In 2009, as the global financial crisis reshaped business priorities, Marius Jost sat down with Duncan Chapple to discuss major shifts in the IT research industry. Their podcast captured three emerging trends that would define the next decade: growing demand for targeted research despite budget constraints, the rise of freemium business models, and the impact of vendor-sponsored content on analyst credibility. The interview proved remarkably prescient about the staying power of major firms like Gartner and Forrester, while accurately predicting challenges smaller analyst firms would face in maintaining traditional revenue models.
This discussion from 2009 remains relevant in 2024 as companies balance the need for expert analysis with cost management, and analyst firms continue adapting their business models to market demands.
Introduction
Marius Jost: “We’re navigating a cautious economic climate, making this a pivotal moment for the analyst industry. Today, we’ll discuss three major trends affecting IT research. These trends are diverse but significant, as they reflect enduring changes. Duncan, let’s start with your perspective.”
Duncan Chapple: “Thank you, Marius. It’s an exciting time for the industry. My focus is on how demand for analyst services is evolving, particularly at the divisional level. Our recent survey of 55 analyst firms revealed some notable patterns.”
Key Trends
1. Rising Demand for Analyst Services
Duncan Chapple: “Despite price pressures, demand for analyst services is growing, especially at the divisional level. Organizations are leveraging analysts more deeply in decision-making, even as they push for cost reductions. This trend highlights a shift from big-picture insights to actionable, business-unit-level insights. Analyst firms are now critical in addressing immediate business challenges rather than solely focusing on long-term strategy.”
Marius Jost: “Interesting—so companies are increasing usage while simultaneously squeezing prices. How are firms balancing this dynamic?”
Duncan Chapple: “It’s challenging. Companies often maximize existing subscriptions instead of paying for specialist services. Larger firms like Gartner and Forrester benefit from inelastic demand, enabling them to maintain pricing. Smaller firms face greater pressure, as clients negotiate harder or even cut analysts from their rosters.
Additionally, clients are leveraging their existing relationships to cover more areas. For example, instead of engaging a specialist firm like Tower Group, they rely on broader firms with retained arrangements. This cost-focused approach impacts the breadth and depth of research access.”
Marius Jost: “That’s a critical point—the reliance on retained arrangements over bespoke engagements. Do you see any specific areas where demand is concentrated?”
Duncan Chapple: “Yes, demand is strongest where research directly impacts business outcomes, such as market entry strategies, competitive intelligence, and risk management. Companies value targeted insights that address immediate operational or strategic challenges over expansive, forward-looking reports.”
2. The Economics of Free
Marius Jost: “A significant shift is the ‘economics of free,’ where marginal costs approach zero. End users often rely on free resources like Google or white papers to support internal decision-making. Journalist Chris Anderson’s insights on this ‘freemium’ model resonate—give research away to generate awareness and monetize consulting or speaking engagements.”
Duncan Chapple: “Exactly. Free content can serve dual purposes: marketing consulting services or promoting vendor-sponsored solutions. Smaller analyst firms, like James Governor’s, often distribute free research to establish credibility while monetizing through other channels.
We’re seeing a logarithmic rise in this approach, especially among smaller firms. Historically, white papers were a primary tool for this, but now entire reports are being distributed for free to build relationships and trust with clients.”
Marius Jost: “How does this impact traditional analyst business models?”
Duncan Chapple: “It forces firms to rethink monetization strategies. Free content often serves as a lead generator for high-value services like consulting, workshops, or speaking engagements. Additionally, some firms partner with vendors to fund this free research, which can raise questions about credibility and bias.”
Marius Jost: “Exactly—credibility is key. While free resources attract attention, clients need to understand the motivations behind them. Transparency about sponsorship and funding sources is crucial.”
3. Sponsored Research and Credibility Challenges
Duncan Chapple: “Free research funded by vendor sponsorship raises questions of credibility. While it’s effective for market development, clients must discern the impartiality of the findings. Independent analysts providing critical insights may need to monetize through consulting or speaking engagements rather than traditional reports.
Sponsored content often serves dual purposes. For example, it helps vendors promote their solutions while enabling analyst firms to expand their reach. However, the reliance on vendor funding can limit the scope of analysis, especially for reports that deliver unfavorable findings.”
Marius Jost: “Agreed. Sponsored content can still provide value, but transparency about funding sources is crucial. For example, distributing free PDFs with embedded advertisements can direct users to relevant services, creating value for both vendors and end users.
It’s worth noting that smaller analyst firms often benefit the most from this approach, using free reports as a springboard to establish credibility and attract paying clients. The key is balancing reach with integrity.”
Industry Insights and Future Directions
Duncan Chapple: “The analyst industry is at a crossroads. Firms must navigate the tension between growing demand and tighter budgets while adapting to shifts like the ‘economics of free.’ Transparency, credibility, and the ability to deliver actionable insights will determine their success.
At the same time, larger firms like Gartner and Forrester are better positioned to withstand these pressures due to their established client base and diversified offerings. Smaller firms, meanwhile, have the opportunity to disrupt traditional models by embracing innovative approaches to content distribution and client engagement.”
Marius Jost: “Absolutely. The evolution of the analyst industry will hinge on its ability to adapt to these economic and technological shifts. Thank you, Duncan, for sharing your valuable insights.”
Listen to the podcast below.
