interest dinner at Le Bernardin instead offering to split the bill at McDonald’s. It won’t guarantee that you’ll fall in love but it will increase the odds that they’ll show up so you can make your case.

The often-ignored but equally important reason you want to work with analysts – to learn from them

But here’s the thing. Coverage isn’t the only reason you want to work with an analyst firm. It may not even be the main reason you want to work with them. You want to work with them because you can learn from them. They spend all day thinking about the markets you are in. They spend a significant amount of time talking to customers. They know what your competitors are up to. Who else in your market can give you this kind of perspective? How valuable this perspective is to your company depends on a lot of things but here are some things I’ve used analysts for:

  1. Feedback on messaging and positioning – they know the terms the rest of the market is using and they know how customers express themselves. That puts them in a unique position to give you feedback on how you are expressing your value proposition and your terminology. They also have a firm grasp of what your competitors have and can help you understand what really differentiates you.
  2. Competitive insight – we are all under non-disclosure when we talk to analysts so they can’t tell you anything that isn’t already in the public domain (well technically anyway). but it isn’t always easy to keep up with what the competitors are doing especially if you are in a crowded market. Part of the analyst’s job is to stay on top of who’s doing what in a market.
  3. Customer insight – Analysts do a lot of customer briefings. I find myself asking questions like “Have you ever seen a company with this problem?” or “We think that customers using competitor X’s product tend to look like ABC. Would you agree?” You should never trust any one person’s opinion as the final word on a market but the insight you get from an analyst can help you understand where to look next.

Now don’t get me wrong – I have worked with analysts that I though had a spotty level of knowledge of their market, had obvious biases toward certain vendors and seemed to be incapable of constructive feedback. Every profession has a few that maybe should be doing something else with their lives. Fortunately for me that has been the exception rather than the rule.

Another thing to keep in mind is that you will have a much deeper understanding of the particular slice of the market that you play in than any analyst you will meet. They on the other hand will probably understand the broader market better than you do. You need to keep this in mind when you are filtering their feedback.

Two big cautions for startups!

  1. All of the good stuff that you get from analysts only happens if you do the work. You have to establish a regular calendar of meetings with multiple analysts. You have to prepare for those meetings. You have to find customers that are willing to talk to them. You have to have interesting new news to talk about. You have to complain like heck if your analyst is a dud. If you simply sign the cheque and wait for the good stuff to come rolling in you are wasting your money. Without an analyst relations plan, it’s pointless.
  2. Don’t forget your other marketing priorities. If you are a B2B startup working with analysts is going to be on a long list of things you have to do including lead generation, sales support, enabling your salesforce, building content for your site and campaigns, securing customer references, etc. etc. You have to weigh working with an analyst firm against the other things on your list and take your budget into account. If you only have $60K to spend on marketing, I wouldn’t recommend that anyone spend half of that on a Gartner contract. Even though I think analyst relations is very important for certain companies in certain markets, you need to be smart about it and make sure it makes sense for the value you will get.

 

51 thoughts on “Industry Analysts: Can You Buy Coverage?”

  1. April, good post. Much has been said before but we have to keep hammering on this stuff! Anyway, I think the last paragraph in this post is an especially important point. B2B startups need to be ruthless in prioritizing and it’s possible that this won’t be the top priority (I do think it needs to be of at least some importance if your target customer is enterprise rather than SMB). Gartner MQs take an establishment view of things. After all they only do them for established markets. I would be pretty happy to get recognition from Gartner as a company to watch, until you’re past that C round and the business model starts looking pretty proven. Then it’s time to step it up.

    1. Thanks for the comment.
      You are right that the MQ’s are only for more established markets but I’ve been at a startup where we were covered in MQ’s that weren’t the exact market we were in (at least the way we defined it) and we made a LOT of hay with customers about that. For certain big enterprise customers, it gives you a load of credibility. The big reason it’s hard for startups to make it on the quadrant is that darn “Ability to Execute” axis! You have to be able to show some traction to prove you have this. Still, I worked at a company where we did it with only a handful of customers (massive ones, granted), mainly because we spent a lot of time with the analyst, he spoke to our customers and he was a fan. The reason it was important to us is because we were selling to banks and it was very hard for us to get on a short list without being in a Quadrant. Again, if your customers don’t care that much, then you don’t have to care that much so I totally agree with you that prioritization for your market is really important.
      April

  2. Hi April:

    It is not just the larger analyst firms who do not engage in pay for play. Although I agree that purchasing a contract or research subscription will get you more attention with Gartner, Forrester and IDC.

    However, vendors and service providers of all sizes get Hypatia Research’s attention when a vendor’s offering align with our research agenda–which is customer-driven. Briefings, demo’s and customer references are all done as part of our due diligence at no cost to vendors.

