How Forrester Research and Jupiter Communications vie for ink.
By the time you've finished reading this article, Bill Bluestein, Mary Modahl, and Stuart Woodring will be a little bit richer.
That's because they work for Forrester Research, a Cambridge, Massachusetts, technology research group that compensates its analysts in part based on how often they get quoted.
Forrester wants to establish itself as the preeminent prognosticator of how people will interact with all things electronic, and its unusual marketing ploy seems to be working. If you've been reading The New York Times for the past year, you've seen a Forrester analyst cited an average of 3.5 times a month, spouting off about Web site security or commenting on consumers' willingness to pay for content. If you're a Wall Street Journal reader, Forrester references pop up even more frequently: 7.75 times a month.
What's driving Forrester's aggressive publicity push? The company, with a projected annual revenue of US$34 million, hopes to dominate one very hot arena: selling accurate forecasts of how consumers will use new technologies to companies like Disney, Netscape, and Federal Express - along with, coincidentally enough, The New York Times Company and Dow Jones & Company, which owns The Wall Street Journal. "A very critical way we market is through the media," says Forrester president George F. Colony, a charismatic 44-year-old who founded the company in 1983. "Quotes help us sell."
No one understands that better than Adam Schoenfeld, a VP at Jupiter Communications in Manhattan. The scrappy, fast-growing Jupiter is Forrester's closest competitor in the consumer research market, with a projected $10 million in annual revenue, and Schoenfeld is Jupiter's one-man quote-spewing jihad. He averages 1.25 mentions a month in the Times - more than any one of the competition's pundits. "I keep my eye on a couple of my favorite Forrester analysts," the 33-year-old Schoenfeld acknowledges with a grin, "just to make sure I'm getting quoted more than them." Schoenfeld, who worked for the Associated Press before coming to Jupiter, is constantly consulted by writers doing pieces on the latest wrinkle in the online services business. "If we were paid by the quote," he says, referring to Forrester's practice, which is unique in the industry, "I suspect I'd be the richest man in cyberspace."
While Schoenfeld's visibility exceeds that of any single Forrester analyst, Jupiter as a company trails its competitor in overall media mentions. In one week this spring, when Microsoft had just announced its purchase of WebTV Networks and America Online was reportedly mulling an offer for CompuServe, references to Forrester Research showed up 49 times in a broad index of 3,600 publications, while Jupiter popped up 34 times. During the same seven-day period in April, however, Jupiter scored quotes in some very high-profile places: two were in the Times, and two were in The Washington Post. By comparison, Forrester had just two citations in major newspapers.
It's tough to rankle Forrester's founder by pointing out that the young Turks on Broadway rival his larger, older firm for visibility. Colony, a native of New Hampshire, asserts that being located in the media capital of the world accounts for a lot of Jupiter's ink. "Being in New York helps get you on CNN," he says. "It gets you on Charlie Rose. You drink with the new reporter at ABC." Colony adds that several of Jupiter's key players come from journalism backgrounds, which gives them even more of an edge.
Gene DeRose, who did a short stint at Cosmopolitan before joining Jupiter in 1990, couldn't agree more. "We're the New York media and consumer marketing shop," says Jupiter's chair and CEO, sitting in his office alongside an acoustic guitar and a concert poster from The Knitting Factory, a nearby avant-garde nightclub. "We're smart and engaging about what we do," DeRose continues, explaining Jupiter's stellar visibility with a splash of the cockiness that's endemic to his industry. "We make good copy."
Not to mention that he grew up with (and used to employ) one of the producers of CNNfn's daily Digital Jam - which may help explain DeRose's regular appearances on the show.
The other side of the publicity equation, of course, is that journalists need experts to add a credible "industry observer" voice to their stories. Usually, there's a tight deadline involved, and the analyst who returns the call first gets ink. Sean Wolfe, an online editor at Cowles New Media, gives Forrester high marks: "They turned calls around on a dime, and they gave you really good quotes."
"You can tell by the tone of the journalist's voice how close they are to deadline," says Matt Cain, a former managing editor at MIS Week and reporter for Electronic News who's now a VP at Stamford, Connecticut-based Meta Group, another market researcher. "Give 'em the quote and get off the phone," he advises his analysts. Cain adds that one of the services analysts perform for journalists is explaining how complicated technologies work and putting vendors' oft-inflated claims in perspective. The journalists "wind up looking smarter than they actually are," Cain says, "because you've given them the big picture."
