Forrester gives UK MSPs a wave

For the first time, industry analyst Forrester Research has taken a look at UK database marketing service providers. So how did they do?

For any client seeking a better understanding of where to place its business, these reports are a vital tool. For the MSPs involved they are an even bigger deal – getting named as a leader is a major plus for their own marketing.

What makes the report so valuable is the rigour involved. “It is painful to everybody involved,” Frankland told Data Strategy. “So depending on how quickly the market is changing, we typically only do it every 18 to 24 months.”

Drivers for a UK report were three-fold – global companies looking for information on local suppliers; UK-based companies wanting an authoritative insight into potential partners; and US-based MSPs thinking about possible acquisition targets. “There was heat in the market,” says Frankland.

So how did UK providers do and how do they compare to American rivals? “Coming in cold to the market, one of the things that struck me was there was no clearly dominant leader. It is always interesting when you have got that position,” he says. “There is no single company that we would consider as a distinct leader of the pack. Some are larger than others, some have got more data sources.”

Indeed, one of the key findings of The Forrester Wave for Q2, 2009 is just how fragmented the UK market really is. A quick look at the main findings chart shows three global providers (Acxiom, Experian Integrated Marketing and Rapp) competing with one financial services provider-owned business (Callcredit Marketing Solutions) and four independents (Dataforce, GB Group, Marketing Databasics, Occam). The size of their market presences, as defined by Forrester, are also extreme in range.

Inside the report, you will also find a list of 14 other MSPs that Frankland had to exclude for a variety of reasons. The methodology behind The Forrester Wave involves assessing each company on 77 criteria, giving them a score from a five-point scale for each. That accounts for the pain involved and also why many had to be excluded.

“It is not an absolute evaluation, it is comparative,” says Frankland. Those on the exclude list had footprints which did not cover key areas needed to complete all of the criteria. In order for the comparisons to be valid, they have to be made between like-for-like competitors.

Some local market adjustments were necessary. “Few of these companies have just database building and managing as their sole raison d’etre,” he says. Frankland believes the sector is in its third evolution, moving from data processing towards customer engagement where technology and databases are an enabler, rather than an end in themselves.

This points up something of a paradox in this exercise. The purpose of the report is to help potential clients to distinguish between the strengths and weaknesses of potential suppliers. To do this, however, those suppliers need to be sufficiently alike for valid comparisons, which is why the final set is only comprised of eight companies.

Yet at the same time, Frankland points out that there has been a convergence of propositions because of the widespead adoption of similar technologies, from FastStats at the low end up to Alterian a the high end. “It is fair to say that there is going to be a need for differentiation in the market,” he says.

Dealing with the demands of online marketing and digital data flows is undoubtedly the key area where this can happen (and which is also most at odds with the historical roots of the companies covered in the report). Recent years have seen database bureaux rush to introduce customer insight and analytics – an area in which Frankland believes the UK is actually ahead of the US.

“The other important issue is that it is one thing to offer all of these things, it is another to be good at what you do,” warns Frankland. Clients who buy the full report get access to the complete evaluation data and can drill down into it in order to identify where leaders may only be strong performers and vice versa.

It is one of the major strengths of the Forrester report that it does enable clients to redraw the landscape according to their own view. That diagram might look very different to a business that operates totally online and needs a MSP to support it, compared to a multi-channel business, for example. Equally, if you have no interest in data supply, relative positions will change.

For all of the difficulties involved in preparing it, the report has come at a good time for the UK industry. Whether the industry analyst can be tempted to return and have another go later next year may depend on just how much innovation takes place.

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