    ****comment edited here to so that other analyst firms don’t decide my blog is an advertising outlet 🙂 ***

    Best,
    Leslie Ament
    VP Research & Senior Analyst

    1. Hi Leslie,
      Thanks for the comment and you make a great point that not every analyst company has the same business model as the big guys. Some folks might say that the big firms have a massive conflict of interest in that they are taking money from both vendors and customers while trying to remain “neutral”.
      I know several boutique firms that I have gotten a ton of advisory value from.
      Again, I think the important thing for startups is to do their due diligence, determine where they can get the most value for their time and money and then prioritize who they will work with and how.
      April

  3. April,

    You are spot on. If you are a B2B startup in the enterprise space, targeting the Fortune 500, this is a game you are going to have to play.

    I would add one more point to your doing the work caveat. If you are ahead of the game, be prepared to take time working with analysts to help them understand the benefits your solution offer. This may take time and can be extremely frustrating when they seem to not get it or want to put you in a box that doesn’t begin to cover everything you do.

    Having case studies and customers they can talk to will help them understand your story but manage your expectations if you are trying to create a new category that they are unfamiliar with.

    Thanks for sharing!

    Josh

    1. Thanks Josh,
      That’s a good point and something that you have to get your head around when working with the bigger firms in particular. Each firm will have their particular point of view on the market and when it doesn’t line up with your point of view it can be incredibly hard to convince them you have unique value. On top of that you have the bigger companies like IBM that invest a lot with the bigger firms and as a result their view of world tends to line up pretty nicely with the big guys (not that they would admit that it goes like that). If you are trying to establish a new market view as a smaller company it’s going to take some time and effort.
      That said, I do believe that most analysts like companies that are disruptive to established players in the market. Startups have an advantage there that they can bring something fresh that the analysts can get excited about (and talk to their customers about and hey even charge for consulting services to talk about this potential disruption 🙂
      April

  4. This is a really, really interesting post.

    April, don’t you think (the value of working with analysts notwithstanding) that the dynamic itself is a bit sketchy? Is it really possible to ensure 100% unbiased analysis if the very folks you are analyzing are feeding the relationship with money and other supports? It reminds me of the lobbyist dilemma.

    1. It’s a funny model, no question! The idea is that you are paying for the research and the ability to get advice from the analysts but we all know that time with the analysts helps you educate them as well as them educating you. I’ve never had an analyst firm approach me and offer to set up a briefing for me to talk about my stuff without having to pay for it.
      April

      1. “I’ve never had an analyst firm approach me and offer to set up a briefing for me to talk about my stuff without having to pay for it. April”

        April:

        There are still a few independent boutique and mid-sized analyst firms who do not engage in pay for play as well.

        Vendors and service providers of all sizes get Hypatia Research’s attention when a vendor’s offerings align with our research agenda–which is primarily customer-driven. Briefings, product demonstrations and customer references are all done as part of our due diligence at no cost to vendors.–Best, Leslie

    2. I don’t think there is any question there is some bias, and I would like to see a little more transparency in disclosing relationships. On the other hand, especially for Gartner, the fact that they depend so much more on revenue from end users vs. vendors should mean they work very hard to be fair and on the side of the users as much as possible. Otherwise they torpedo their business model.

  5. April,

    As Aaron says above, this needs to be repeated repeatedly as it is one of the most misunderstood aspects of the industry. Yes, there is some gaming that goes on – that’s inevitable. But you still have to do the work.

    Another point is that you don’t always have to agree with their opinions and don’t always have to accept their recommendations as the right way forward. I am conducting a series of analyst inquiries right now and two things pop out at me: First, Not everyone has a complete picture of the problem or market. This is where your own market/customer knowledge is important. You can balance that against what the analyst says for a more nuanced or thorough understanding. Second, you get pieces of value from each conversation and have to disregard the rest. The fun/trick is to put those pieces together into a larger answer.

    One analyst yesterday came up with a totally asinine suggestion (we tried not to laugh out loud) but followed that hubris up with an excellent comment on something we hadn’t considered.

    Keep up the good work.

    1. Hey Tim,

      As a product manager, I’ve definitely appreciated the value that we _can_ get from analysts – in accelerating our learning about a domain or space. The good analysts, when synthesizing a lot of data about an industry, generate good insights.

      From what I’ve seen, those insights are primarily centered around understanding which problems are important to solve, and a point of view about each company’s approach to solving those problems.

      I _don’t_ however, think of analysts as a good source of data about how effective a particular solution is at addressing a problem. There’s definitely a link, analysts present a point of view about how effective a particular approach will be at addressing a market need, but I don’t think of them as product managers (there are exceptions, when individual analysts happen to be wired like product managers).

