On December 1, 2009, Forrester Research announced the acquisition of Strategic Oxygen from Monitor. Strategic Oxygen provides marketing professionals with data to help target marketing campaigns more effectively. While of interest to Technology Product Management & Marketing Professionals, it will be a separately-priced offering and not included in that RoleView.
This acquisition is of little interest to analyst relations (AR) teams as Strategic Oxygen does not track IT or telecommunications markets nor does it advise enterprise technology buyers on products from vendors like Accenture, Cisco, IBM, or SAP.
In a case of bad luck from a publicity point-of-view, Forrester announced the acquisition on the same day that Gartner acquired AMR Research. The Gartner acquisition overshadowed the Forrester announcement, but that does not mean that Forrester’s M&A move is less significant. Rather, it provides important insights into Forrester’s strategy.
The first insight is that M&A continues to be an ongoing tool for Forrester even though it has been quiet on that front since the JupiterResearch acquisition in July 2008. Forrester is sitting on approximately a quarter-billion in cash, cash equivalents, and short term investments. It also generates very good cash flow from operations so it definitely has the resources for an aggressive M&A strategy. Forrester simply takes a conservative approach to M&A to ensure a high level of success.
The second insight is that Forrester continues to look beyond the IT organization. Forrester did not have a significant presence in the IT organization prior to closing its acquisition of Giga in early 2003. The Giga acquisition gave it a substantial footprint in the IT organization, likely making it the number two end user advisory firm after Gartner. While Forrester’s end-user clients provide a steady revenue stream, it has done its recent primary investment in expanding its services for marketing professionals with the acquisitions of JupiterResearch and Strategic Oxygen.
The third insight is that Forrester continues to appreciate the value of data. Because of the leverageable nature of data – create once, sell multiple times – data can be a high margin business. Forrester takes a different approach with its data business in that it does not count boxes like a market research firm. For example IDC generates IT and telecommunication market share numbers, which are useful primarily to product marketers in technology companies. Forrester, on the other hand, creates numbers that are useful for marketing professionals inside and out of technology. Their Consumer Technographics is an example.
A fourth insight is that Forrester is continuing a pricing and packaging approach that pushes á la carte pricing with an increasing number of separately-priced services instead of the basic “all you can eat buffet” approach of the old WholeView model.
Insight number five is that Forrester likes acquisitions that have relatively little overlap with its existing research and services. JupiterResearch was an exception as it did overlap with what Forrester already offered. However, social media is such a hot topic Forrester acquired JupiterResearch to expand its offerings quickly just to keep up with demand.
The last insight is that Forrester likes acquisitions whose services can be immediately sold through its existing sales channel. This allows them to quickly monetize the new offerings without extensive sales training.
- Clients and prospects should evaluate each analyst firm acquisition and new service offering carefully to determine what is the true business value of the incremental service
- Analyst firm M&A activity may change the analyst ecosystem enough to require a review of AR teams list of relevant analysts. Periodic review of analyst lists is always important, but an acquisition might accelerate the need.
Bottom Line: Members of the analyst ecosystem should plan on Forrester (and other firms) making additional smart acquisitions. Depending on what your role is – competitor, vendor AR, enterprise client – the impact on your plans will be different as Forrester’s moves will affect each group differently.
Question: What do you think of Forrester’s latest acquisition?