Forrester, Jupiter, and competitors like the Meta Group typically send out large flights of press releases to promote their latest research findings or media events. Jupiter ships about one a week; Forrester's average is closer to two. But Steve Lohr, a New York Times reporter who covers the technology beat, says he ignores most of the self-promotional mailings - he contacts the market researchers only when he needs a comment for a story he's working on. "Everybody deals with these people in a mercenary fashion," he says. Like Times colleague John Markoff, Lohr says he consults analysts for quotes to help shape a story, not when the analysts' firms are pushing a new report or service.
Markoff, the *Times'*s most prominent technology writer and the coauthor of Takedown: The Pursuit and Capture of Kevin Mitnick, says analysts have to prove their astuteness about tech trends to remain valuable as a source. "There are people I won't name that I won't go back to as sources because they turned out not to be knowledgeable," Markoff says. Does he worry about the ethics of using as sources analysts who are getting paid, in part, for making it into his stories? "Not really. I make up my mind about the usefulness of an analyst based on a number of conversations I have with them. If I feel like they're clueful, as opposed to clueless, I'll use them. It's a judgment call on my part."
A Wall Street Journal reporter, who requested anonymity, points out that those in his profession need to be careful about quoting one research firm in too many stories, giving the appearance of favoritism. "There's a bias against using any one in particular too much," he says. This same reporter, though, referred to Forrester analysts or reports in 20 stories last year. By comparison, his articles contained just one mention of Jupiter Communications all year, and less than three mentions each for some of the other major research firms: Meta Group, Gartner Group, Yankee Group, and Giga Information Systems. George Colony's marketing plan, in this light, looks pretty savvy.
In the past, companies like Forrester, Gartner Group, and International Data Corporation concentrated solely on helping technology vendors understand how to sell to corporate markets, or, conversely, helping corporations understand what technology they needed to buy. Since research firms were so intently focused on the needs of big business, many missed the emergence of the consumer market for the personal computer in the '80s. Once PCs had won a place in the home, few of the research firms predicted the rise of services like CompuServe and America Online, and even fewer called the emergence of the Internet as a network for consumers. George Colony recalls that whenever he came across the word "Internet" in a draft of a Forrester report, he'd cross it out. "This is academic garbage," he'd scrawl.
"I was mad as jumping beans at George in that area," recalls Forrester's Mary Modahl, who helped jump-start the company's research into consumer use of online services, interactive television, and the Net. By 1994, Modahl had created Forrester's first "new media" service, dubbed People & Technology. The company's initial take on the Average Joe's adoption of technology has proven clear-eyed: Forrester predicted that interactive TV would tank and that the Web would eventually surpass proprietary online services in usage.
Jupiter, founded in 1986 by Josh Harris, prides itself on having hit the field before its competitors. "From Jupiter's beginning it was always about consumer online services," says Harris, who serves on the company's board but is no longer involved day to day. "We stuck to our guns and just ground it out, waiting for the market to catch up." While the market was catching up, Jupiter focused on videotex systems, screenphones, and other telecom-related information services.
"In the late '80s," DeRose explains, "no one was spending more money looking at consumer interactivity than the phone companies. And in this business, you follow the money." As other companies - cable TV providers, broadcasters, publishers, and advertisers - slowly began to demonstrate more interest in how consumers used the electronic media, Jupiter's growth followed apace, expanding from 12 people in 1990, to 35 in 1994, to 85 in the spring of this year and a projected 100-plus by year's end. "This is going to be a big space," DeRose says of consumer interactivity. "We have to gain size, scale, and brand equity quickly."
To date, Jupiter has grown organically, without infusions of capital from outside sources, though the business has reportedly entertained recent offers from both Gartner Group and Meta Group, two publicly held companies looking to build an expertise in the area of consumer interactivity. Harris and DeRose say an IPO isn't out of the question, once the market improves and Jupiter has established more of a track record.
In the meantime, both Forrester and Jupiter are growing like magic beanstalks. Forrester saw its sales jump 72 percent last year; the company now has five consumer-oriented new-media services - focusing on issues such as electronic commerce, Web publishing, and Internet advertising - up from zero in 1993. Jupiter lays claim to triple-digit growth since 1991 and has just punched through a 4-foot brick wall to take over 8,000 more square feet of space in a building next door. In May, Forrester expanded onto a third floor of its sleek office building midway between Harvard Square and MIT. "We're eating floor by floor," says Colony, who has an option on the entire place. The company now employs 190 people, 80 of whom are directly involved in research.
Both workplaces, populated with the jeans-and-Doc Martens set, exude a sense of late-'90s casual purposefulness. On a recent visit to Jupiter, the lone white-haired employee was studiously wearing a bright white pair of sneakers. At Forrester, employees clad in the official green fleece company pullover greet the founder with a chipper, "Hey, George, how's it going?" Conference rooms at Forrester are named after the banjo-playing Colony's favorite band, The Allman Brothers. At Jupiter, it's more like Nine Inch Nails; employees there seem, on average, about five years younger than their Forrester counterparts.
