How Partnerships Drive Value for Insights Businesses

Partnership Strategy
(This week, I’m at the ARF Re:Think 2016 conference. If you’re there, let’s grab a cup of coffee and chat – it would be great to learn more about how you are or can be using partnerships to increase value. Ping me on Twitter @InsightIndustry to meet up.)

The insight industry is simultaneously one of the most competitive and most collaborative fields out there. One second we’ll be competing tooth-and-nail over a new account or project, and the next we’ll be working hand-in-hand to develop or market new products together. These longstanding partnerships are driven by a solid strategic and economic rationale.

At the most basic level, we enter into partnerships – often with ostensible competitors – because working together will either improve performance (raise quality, boost sales, strengthen profitability, accelerate delivery, etc.), decrease risk (remove a potential competitor, decrease needed investment, lock in supply, etc.), or almost always: do both.

I believe partnerships create these benefits by delivering value to your back-office (helping your profitability, accelerating time-to-market, raising the quality of your products, etc.) and your front-office (which ultimately improves sales). Taken together, these benefits deliver strategic value in the form of reducing risk factors, boosting profitability, and strengthening competitive position.

Partnerships and their Back-office Benefits

I typically think of back-office benefits as operating along two closely-related dimensions: Supply and Capability.

CapabilitySupply. The data we work with is complicated, and a robust data solution has many moving parts. Sometimes a partner will have an asset that we (currently) lack. In our industry, that is typically a particular pre-existing dataset or difficult-to-recruit panelists that are necessary in our envisioned product. A partner with those assets has already (presumably) invested years of effort (and the money that implies) to develop those assets. In building those assets, they’ve solved challenges that you probably aren’t even aware of yet. So by working with such a partner, you shortcut the time and resources you would need to invest yourself to building such assets for yourself.

CapabilityCapability. Building robust insight solutions is often as much art as it is science. Every business develops capabilities over time that provide it with competitive advantages in the marketplace. Capability differs from supply in that it is typically more process-oriented: A partner’s capabilities are either intangible (pre-existing relationships with suppliers, economies of scale in data collection, optimized processes for faster delivery, familiarity with a complex problem, etc.) or reflected in their technology (machine-learning algorithms that enhance predictive power, data delivery platforms with high client adoption, specialized data collection tools). Developing such capabilities yourself is difficult (read: expensive and risky) and time-consuming. By working with a partner, your business can leverage the competitive advantages your partner has already developed, thereby eliminating significant risk and short-cutting a complex process.

I draw a distinction between supply and capability because a healthy partnership approaches each dimension differently. Leveraging capability requires a more in-depth discussion of the process of collaboration. Capability is as much about “how” as it is about “what”, while supply is easier to define and work with. That being said, supply and capability often go hand-in-hand, since a partner who can provide a supplies you need will often also have capabilities that you might benefit from – after all, it is their specific capabilities that helped them develop those assets in the first place.

Leveraging Partnerships for Front-office Value

Front-office benefits also operate along two dimensions: Channel and Ecosystem.

ChannelChannel. Selling insights is hard. It’s a complex process, often featuring a long sales cycle, and typically supported by sophisticated marketing and publicity efforts. And like any complex sale, it is heavily shaped by the relationships a company has. A partner might have more familiarity with a particular client segment, stronger relationships with a particular group of buyers, a better opportunity to cross-sell a given solution, or better opportunities to market or promote a solution than you do. Working with a good channel partner gives you a larger voice in the marketplace by putting more “boots on the ground” promoting your solutions.

EcosystemEcosystem. Building a sustainable business in the insight industry is all about thought-leadership. Our products are bets that we’ve made about how to best solve our clients’ challenges. When we enter into a partnership with someone, we’re telling the world that we share a philosophical approach to our clients’ problems. This helps to establish momentum in the ecosystem: It provides authority and credibility to the partnership’s solution, and if coupled with effective methodology and technology design, can help propagate your solutions as standards in the industry.

Typically, each front-office benefit is the flipside of a back-office coin. When your partner provides you with a channel benefit, you’re simultaneously providing them with a capability. When you provide someone with a supply benefit, their adoption of your assets is providing you with an ecosystem benefit. These are strategic advantages which should be considered, and carefully leveraged in your organization – independent of any direct financial benefit accruing from the partnership.

