Welcome! Spark offers a practical—and some times irreverent—take on the state of strategy and marketing in the tech world.

If you like Spark, pass it along to your colleagues and let us know. In this inaugural edition, we’ve decided to tackle the state of industry analyst firms and how they currently impact technology firms. Brian Sommer offers a candid take on marketing without industry analyst firms. For those who feel abandoned by a lack of coverage in their sector, this perspective is for you. But for everyone else who must engage with analyst firms, Jason Busch presents his opinion on the top ten myths of working with ‘em. Last, in Out Takes, we offer a lesson from the trenches.

Disagree or have something to say? Get in touch: info@azulpartners.com

Marketing Without Industry Analyst Firms

Do you really need to use tech analysts as part of your broader marketing strategy?

Answer these quick questions:

• Has the flow of quality sales leads from analyst firms to your firm slowed to a crawl (Y/N)?
• Has analyst coverage of your space and/or your firm thinned out (Y/N)?
• Are analysts intentionally publishing reports and rankings (e.g., magic quadrants) with oblique information to confuse the market and force readers to talk to them for more information (Y/N)?
• Do you suspect that analysts misuse the information you provide them (e.g., share it with a competitor) (Y/N)?
• Have analysts gotten less and less willing to provide you with a quote for a critical press release, brochure, etc. (Y/N)?
• Does everything you ask for from an analyst (e.g., permission to quote a report excerpt) come with a price tag? Yet, they expect the moon from you for nothing? (Y/N)
• Have analysts moved on? Do they exist to serve tech companies or corporate subscribers (Y/N)?
• Have analyst firm mergers resulted in more confusion and work for you (Y/N)?

If you answered yes to more than three of these, you really need to re-examine how you budget and work with the industry analyst community. Certainly, there are firms who can help your cause. But as a whole, analyst firms are not what they used to be. And you should take action accordingly.

One tech CEO put it very bluntly: “We looked at the ROI of working with analyst firms and it’s not positive!”

What goes into that ROI equation?

The ROI of Working With Analyst Firms

This CEO added that they saw a reduction of coverage, increasing turnover of analysts, etc. since the late 1990s. They decided to develop internal competencies to ‘market without tech analysts’. Her insight was prescient and fortuitous as analyst coverage in their space has continued to thin out to negligible levels.

What this firm decided was that they needed to:

• Create an internal lead generation program. They could not rely on getting referrals from analysts and, even when they got them, the leads were not well qualified. The internal lead generation effort has been quite beneficial to the top line and very cost effective.
• Develop their own intellectual property (e.g., white papers, newsletters, case studies, etc.). As it turns out, their cost to self-develop these items was significantly less than what analyst firms charged.
• Create their own events, webinars, etc. Appearing at a research firm’s annual event may have some networking value; however, the prospects there are not necessarily focused on the solution a given firm has.
• Quit paying analyst firms. The research wasn’t of value and being a subscriber was not a guarantee of getting coverage (even bad or incorrect coverage!).
• Create a network of market influencers who would speak at their webinars, write papers, etc. This firm discovered that credibility and thought leadership are not the exclusive domain of a couple of Tier 1 analyst firms.

Other firms have reported a number of other changes to us. The key word many use is: outreach. This is what happens when tech firms take control of their public persona. The propagation of thought leadership is a competency more tech firms should embrace internally. Is your firm leading the market and shaping market perceptions or is it spending too much time reacting to the prognostications, misinformation and latest three letter abbreviations of competitors and analysts?

“Leaders shape, build, and influence markets. An industry analyst campaign may be part of this effort, but is not always essential.”

Some vendors are reasserting “control”. They are taking back the amount of information they will share with analysts and to which analysts will be entrusted this information. They’ve also realized that in today’s markets that certain niche analysts are more influential in specific verticals than top tier firms. And they’re budgeting accordingly, reducing the funds they allocate to the Goliaths of the space, and reallocating them to other initiatives and more focused firms.

At Azul Partners, we believe that true leaders shape, build, and influence markets. A campaign to influence and work with industry analysts may be part of this effort, but is not always essential – especially if the analysts are not actively covering your sector (defined by publishing relevant research on a regular basis and influencing key deals, or helping your cause in other, useful ways). Indeed, it is our opinion that markets, customers, prospects and even the analyst landscape have changed dramatically. Smart tech executives are also adapting to this shifting landscape. If you haven’t taken a recent look at your analyst-to-marketing connection, you should soon.

Reach Brian at brian@azulpartners.com

The Top Ten Myths of Analyst Relations

Analyst relations (AR) is a high stakes game of influence and relationship building. Companies that play it well can reap significant rewards. Those who don’t can be punished. In mapping out their plays, many vendors and services providers operate on assumptions which are both false and potentially damaging to their company and marketing goals. To avoid the slings and arrows that cause so many causalities on the analyst battlefield, consider the following myths:

1) It’s OK to take a short-term tactical approach to working with analysts
All too often, companies call firms that specialize in analyst relations seeking advice and help on a tour that needs to happen within four-to-eight weeks. While most understand that analyst briefings are a requisite piece of any marketing program, few seem to realize that they are only one component of the overall plan that is necessary to build relationships with key analysts who can influence market direction. Analyst relations is an ongoing, integrated set of activities that must be carefully planned and executed well in advance to avoid unproductive fire drills.

2) Throwing money at the analysts can help win them over
One of the greatest misconceptions about analyst relations is that tossing a few bucks to the major firms will ensure positive coverage and help build relationships. While it’s true that some firms operate on a pay-to-play model, most will willingly accept briefings and entrees from non-clients - if the pitch and timing is right. But over time, organizations need to establish a dedicated budget to make analyst relations work. How much do you need to allocate to gain admission to the ballpark? It varies from firm-to-firm. Licensing a few research seats is a necessary first step. But it’s just the ante to get into the stadium. In some cases, though, bleacher seats are good enough.

