AR Classics: Netscout unwisely sues Gartner for “Pay for Play”

Yesterday a Boston Globe website reported Netscout’s case against Gartner, making public the allegations that Gartner’s research harmed Netscout’s reputation in retribution for Netscout’s refusal to increase its investment in Gartner services. While the case is not a re-run of ZL Technology‘s ill-fated case against Gartner, it is unlikely to win in court, change Gartner or improve Netscout’s ability to generate sales recommendations from analysts. Netscout investors should counsel the firm to drop the case.

In a nutshell, Netscout’s complaint is that Gartner punished it, by making it a Challenger rather than a Leader in the 2014 Magic Quadrant For Network Performance Monitoring and Diagnostics (reprint here), after deciding not to buy Gartner services. Netscout claims that Gartner defamed it, for example by failing to act when Netscout’s review comments pointed out an inaccurate statement that Netscout’s solution was hardware only. The complaint is similar to ZL Technology’s claim on those points (which failed because of the First Amendment right to freedom of opinion) but potentially has a better chance in Connecticut than in California, where ZL Technology filed its case. Furthermore, Netscout moves onto broader ground saying that Gartner salespeople pressure vendors by claiming that clients get better placement. They make a more interesting comparison with the 2003 actions that separated investment banks’ research operations from their core business: The silver lining to the case is that this issue will get some discussion.

First Amendment right are strong: as a result, Gartner’s position seems also strong. Of course the real court for this case is the court of public opinion, since the case will (if they are smart) be used by Netscout’s sales people to counter objections based on the Magic Quadrant.

While it is often the case that Gartner salespeople claim that clients get better placement in its research, there’s very little to really back that up: the buyer should beware such unethical claims, which are driven by the salesperson’s self-interest. Gartner analysts are quite unconcerned about who is a client, as Richard Stiennon (a former employee who has written MQs) explains in his useful book Up and to the Right. Gartner’s growing client base mean that it should be able to ensure that sales people don’t use immoral tactics to grow revenues from vendors.

That said, it’s certainly the case that there’s a moral hazard for Gartner: although its research is not “pay for play”, and we certainly defend the analysts from these claims, the firm’s leadership seems to be failing to stop all its salespeople from pretending they are collectors for a protection racket. Certainly some Gartner clients find that account managers sometimes become make similar claims to the ones Netscout reports and become obstructive of access to analysts if spending falls below certain levels. They are creating a risk for Gartner’s reputation, and that of the whole industry. As one analyst commented to me “If account managers are making those claims, and it is properly documented, then I don’t think it matters how clean the individual analyst’s hands are”. This case produces opportunities, not only for Gartner CEO Gene Hall to change the way it sells, but also for the industry to start a discussion about how both firms, and individuals, can avoid such hazards.

If that is the case, why do we counsel against such court actions if they can arm salespeople and shine a light on real issues? We do so because it does nothing to help Netscout’s long-term brand equity. Of course a firm of Netscout’s size was not short of skilled AR and PR professionals with experience of larger firms that have faced similar, or worse, problems with Gartner and its competitors (although there has been a change in leadership of the analyst relations, with a senior marketing director recently hired). The action against Gartner obviously derails the relationship between the two firms, and could have a chilling affect on other analyst relationships.

Were I an analyst at Gartner or elsewhere I would simply try, as much as possible, to not mention or interact with Netscout to avoid the risk of such aggressive escalations. No vendor has such a unique offer that a substitute cannot be recommended.

That’s unfortunate for Netscout because, if it’s claims are true, it would have been able to eventually turn around the views of Gartner analysts by politely and consistently showing how their solution did not have the weaknesses described (even if they had to announce a fake upgrade to allow Gartner to save face). Its complaint details several attempts to do exactly that and, if its suggested corrections were well-founded, Gartner should be explaining (not only to the vendor community but also to its other clients) why the feedback was not used. But, at the end of the day, Netscout needs to put its shareholders’ interests before the community interest of improving Gartner. The firm must now much more effort into its communications with other analysts, and consider ways that its channel partners can be encouraged to develop their relationships with Gartner to keep Netscout on the radar.

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.

There are 17 comments on this post
  1. August 07, 2014, 11:14 am

    Duncan – good article.

    Regardless of the impartiality or acumen of the Gartner analyst editing the MQ, the biggest concern here is the claim that Gartner sales person was claiming “you pay to get better positioning”. Sounds like blackmail to me.

  2. August 07, 2014, 11:21 am

    It certainly happened when I was at Gartner.

