With major events bringing even more change, it’s the time of year to take stock and explore what it all means.
With a Happy New Year and a welcome back, here’s our take on the most important events from 2017 and their impact on our industry. In no particular order:
Gartner’s acquisition of CEB started 2017 with a bang, huge multiples continued with Moody’s purchase of BvD, and then MDA bought DigitalGlobe. All had nice price tags. Heady valuations abound for that just-right combination of unique data, ubiquitous use, recurring revenue, and support for workflow or APIs. There remains a lot of money chasing precious, and too few, assets, resulting in major data businesses commanding premiums for their crown jewels. Witness too, Great Hill Partners acquiring Zoominfo and PE backed DiscoverOrg rolling up RainKing. With them, industry consolidation continues on its ever-persistent march.
We remain particularly interested in Gartner after its purchase of CEB, who we believe will apply pressure on the big-buck management consulting firms whose services often revolve around technology transformation. CEB’s functional prowess and roots in benchmarks and best practices combined with Gartner’s technology DNA and distribution makes for a well-positioned combo.
Meanwhile, all eyes remain focused on changes at the top at McGraw-Hill Education, on Pearson after the sale of some assets, on Cengage’s launch of a Spotify-like solution, and on the innovation patterns of large companies going through digital and market transformation. David Levin’s departure at McGraw-Hill reminds us that good leaders can fall to the demands of PE owners who are often unrealistic when it comes to growth or margin expectation — or the ability to deliver both during transformational times. Cengage’s news reminds us that consumer expectations in UI/UX perennially and ultimately find their way into new markets.
Overlay the GDPR with the demise of net neutrality, and we still don’t see any cohesive approach to operating in a global networked world where coordination across countries cannot keep up.
More innovation came from Bloomberg. With its media and advertising revenue streams stagnant, it debuted a consulting service — a rarity from a media giant specializing in corporate communications, brand consulting, and marketing strategy advice. While we’re dubious about this particular play, the trend of moving up the services value chain is a legitimate strategy many are executing. And let’s not forget that on December 18, Bloomberg Media flipped the switch on TicToc, its branded 24-hour social news network operating on Twitter. It includes a heady dose of video-based content and comes with a dedicated staff of 50. AT&T, CME Group, CA Technologies, Goldman Sachs, Infinity, and TD Ameritrade will each pay between $1.5 million and $3 million for ad sponsorships, proving new models for news are still out there and along with it the power to be a game-changer.
Amazon, Facebook, and Google continue to take the air out of the room, facing few consequences. The consequences that do occur will likely start in the EU where its General Data Protection Regulation (GDPR) looks set to make a mess out of the free flow of information across international boundaries. Overlay the GDPR with the demise of net neutrality, and we still don’t see any cohesive approach to operating in a global networked world where coordination across countries cannot keep up. Oddly, while the Justice Department ties up the AT&T and Time Warner merger in knots, Amazon marches along, taking over the planet, buying Whole Foods and getting licenses for entering the Rx world. Who needs lowly lead generation and advertising when commerce and drone delivery brings anything to our front door in an instant and at scale.
In the land of STM, protracted, ongoing contract negotiations and a stalemate between Elsevier and the German research consortium Projekt DEAL has left the rest of the market wondering who will blink first. The impact has implications for other major negotiations and the pricing conflict ironically plays out while Sci-Hub drama continues. The “Pirate Bay of Science” lost in US courts to Elsevier and ACS, but the decision had little practical effect on the piracy site, which continues to hold subscription models under siege with 85% of closed access journal articles ever published in its (illegal) possession.
Funder policies and mandates continue to drive momentum beyond open access and open data and ultimately into open science with the EUs Horizon 2020 program, Wellcome, and Max Planck. Chan Zuckerberg’s buying of Meta marks another move by funders jumping into scholarly communication, a trend playing out in enterprises across most sectors. In financial services, it is through consortia formed by leading financial institutions. Those include institutions such as the R3 Consortium forming to propel blockchain development, or continued moves into fintech development, and most recently third-party risk assessment. Customers are going into worlds formerly inhabited solely by information solutions providers, a move we cited several years ago with the purchase of the Weather Channel and Truven by IBM, Climate Corp by Monsanto, Iron Solutions by Trimball Navigation, and mapping services by leading auto brands. This continues to drive up valuations while forming new competitive threats.
Machine learning rose to the top of the hype cycle amid product claims and some genuine advancement. It is hard to point to any major announcements given that so many these days overuse the ML/AI acronym where just like dot.com, portal, 2.0, social, mobile, or SaaS before it, the term is requisite boilerplate to lure investors and hefty valuations. Customers beware.
We like InReach Ventures combining internet data and machine learning to guide VC investment. And let’s not forget the Outsell 250, our eight Growth Tank Nominees and the ultimate winner, Yewno, who are all innovators driving real solutions that passed the Outsell test.