Forrester and Jupiter adhere to similar economic models - they're essentially high-end publishers that seek annual subscriptions from big corporations. Wall Street analysts applaud the stability of this approach, since at the beginning of any given year, Forrester and Jupiter have already booked a significant amount of guaranteed revenue through renewals (both firms retain more than 75 percent of their clients from one year to the next). The companies supplement their publishing revenue with other services - Jupiter hosts a series of new-media conferences, for example, and Forrester sells consulting time to about a third of its customers.
While the models are similar, one element that differentiates the firms is pricing. Jupiter occupies the lower end of the scale, selling $500-a-year subscriptions to newsletters like Digital Kids Report and $1,000-a-head passes to conferences such as "@travel: Strategies for Destination-Based Commerce." Forrester, which went public last year, has positioned itself on the big-ticket side of the consumer research market. The lowest possible subscription price for one of Forrester's research services is $5,000 with a minimum of three services required, and the average company shells out $15,200 annually for "core research." If you want to be able to pepper a Forrester researcher with questions, though, or schedule meetings to review your Web strategy, you're talking an average of $85,000 a year for the firm's prestigious Partners Program.
Naturally, the ambitious young execs at Jupiter covet figures like that. A year ago, the company began an experiment to try to boost cash flow and to build stronger client relationships: bundling its deliverables into a package called Strategic Planning Services, or SPS. By putting a single price tag on a bundle of newsletters, reports, and conferences and granting clients access to Jupiter's analysts, the firm discovered it could charge $15,000 to $40,000 annually. DeRose, who calls SPS the "key focus" of his company right now, says he has signed more than 100 clients to the package deal so far and believes he will end the year with well over 200 clients.
But despite Jupiter's ability to match Forrester quote-for-quote at only half the size, clients see Jupiter as more of a tactical, numbers-oriented research group. "Jupiter takes a snapshot in time, with all the appropriate statistics," says an America Online manager in charge of buying research. Yet even companies like America Online that spring for SPS are less likely to take advantage of the analyst access that's included, viewing the service as essentially a "value pack" of reports, newsletters, and admissions to pricey conferences. Until Jupiter can prove the value of its personalized analyst insight, it will have a tough time matching Forrester's lofty per-client averages.
Forrester, in contrast, is regarded as a source of big ideas and long-term overviews. "We're ripping these executives open, thrusting some vision in there, and sewing them back up," Colony says, accompanying his words with animated gestures. Only a third of the contracts his company sells include face-to-face time with Forrester analysts, but clients that pay up are inclined to take advantage of the meeting time. Digital Equipment Corporation, for example, schedules frequent strategy reviews with Forrester analysts. Digital, which remains a Forrester client despite being bashed unremittingly in the press by Colony throughout the '80s, groups the research it buys into three tiers, based on perceived value and how much time employees spend with the analysts. Forrester is in the top tier.
As Jupiter strives to both change the perception that it is somehow less strategic than its Cambridge counterpart and at the same time roll in greater revenue, publicity becomes crucial. That's where the quotation derby comes in.
"The more you get quoted, the more people are likely to think you're important," says Laura Lederman, who follows market research stocks for William Blair & Company. "The more they think you're important, the more they're likely to buy from you."
Forrester's founder acts like the Great and Powerful Oz, post-curtain pulling, when questioned on his company's cash-for-quotes policy. He seems concerned that it might reflect badly on Forrester's deeply ingrained dedication to the research, and points out that there are greater financial incentives attached to writing good reports than maintaining a high profile in the press. Director Stuart Woodring, however, explains how the system works without a trace of reticence, and defends it steadfastly.
"One of our goals is to have a strong influence on technology markets," Woodring says. "And you can't have influence if you're not visible." According to Woodring, Forrester sets quarterly goals for each of its analysts, based on the current level of media interest in each area of expertise. For example, an analyst covering Internet advertising might get 15 to 20 calls from reporters a week, and thus would have a higher goal than someone covering database technologies.
Each quarter, Forrester's marketing department tallies up media mentions, scanning about 100 general business publications. The list includes major newspapers like the Times and the Journal, as well as magazines such as Forbes, Fortune, Time, and even Wired. But Forrester analysts don't get points for every citation; comments that show up in technology trade publications like PC Week or InfoWorld don't count toward an analyst's goals. According to Woodring, getting placement in the trades is too easy. "We could be in trade publications 10 times an issue," he says.