The Financial Dimensions of a Healthy Partnership

Partnership StructureTo be sustainable, a partnership needs to provide both strategic and financial benefits to both parties. Now and again, I’ve seen partnerships where the strategic benefits outweigh financial considerations – but in my experience, those are usually rare and typically unsustainable in the long run.

At its most basic level, the financial structure of a healthy partnership boils down to two essential questions: Who pays whom? And how much?

In my experience, healthy partnerships in the insight industry are often structured around six possible models:

gives both partners incentives and shares risk between them;
Joint Venture
gives both partners incentives and shares risk between them, but is often more complicated to negotiate and manage;
where a “buyer-partner” simply purchases or licenses something from the “supplier-partner”;
where a buyer-partner purchases or licenses something from the supplier-partner, and the “buyer” takes an equity position in the “supplier”. This model creates shared incentives between the partners, reduces the seller’s immediate risk, and provides the “buyer” with a hedge against future risk;
where a seller-partner sells or licenses something to the buyer-partner, and the seller takes an equity position in the supplier. This model creates shared incentives between the partners, reduces the buyer’s risk, and allows the seller to participate in the buyer’s strategic upside;
where money is not actually exchanged between the partners and the relationship is based solely on operational processes.

Revenue-sharing and JVs are natural structures for partnerships based on channel and capability. They make it possible for the partners to both share in the risk and the benefits from the partnership.

The Sale model is often applicable for supply partnerships. For the partner with the assets, it might seem attractive at first. After all, any new client is a good client, right? But I always try to caution clients about this mindset for two key reasons: First, by thinking of such a relationship as just another sale, the supplier might be leaving money and strategic value on the table. And second, if your client/partner in the relationship thinks of you as “just another vendor” then you increase the likelihood that at some point you will get swapped for a competitor – further limiting your future benefits.

While the buyer/vendor relationship may be a good one for supply-based partnerships, I typically advise clients to at least consider the other models, as revenue-sharing and JV structures enable sharing of both benefits and risk, and Stake/Sale models make it possible to share in benefits while providing a hedge against risk.

Finally, Cash-Neutral structures are often rare beasts in the industry, and typically are only sustainable in ecosystem-focused partnerships where partners work towards mutual gain (e.g. through setting of standards).

Bringing Partnerships Together

All of these different models can work in concert, and should provide a solid foundation for your partnership strategy. In the ten years I spent building Gemius S.A. into one of the world’s largest web audience measurement companies, we relied on a holistic combination of these approaches when entering new markets.

Partnership Dimensions

In many of the countries we entered, I would start by identifying the most likely competitor in the marketplace, with a slight preference towards companies whose online audience measurement capabilities were technically and methodologically weaker than ours.

Typically, these competitor/partners already had a strong presence in the local audience measurement market (for example, MediaResearch A.S. (now Nielsen Admosphere) was the television currency in the Czech Republic, Ipsos Szonda was the TV, radio, and print currency in Hungary, Valicon was the print currency in Slovenia, etc.). This meant they had relationships with media sellers and media buyers in their local markets, making them ideal channel partners for us.

Furthermore, as established research businesses in their markets they brought supply assets to the table (e.g. existing studies that could serve as structural/establishment surveys in the marketplace) or capabilities (know-how, infrastructure, process) in conducting local research.

Meanwhile, Gemius brought its sophisticated online audience measurement capabilities (methodology, technology, multinational experience, etc.) to the table, which in turn helped our local partner/competitors leapfrog other competition without needing to the invest millions of dollars (and years of development effort).

And both partners brought their experience, credibility, and philosophies to the table, helping to provide Ecosystem benefits that helped everyone.


These partnerships – some of which are still going strong today, over a decade after they were initially developed – were key to both partners’ success. And that is because they were structured with an understanding and respect of the value each partner brought to the table, and because both partners invested heavily in building a healthy, productive working relationship (i.e. constructively working through problems and challenges as they arose).

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I’d love the chance to discuss how you’re approaching partnerships your business might benefit from partnerships, or to help you build a more robust partnership strategy:

  • If you’re at the ARF Re:Think 2016 conference this week, please ping me on Twitter @InsightIndustry.
  • If you’re not at the conference, then feel free to reach out directly or on LinkedIn.
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