And as one analyst pointed out: 2017 was the year when fake news was not fake news and the announcements kept coming. Traditional media scrambled in 2017 to address the fake news fallout. The first half of the year saw significant investment ($120 million committed by early May) by philanthropic individuals to fuel experiments in the hopes of bringing trust back to media. Fake news’ fallout also worked its way into the advertising and media ecosystems, and efforts like TrustX and TAG gained ground with both advertisers and media companies. Despite these efforts, Facebook and Google moved slowly (hah! When do these firms ever move slowly?) all year, remaining the biggest distributors of fake news. They refuse to call themselves media companies when the rest of the world sees them as such and cannot seem to own up to their culpability in spreading this cancer.
And branding announcements never cease to teach us. Sadly, the rebranding of QuintilesIMS to IQVIA was this year’s poster child for branding “ick,” which remains an unfortunate practice endemic to our industry. Try as we might to influence improving brands, every year there seems to be examples in this year-end post, leading us to plea once again, “Pick up the phone and call us before you go live!”
And Arthur Andersen returns, reminding us that good brands can rise from the ashes with a Paris-based tax & accounting firm recently announcing that it has reinstated Arthur Andersen in France, the US, and 14 other countries that includes 26 offices across five continents. The announcement came as a shock to Andersen Tax — a competing firm with 58 global offices, founded by former Arthur Andersen partners who laid claims to the Andersen name in 2014, when it changed its name from WTAS to Andersen Tax. Since then, Mark Vorsatz, CEO of Andersen Tax, and Stephane Laffont-Reveilhac, managing partner of Arthur Andersen, have been disputing the naming rights. A lawsuit, initiated by Andersen Tax is currently in progress to determine which firm possesses the rights to the trademark. Good brands are worth fighting over. Memo to IQVIA: let’s just hope we never see the likes of Enron.
We must not forget, let’s never forget, Equifax whose breach has gone stunningly quiet. The collective outrage has winnowed to a whisper.
And our round-up would not be complete without mention of China. China rising in scholarly publishing. China laying out its first data protection plan, something akin to the EU’s GDPR. China’s presence in Southeast Asia. China’s continuous impact on the global economy and world stage. China completing its test trial of its own cryptocurrency — a blockchain-based currency akin to bitcoin, litecoin, and ether. With the completion of the trial, The People’s Bank of China (PBOC) is one step closer to becoming the world’s first central bank to offer its own blockchain-based national currency. Working closely with China’s Ministry of Finance, the PBOC is looking to end the paper Renminbi (RMB) currency in favor of a full-on digital currency.
And finally, as we round out high-impact announcements, we must not forget, let’s never forget, Equifax whose breach has gone stunningly quiet. The collective outrage has winnowed to a whisper, and the implications of that breach somehow walked off the world stage. We cannot let that happen.
Why This Matters
The world has gone amok, but we covered that when we called 2016 the year of the tipping point and 2017 the year all about data. We provided clients with ample time to prepare! Since then, we’ve learned that Russia meddled in US elections, Trump and the media cannot get along, and Brexit ties, while not yet broken, are pulling at the bit. This is the year where we’ve had worst-ever hurricanes in the Caribbean and the Gulf, earthquakes in Iran, Iraq, China, Italy, and Mexico, a volcano erupted in Bali, and worst-ever wildfires in northern and southern California. We are living with terrorism in our midst, bitcoin at an all-time high, and the rise of cryptocurrency and Initial Coin Offerings. Impending “disruption” is everywhere.
And yet, the economy is bubbling right along while we seemingly learn to live with this halo of noise and distraction surrounding us every day. Advanced economies are experiencing same-time positive GDP, a phenom unseen in many years and one which guides stability in our industry. Most segments are growing at low and steady rates even while all this “change” unfolds. And for the first time since 2009, almost across the board, leaders are telling us they are turning from transformation, investment in portfolio, strategic planning, and digital investment in platforms to the day-to-day execution and margin optimization that comes from reaping profit from investments and ensuring they pay off. We are back in an era of execution — tactical marketing, sales optimization, emphasis on talent — doing so without an economic cycle driving it as a must. We are simply moving on.
This is the industry that reminds us of the little engine that could. It helps improve the planet by making a difference in commerce, innovation, education, finance, current awareness, the civility of law, and our ability to make decisions. This is the industry that grows on average 3% a year. Investors love this industry because of its steady state, its recurring revenues, its customers’ reliance on solutions, good profits, and its predictability — all of which they have come to depend on. In and around all the craziness and noise, there is calm, centeredness, and a community of people who care about their craft, delivering good business, and the difference their businesses make.
Perhaps the best sign of that is the news our industry didn’t make. There was no Uber whose leader and culture fell from grace. And for now, and we hope forever, there is no Harvey Weinstein in our midst. While our industry can do better to improve gender diversity in our c-suites, we end the year thankful we are not big, brash entertainment, not verbose politicians abusing our power. We just make a difference in the industries we serve. That is the best news of all. So, as we check our lists and measure twice, it is gratifying to know we are simply steady and nice.
Plan good things for the year ahead. Execute well and have a merry holiday season. Thank you for the pleasure and privilege of serving you and your team this year.