      Your example matches my experience too – every (?) time I review an analysts’s perspective on a market / industry where I already have some context, I walk away with a mixed bag of “I should totally think about X” and “the analyst needs to be educated about Y.”

      It scares me when I start to immerse myself in a domain, and look at analyst’s perspectives early on – and I don’t yet know which is the “X” and which is the “Y.” Most product managers, I suspect, are already operating in a domain that they know well – my situation, as a consultant, might be more unique, as I am regularly learning new domains.

      1. Scott – you hit the nail exactly on the head on this one. Filtering is so hard (particularly for folks that don’t have a lot of experience in a market OR experience in working with analysts).
        April

  6. I agree in general the analyst community does not bias their rating based on a customer pays or not. But I did have an interesting chat, couple of years ago, with the account manager of a BIG analyst firm when I was running marketing and was discussing the contract renewal. When I told her that I might be choosing to reduce the size of the contract and even possibly terminating the contract, she came out and openly told me that such action might have an adverse impact on the parallel discussion we had been having on our product being represented in one of their vendor leader-board ratings. Her tone was clearly meant the consequences.

    I ended up terminating the contract anyway mainly due to that insinuation by that account manager.

    1. I had the exact same conversation with a rep once! I took it up with the rep’s manager and he wasn’t with the company for long. I think most firms (especially the big ones) don’t instruct their client reps to deliver that message (nor do I believe that the analysts would drop you from an upcoming report because you terminated) but that doesn’t mean there aren’t some bad ones out there that won’t try it to keep an account. I don’t blame you for cancelling the contract, that’s totally unacceptable.
      Out of curiosity – were you included in the report after you terminated the contract?
      April

      1. Nope they did not. Seems the reason I got back was that the analyst leading that leader-board ratings had decided to take up a job with a software company (they all seem to parlay the analyst jobs into cushy jobs in s/w companies these days). Anyway at that point I did not care a rat’s… if they had covered me or not, given that I no longer trusted their integrity.

        Also I was clearly having the feeling that they were not creating a lot of genuine content that I really liked. I gave them a lot of content myself .. which I then turned around and bought… just for their packaging.

        1. Ugh. Such a disappointing story. I think any analyst firm that operates this way seriously risks their credibility with non-vendor customers. Customers just aren’t that stupid (at least I hope they aren’t).
          April

          1. Is there any difference between this dynamic and the “separation of church and state” that “news / media” companies have to deal with. I’ve seen this a lot where “report the news” and “get ad revenue from vendors on which we report” are the competing factors.

    2. I’ve seen those tactics used as well. It’s shoddy selling. Reflects poorly on the rep, the firm and the respect of the client in using blackmail as a closing tactic.

      Your commercial decisions are your own, however many advisory firms have an ombudsperson who can help on the research side if you had concerns. I think I might have raised the “threat” with the analyst as well just to air it out.

  7. There’s a lot to unpack in this post and related comments. Analyst biases, “pay-for-play” (implicit or explicit), hiring of analysts by vendors, moral dualisms, etc.

    Let’s start with the biggie – “pay-for-play”, or the idea that you spend will influence the perspectives articulated by the analyst. For the 800lb gorilla in the business (Gartner), this is unequivocally not true. It’s also not valid for most reputable firms, simply because once it becomes apparent that there’s a relationship between spend and coverage that firm’s value as an advisor is wiped out in the eyes of the customer. There have been notable occasions where some of the biggest vendor clients of an advisory service have willfully terminated their contracts coincident with negative coverage. In all cases that I know of, the analyst’s position remained sacrosanct despite the surrounding churn in the commercial business relationship.

    I think the bigger confusion in the context of “pay-for-play” surrounds firms who undertake custom research – lab testing, product reviews, white papers, etc., and release them under their own banner even though they were produced exclusively on contract for a firm or group of vendors. Yes, they put disclaimers on the work (don’t they?) but it still dilutes the entire body of work of analytical and advisory service firms in my mind.

    So is there “pay-for-play”? Absolutely not, among reputable firms. Can you benefit from a better, deeper, more intimate relationship with the advisory firm and their analysts when you’re a customer? Totally.

    April offers an excellent set of points in the body of her post on how to do that. Follow them. Rise above the analysts’ signal to noise floor. Talk with them. Share as much as you dare. Ask questions (lots of them) and listen. Ask more questions. There’s a tremendous amount of intellectual value stored in the minds of the analyst community. And they’re wired to want to help you. Take advantage of it.

    r

    http://bit.ly/yFVYNF [PDF of Gartner at a Glance]
    http://bit.ly/xgonZ6 [PDF of Forrester at a Glance]

    PS – full disclosure – I’ve had past lives as an analyst, as a seller of advisory services, and as enterprise and vendor customers of their services

  8. The biggies all have published guidelines on how to arrange a briefing.

    In my time as an account exec at an advisory firm I’ve occasionally had analysts ask me to facilitate a refresher briefing with vendor clients who were not as diligent in the AR programs as others.