    • August 12, 2014, 6:45 am

      Hi Dan, of course this happened and it probably still does. Let us be honest here. 2500+ sales people! When I joined you had to had a serious background and a proven track record. I was one of the youngest people on the sales floor. And I found out this was for a good reason. People that sell eagle in 6 months and leave after the handout in Vegas…. Sure.

    • August 12, 2014, 6:50 am

      I can only talk for my time at Gartner and I know back then you had some lose cannons on the floor. Problem is, you only need one to get this problem out there. I only sold in the European markets, but it happened everywhere. There are documents that state real clear what you need to do as a company to be part of a MQ. I would highly recommend that you of course trust your sales rep, but always have stuff on paper that explains how etc. Nothing new here.

  3. Benjie
    August 11, 2014, 8:32 pm

    Gartner seems to churn through sales people as it pursues aggressive market growth and stock market success. Accordingly new sales executives aren’t properly trained, can’t get their arms around all the various products in the sales briefcase, and are likely to say or imply things that just aren’t true. They do have influence internally with the analysts who are pushed to support sales often at the expense of research, analysis and writing time. But you can’t sue someone for their opinion. Well, you can, but it’s unlikely to be successful, first amendment and all.

  4. August 13, 2014, 12:16 pm

    […] Netscout unwisely sues Gartner for “Pay for Play” […]

  5. Philip
    August 17, 2014, 5:39 am

    This alleged behavior of “pay for play” was always forbidden when I was at Gartner and so we never did it. Why? Because our strongest selling point was Gartner objectivity and trying to “influence” analysts was an extremely short-sighted approach. As Duncan correctly points out, it is up to the vendors to maintain proper analyst relations. Analysts are people too and want to be treated like everyone else. Mistakes happen but openness and a willingness to share information wins every time. Netscout will simply look like losers, who instead of improving their product waste money on lawyers.

  6. October 09, 2014, 7:57 am

    […] they have had that position. Other firms participants said had increased in influence included Gartner, 451 Group, Forrester, Digital Clarity Group and NelsonHall. In a comment on their post I […]

  7. October 21, 2014, 10:27 am

    […] also touches issues of ethics which are increasingly important in the context of the unwise Gartner-Netscout case.  “For manufacturers the accession to analysts ratings is often connected with high […]

  8. Concerned Customer
    October 22, 2014, 7:42 pm

    Let me get this straight. Gartner analysts incorrect state information about a vendor, Vendor tries to correct Gartner’s incorrect statements, Gartner declines, Gartner sales associate tells vendor they’d get better service if they bought more of Gartner services.

    I’m not sure how you spin that to be the vendor’s fault. Gartner seems to dealing in shady sales tactics, and worse, giving preferential listings to clients over the real-world marketplace. Lots of people pay Gartner money to provide accurate industry analytics, not a list of who paid them the most for the best listings. Even if NetScout loses this suit, it’s going to hurt Gartner. It’s a pretty common opinion that Gartner is a “Pay-for-Play” shop.

    • October 22, 2014, 8:17 pm
    • Fascinating viewpoint. I disagree with the premise and the conclusion. I’ll write a post about it next week but just because Gartner does not write what Netscout wants does not make it inaccurate. Netscout is not putting its customers or shareholders first. Gartner will recoup its costs and will have taught a lesson to other vendors. And your point is??
  9. November 03, 2014, 10:25 pm

    […] employees from continuing to work as an analyst for a period if they leave Gartner. Someone like Richard Stiennon, formerly a top Gartner security analyst, for example, is possibly worth more to another analyst […]

  10. January 20, 2015, 2:17 pm

    […] to the analyst documenting what you heard. This will provide an audit trail in case there are disagreements in the future about whether or not your company should have a more favourable positioning on the […]

  11. June 01, 2015, 10:33 am

    […] the possibility of regulation there remains a reputational risk. These are real, as cases like Netscout have shown. In particular, the role of marketing agencies in the FIFA cases suggest to us that any […]

  12. November 03, 2015, 11:52 am

    […] Gartner has a huge impact on the telecoms and networking industry. Its signature research formats are high valued. The Magic Quadrant is the most widely-cited business research series, differing massively from academic or financial research because of its method and broad reach. […]

  13. September 14, 2016, 5:33 pm

    […] Netscout and Gartner have scheduled their trial for next July. The case stands little chance of improving Netscout’s value. It does, however, risk harming the reputation of both analyst firms and analyst relations professionals. […]

  14. September 16, 2016, 9:48 am

    The Gartner methodology is quite solid nowadays, however the firm is still expressing an opinion by the choices it makes on inclusion criteria and weightings for instance.

    As Jonny Bentwood wrote back in 2009, in fine it’s not productive to shoot the referee >