There was an article in the Wall Street Journal a few weeks ago (January 30th, 2008), which slammed into the Aberdeen Group for being a “pay for praise” analyst company. The article was titled “Vendors Still Paying For IT Research That Flatters Them”. It was unfair, or perhaps it was simply “very late news”. Aberdeen used to be a “lady of questionable virtue, who spread her favors widely”, but she changed her business model. In the UK the Butler Group suffered with a similar reputation, and that too has changed.

“Pay for play” is not a sustainable business model. The WSJ article pretty much proves it, because the damage to the Aberdeen brand has had such longevity. Aberdeen no longer evaluates technology at all – it hasn’t done so for years. It carries out surveys, which vendors can sponsor, and then turns them into reports which IT users can read. The reports do not discuss the relative merits of the various vendors in the market. In other words it’s sponsored user-side research, with, perhaps, a little bit of thought leadership or technology discussion thrown in.

Nevertheless, the WSJ condemns this business model in the following way:

If much of your top line is dependent on getting tech companies to sponsor your research reports, you’ve got quite an incentive to design questionnaires that will yield the kind of reports tech vendors will want to sponsor.

Well, duh? But how is that corrupt?

Is journalism corrupt because journalists write articles that people want to read and vendors place adverts on the same page. Do journalists have “quite an incentive” to ask their probing questions in such a way that they will yield the kind of comments that vendors will want to put their adverts near? All that Aberdeen appears to be involved in is sponsored research and as long as the sponsorship is transparent, there is no problem.

The Self Policing Business Model

People are suspicious, and rightly so. I published articles on IT-Director.com for years, and often when I mentioned Microsoft, it would not be in a favourable light. And yet Microsoft happily advertised on IT-Director on a regular basis, and neither it nor its agency ever complained. And every now and then I’d come across something from Microsoft that would impress me and I’d say so, and sure enough there’d be someone who’d read the article and conclude that because Microsoft was advertising on the site, it was also writing the articles. And they’d write a comment that said so, and I’d leave it there for everyone to read.

I’m using Google to provide the adverts for this blog site. Does that mean every time I mention Google I get all crawly and unctuous. If you think so, try this for size. I like what Google is doing in quite a few ways but it just doesn’t matter how positively I mention them, they never seem to pay me better ad rates.

Several of the postings I’ve put on this site have been worth a good deal of money to the vendors whose products I’ve described. I know this from the level of readership. When a posting gets 10 times the average readership it is stimulating significant interest and that translates into sales. Qliktech, StrikeIron and Expert System are companies that have done well in this way and none of them paid me a cent. But I know that if they ever need an analyst to write a paper or do a webinar they’ll probably come to me. There’s no agreement of any kind, but it normally happens that way.

The AVID anti-virus campaign I ran was done for no reward, and it caused the AV industry to change direction. Eventually I got whitepaper work and webinar work from SecureWave and Bit9 – not so much that I could retire to the Bahamas, but it paid the rent.

Only twice in a 15 year career as an analyst has any vendor tried to “bribe me”. You’d be surprised if I named the companies that “gave me the wink”, but actually I cannot tell you for two reasons. First on both occasions the offer was made verbally, so there is no record. And secondly, I have no idea whether the companies involved sanctioned the offer “at a higher level” or whether it was made by an individual who was “trying to be creative”. Maybe it wasn’t the fault of the company. My response in both cases was to recoil. I didn’t even need to say “no”.

In a way the analyst business is self policing. Whenever a vendor gets an analyst company to compromise, the news gets out very quickly and the reputation gets tarnished accordingly. It’s there in black and white in whatever piece of marketing collateral the analyst company put its name to. And the vendor never suffers, just the analyst company.

So the whole thing is self-policing to some degree. From the analyst side, the important thing is to do business in a way that makes it difficult for compromise to occur.

Note: This posting is one in a series of postings that deals with the topic of dealing with analysts. Click here for links to other postings in the series.