    I’ve also had vendor clients try to arrange briefings through me, sometimes to no avail. Typically that was because their offer didn’t track the analyst’s current research focus. Or they may not have met published thresholds for inclusion in a report.

    In my experience it’s ultimately at the discretion of the analyst. The latest Gartner numbers claim 12,000 “Vendor Briefings” per year which I find low considering they have ~1000 analysts. Don’t know how Forrester does with that.

    It’s not easy for the analysts either. I stumbled on a recent blog post where the analyst said “I’m currently writing first ever user survey related to solutions. The survey engaged over 600 user companies across the US, UK, France and Germany”. However you slice that, there’s a lot of work in that project, so you can see why they sometimes aren’t as eager to meet for an hour of “death by powerpoint”.

    1. Thanks for the comment!
      You make a great point about how busy the analyst are (at the big firms anyway). The Gartner analysts I am working with now have completely insane schedules. It can be difficult to get on the calendar of an analyst when you are a client, as a non-client vendor I can imagine for some of these analysts it would be almost impossible.
      April

  9. Thanks, April (Apple) for the great article. Really interesting to see how analyst relations are important from a marketing perspective. I’ve only thought about them from a product management perspective before. I’ve also only thought of them as someone who serves the customers in the space (e.g. our buyers), where getting value from them (as vendors) is incidental – the briefing becomes a two-way exchange of information.

    I wonder, if like many things, the quality of insights you get from working with an analysis firm is entirely determined by the skill level of the analyst.

    Is there anything like a better-business-bureau for analysts (or analysis firms)?

    1. That would be great if there was such a thing. I tell startups to do their homework and research the analyst before buying the contract. Word gets around pretty fast if the analyst is lousy.
      And easy on that Apple business 🙂
      April

      1. David Friedlander

        There actually is a firm that analyzes the analysts (“But who will watch the watchers?”). Outsell is essentially an analyst firm covering the media and information industry, including the industry analysts (http://www.outsellinc.com/market_research).

        I don’t have any connection to Outsell, but when I was an analyst, it was a fairly big deal when they published their annual report ranking the firms.

        1. Interesting! I have never heard of Outsell but now I am going to have to ask around about them. When I am going into a new space I usually get my G2 on analysts the old fashioned way – by calling up a bunch of folks I know in that marketing and asking them who’s good and who isn’t. People that work with analysts tend to have strong opinions about them! 🙂
          April

  10. David Friedlander

    April,

    Great post! “You can’t buy love. But you can purchase a date.” – that about captures how it works.

    I’ve been meaning to comment since Wednesday morning but was in our SKO meeting for 2 days. I was an analyst for 7 years at one of the major firms. These days, I’m a client and get to pitch to them.

    While most of the analyst firms *try* to be impartial, it’s an imperfect system. If as a vendor you can buy enough “dates” with a key analyst, you’ll influence them for 2 reasons:

    1. You’re building a relationship (obvious).
    2. The analysts often get paid a bonus for consulting and speaking engagements (the “dates”), and typically have a quarterly target.

    That second reason means that larger vendors can buy a lot more dates, and even though the bonuses aren’t huge, it could add up. It also puts the analyst in the position of having to soft-sell projects. So there’s a risk that analysts will (consciously or not) gravitate towards the vendors who can buy more consulting. It’s indirect, but you still know who contributed to that bonus at the end of the quarter or year.

    Despite this, the firms go to great lengths to create a firewall between sales and the analysts. In several cases, big clients from 6 or 7 figure accounts were unhappy with research. If they made threats, research management always had our back.

    The two biggest reasons to work with the analysts are what you mentioned – their sphere of influence and their broad knowledge of the industry. For startups, though, building the relationships and seeing any real payoff is a multi-year process. Who knows. You may end up in a report one day – and as an analyst friend advised me recently – it doesn’t hurt to ask if they’d consider you in the “cool vendors” “Magic quandrant” or “wave” report.

    I’d be curious to know your thoughts on how to work with tech industry bloggers, too. We’ve had some success reaching early adopters through bloggers before we even made much headway with press and analysts.

    1. Hi David,
      Thanks so much for the comment!
      I wasn’t aware that analyst had quarterly targets for engagements – that’s really interesting.
      As for bloggers – it depends on your market and who’s blogging about it but for most of the startups I know or have worked with, they are the first influencers I’d work with. It’s hard to compare them with analysts really. As far as how you work with them, it’s interesting but I think I’ve had a lot of success in working with them just like you would a really good journalist. You want to build a relationship with them, understand what their motivators are and bring them what they want.
      April

Leave a Comment

Your email address will not be published.