23 Oct 2024
The Russian Dolls of the Survey Industry
In our recent blog post, we sized up the $1.1 Bn global B2B survey industry, by estimating bottom-up the 50 main vendors that users of Inex One (and the vendors themselves) talk about. But this number is inflated. Here’s why.
Survey Firms: Rivals by day, Suppliers by night
When I started researching the survey industry, I was amused by how industry longtimers would call the industry “incestuous”. Turns out survey companies habitually buy survey sample from each other.
In theory, that’s fine (your own panel has almost all the respondents you need, and you buy the last 200 from Patrick’s panel). In practice, it opens up for various risks that the survey industry is grappling with. It also complicates things for entrepreneurs who try to size the global B2B survey industry, but we’ll manage.
Credit where credit's due
A very public example of how common 3rd party sampling is came in the summer of 2024, when Dynata filed for chapter 11. Dynata is the market leader for surveys in the PE/ consulting space, so these numbers are highly relevant. The bankruptcy filing included a list of the 10 largest unsecured creditors. These are companies that have given something to Dynata, but weren't paid yet. The word “unsecured” means that they have no collateral; they’ve already done their part of the transaction and are waiting for the payment back.
Seven of these companies were other survey companies (see below):
Dynata is buying survey respondents from these companies, for surveys that it sells to its clients. This is completely normal!
Now, what do these amounts mean? In total, Dynata owed $6.3m to its top-10 unsecured creditors, of which $4.9m (78%) was to survey firms. Dynata had $39m in total accounts payable (page 190).
If we assume that the 78% is representative also for survey sample (whether internal or 3rd party) as part of total accounts payable, then Dynata would have owed $30.2m for sample at the time of bankruptcy.
In that case, Dynata gets ~16% of its sample ($4.9m / $30.2m) from 3rd party sample suppliers. The 16% could be either:
higher as we only account for the debts to their top-7 sample suppliers. There might be more external sample suppliers in the total $39m accounts payable.
lower, if survey sample is a larger share of total accounts payable, and all of it - except the top-10 unsecured - are to proprietary panelists (in which case 3rd-party is 4.9/32.7 = 13%). It could be even lower of course, if I misunderstood Dynata's accounting.
Whatever the number is, buying 3rd party sample is completely normal and common practice - after all, they're going the extra mile to help their client complete their survey. But it does complicate things.
All’s well when we all sell
We’ve seen that our headline $1.1 Bn industry revenue number is inflated, as survey companies buy sample from each other. When we size them individually and add up the total, we get a number that is larger than the amount the actual clients (real-world companies) are spending on surveys.
We couldn’t untangle the 3rd party sampling in all firms, but simply excluded companies that primarily resell 3rd-party sample (e.g. EMI, RepData). The companies that we included all have a meaningful part of their total sample being proprietary.
When building the Inex One survey platform, we were wary of the survey industry’s quality crisis. So we looked for companies that had their own panel and could explain in plain language how they sourced, qualified, and surveyed the respondents. Given our background, expert networks doing bespoke recruitment was our first port of call. These expert networks included BWG Strategy, Maven and IDR. Over time, we got to know other quality survey providers with different primary methodologies, including social media/river sampling and insights firms such as NewtonX, Potloc and GrapeData, panel companies, and CATI firms like Unimrkt and Ronin.
When you engage a survey provider on Inex One, they guarantee the quality of their respondents. We partner with survey providers who primarily use their own panel, and complement with 3rd party panels only if required. If they do so, they will be transparent with you about the process and the sources. This way, you remain in control of where your respondents are coming from and the quality of the research you’re paying for.
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