Similarly, Forrester could also earn scads of mentions in smaller-circulation magazines and newspapers, but the company takes steps to conserve its time and energy. Earlier this year, the outgoing phone message in Forrester's marketing department stated, "If you're a member of the press and your publication has a circulation greater than 30,000, please leave a message. If your circulation is less than 30,000, please understand that the volume of requests that we receive may prevent us from returning your call." Forrester later changed the message after receiving complaints from smaller publications.
Still, Forrester subjects its new hires to a crash course in media relations. Some of the lessons: comment on technologies and companies, but never on individuals; rid your speech of qualifying modifiers, which make you sound uncertain; speak in short sentences; and repeat important points several times to make sure the reporter gets them. "It's really easy," says Forrester's Bill Bluestein, "but I don't think a lot of firms are thinking about it."
Jupiter isn't, at least consciously. While Schoenfeld and DeRose rely on their experience as members of the Fourth Estate to guide them in generating publication-ready quips, there's no formal media training for the analysts, and the company neither tracks how often it's cited in the press nor compensates analysts on that basis, though DeRose admits to doing an occasional Nexis search "for fun." DeRose is strident, however, in his opposition to Forrester's cash-for-quotes policy: "The idea that analysts should be out there whoring themselves to the press sets a bad precedent. You begin to damage the objective underpinnings of the firm."
Other competitors are only too happy to take similar swipes at Forrester, while tacitly acknowledging the effectiveness of its marketing crusade. Interviewed for this piece, the first question Yankee founder Howard Anderson asks is, "This isn't going to be another Forrester blowjob, is it?" While Anderson insists he's proud of the business his protégé has built (Colony worked for Yankee before starting Forrester), he worries about clients seeing analysts' insights in the mainstream media before the clients themselves get their hands on the research. "If you've done good research," Anderson says, "it shouldn't go to Business Week first - the clients need to see it first."
Forrester addresses that issue by withholding press releases until eight weeks after a report has been made available to paying clients. Jupiter, which views itself more as a deadline-oriented publishing business (the division analysts belong to is dubbed "editorial"), takes the opposite tack. Jupiter frequently scoops its own newsletters, offering exclusives to publications like AdWeek and Advertising Age when it releases reports on the amount of money being spent on online advertising. DeRose maintains that the slow production cycle of Jupiter's newsletters necessitates giving some of their breaking news to the mainstream media to prevent leaks.
DeRose points out another of the dangers of playing the get-quoted game: dealing with the media can eat up valuable research time. During the week that rumors about an AOL purchase of CompuServe began to swirl, and Microsoft had just announced its acquisition of WebTV, DeRose says his analysts were swamped with calls. Colony says he too stresses the importance of balancing research needs with reporter interviews, and even jokes about instituting a penalty for cutting too high a profile in the media.
Even so, the chiefs of Jupiter, Forrester, Meta Group, and Yankee all agree that getting quoted helps them lure new clients. But press visibility can also have a dangerous side effect: offending existing clients. Colony and his analysts, for instance, have incessantly criticized Microsoft's forays into content and entertainment. The result: "Bill Gates hates me, and they're a very large client," Colony says with a smirk. He proudly declares that his company never pulls a punch - even if it could lead to losing a client as important as Microsoft.
The loquacious Schoenfeld has antagonized his share of clients, too. For a front-page article in The Washington Post earlier this year, Schoenfeld was asked to comment on AOL's request that its users not go online so much, due to heavy traffic following the company's switch to an all-you-can-eat pricing scheme. Schoenfeld said asking customers to ration their usage was "a really stupid tack." Shortly thereafter, he received a call from Jupiter client Steve Case, who was not pleased about being dissed in his hometown paper and wanted to explain the rationale behind America Online's strategy. "In retrospect," Schoenfeld says, "I felt that 'stupid' was a poor word to use, because it's not very descriptive." More recently, Schoenfeld was drawn into a contentious email exchange with Pathfinder executives after he told The New York Times that "no one could rival them for sheer cash-suck."
Will such run-ins squelch Jupiter's desire to be the most vocal, visible, and profitable company in the consumer research arena? Not likely. CEO Gene DeRose is confident his company can ride a 10- to 20-year growth cycle that's only just getting started. "This is before the beginning," he says.
Which means we can expect to see a lot more high-profile predictions from Jupiter and Forrester analysts in the years ahead. "As long as technology remains confusing, it's going to remain a strong market for these companies," says Catherine Baker, who follows Forrester's stock at Robertson, Stephens. So barring a dramatic drop in the complexity level of new technology, clients will still rely on Jupiter and Forrester to understand it, and journalists will still call for the companies' help in explaining it.
That suits both firms just fine. Quoth Jupiter's Schoenfeld: "I never met a jar of ink I didn't like."