3) Our PR department or agency can run our analyst relations program
Giving analyst relations to an internal PR group or an external communications firm is probably the most common mistake made in playing the analyst game. The second most common is hiring an analyst relations manager with a PR background. PR is transactional in nature and focused on educating journalists who typically stay as far away from the trenches as possible. AR is about building relationships with intellectuals who often pride themselves on their depth of knowledge and ability to debate and build long-term relationships with like minded folks in the vendor community. A completely different skill set is required to perform these functions. As you budget and write job descriptions for analyst relations hires, bear in mind that the ideal AR professional should be able to get a job covering your company as an analyst at a major firm. And they should be paid accordingly. If you choose to seek external analyst relations help to supplement their own resources look for a partner with extensive experience and a track record of working with and influencing the analyst community.

“Sometimes a few beers can go further to building relationships
than a $20K investment.”

4) Frequent briefings are enough to secure coverage and to build relationships
Don’t discount the value of getting on a regular briefing schedule with the analysts. But it’s also important to realize that briefings are only one part of building relationships—and probably the least crucial part at that. It’s critical to get to know the analysts who cover you outside of the office. Invite them to drinks, dinner, and events and get to know them—not just their research. Sometimes a few beers can go further toward building relationships than a $20K investment.

5) Buying research and seats is the best way to spend money with the analysts
Savvy marketing organizations that play the AR game well develop an in-depth understanding of the analyst compensation structure at all of the major firms. In virtually all cases, the $50K spent to access a firm’s research never reaches the analysts who cover you. There are far more creative, cheaper, and effective ways to compensate the analysts you want to reach than buying research or licensing seats.

6) When in doubt, let the executive team lead the briefings
While they may light up the board room, founders, chairmen, CEOs and other top executives can be carpet bombers when it comes to dealing with the analyst community because they are too close to the subject and ill-equipped to deal with any potential criticism. The collateral damage that founders and untrained CEOs can create around analysts often outweighs any benefit they may create. Of course there are those select few founders and CEOs who can be magic in front of the analysts. If you’re fortunate enough to have them, use them liberally. Just don’t parade out execs for the sake of doing it. Regardless of who conducts the briefings, be sure to invest in analyst training and practice this training before giving these briefings (note: This training is not the same as press and media training).

7) We should outsource content and thought leadership to the analysts
On occasion, licensing analyst reports to post on your web site or use in a lead generation program can be effective. In other cases, hiring a firm to conduct a third party analysis quantifying the benefits of your solution is useful. But the secret is out about engaging analyst firms to write whitepapers that rubber stamp your company and solution. Such pay-for-play efforts should only be a small part of your overall marketing content and thought leadership, as they are viewed as largely suspect. It’s much more effective to publish and develop your own thought campaigns that can influence prospects, customers, and analysts alike.

8) Briefings are a one-way street to inform the analysts about us
In most cases, the best use of briefing time is to create a two-way conversation that encourages interaction rather than just education and preaching through a rigid slide deck. In fact, if your relationships are solid with the analysts prior to the briefing, they should already be somewhat familiar with much of the subject matter that you are presenting, so that you can elevate the discussion and focus on gaining insights and feedback.

“Analyst firms are always looking for new sources of revenue.”

9) Analysts can help us with our positioning and market messaging
Analyst firms are always looking for new sources of revenue, and a few have branched out into dishing marketing advice. Smart vendors will politely decline any additional, fee-based services analysts may offer to review and recommend messaging and positioning. Why? Most analysts have never been marketing executives (or if they were, they were the academic and esoteric kind) and while they’re often in touch with market needs from an end-user perspective, they’re rarely good at distilling this knowledge into effective messaging and positioning for vendors. It’s fine—and a great practice—to test your positioning and messaging with analysts before launching a company or produce. But work to bring them on board in the pre-launch, rather than having them lead the effort from the start.

10) When a research firm calls to discuss our capabilities as part of a study, we should answer all of their questions
It’s a little known fact that you can hire analyst firms to do your competitive intelligence dirty work. Yes, even the most “objective” firms will carry out competitive intelligence projects to benchmark your capabilities against the market, speaking with competitors and gathering critical intelligence to share directly with you. In some cases, vendors have hired analyst firms to confirm detailed feature / function check lists for use in patent suits, and have submitted the findings as evidence of infringement. So next time a firm proactively calls up and mentions a study that they’re conducting and requests information from you, think carefully about how the information they’re gathering will be used—and ask them directly if the research is being sponsored by a third party—before responding.

Reach Jason at jbusch@azulpartners.com

Out Takes …

How much is too much to tell the analysts? One of the trusty editors of Spark was once on the vendor side of the world and was briefing an influential firm about the integration of an acquisition in a pre-deal close environment. The acquirer was a public company and the acquiree was a private one. In the midst of the briefing, an executive from the acquiree blurted out that the combined pipeline was looking great (causing one of your editors to sink into his seat). The next week, the firm published a positive brief on the situation of the deal, quoting that line verbatim. And so the market would have it, the stock was also up that day. Next thing you know, our CFO goes into full damage control mode over the possibility of selective disclosure. The upshot? No investigation and eventually the deal fell apart before closing. The lesson? Be careful what you say, and what anyone you bring with you to a briefing will say (even if it’s off the record and it sounds beneficial at the time).

This newsletter is published by Azul Partners, Inc a market strategy and content advisory firm. Founded in 2004, Azul Partners advises the world’s leading software and professional services organizations. We work with companies to develop persuasive content and novel strategies that incorporate rational arguments, deep research and subject matter expertise. Learn more by visiting us on the web at www.azulpartners.com or drop a line: info@azulpartners.com