2021 Events and What They Mean for 2022
As 2021 comes to a close, we find ourselves wondering what just happened to the year. In many ways, it felt like a compressed extension of 2020, the year when all heck broke loose. Confusion over timelines is our new norm. Has the pandemic really been with us for nearly two years? And was its impact truly worse this year than last?
Is it really true that vaccines have only been around at any scale for a little over six months? How many variants and waves have we had? Amid this confusion, we keep waiting for the government to make its moves and wonder when we’ll face economic fallout. We keep telling ourselves the very real signs of inflation we see today are simply a mirage.
Key Announcements
With all this in mind, we press on and make sense out of the non-sense so we can keep Moving Beyond Ambiguity — Outsell’s 2022 meta-theme. At times like this, we find no better way of understanding our world than looking back across the multitude of announcements that data and information solutions providers made in 2021 to read the tea leaves and what they portend. Here are the most important announcements of 2021 and why they matter.
The Pandemic’s Fallout Took Hold
Across those information markets most directly impacted by the pandemic — think travel, events, and retail — the ramifications of COVID-19 began to have long-term effects. Providers that hunkered down in 2020 to weather the storm now realize that cleanup will take many years, and the approach necessary might be different than the one taken under more favorable skies.
We see this in Informa’s announcement that it would spin off properties across its Informa Intelligence division. The decision to divest that division might have come as a surprise to some — after all, it was the events business within its B2B Markets division that bore the brunt of a pandemic-fueled collapse. Yet, if we’ve learned anything from the COVID-19 impact, it’s to stop thinking in straight lines. Needing to sell off some assets to shore up the house, Informa had little choice but to go this route. The margins in its Academic division are simply too strong to let go, and selling B2B Markets without a recovery in events would amount to a fire sale.
The data and information providers making these hard choices must look at their own operating environments and decide if their new focus — driven by need more than strategic choice — will require additional changes. And for those on the outside looking in, such realignment creates opportunity. Given the thirst for all things data, we anticipate that some elements of Intelligence will arouse real interest and, likely, some will fall to fierce competitors. Informa is not alone in this. Across our industry, other data and information providers are starting to do the same — opening opportunities for expansion — assuming strategic buyers can afford them at the time.
This leads directly into our next essential area.
The M&A Market Remained White Hot
Outsell identified 810 deals across our industry since the start of the year — a 45% increase over 2020, a figure with many implications. Acquisitions like LSEG’s purchase of Refinitiv make us wonder: How big is too big? We’ll be watching to see at what point these behemoths become too bulky to move and suffer from a lack of agility. Refinitiv, with a reputation as “the largest FinTech company,” may be hard-pressed to maintain its ability to innovate. Will other deals of this size be the same? Ultimately, it will come down to how the firms involved manage the integration.
In parallel, the rationale for these deals is often strong as our industry realigns how it creates and delivers value. Take, for instance, the merger of S&P and IHS Markit, which points to the opportunity in combining complementary offerings in a way that extends the value of both (in this case, merging the power of desktop research with the wealth of alternative data). We anticipate more of this type of M&A between analytics platforms and data providers to corner particular markets with unique insights.
Another example of this trend is found in the acquisition of ProQuest by Clarivate, which positions it as a leading player in the provision of both curated content resources and enterprise software, so it can serve the entire research value chain from early-stage research onward. So, too, was Wiley’s acquisition of Hindawi to propel its OA growth.
NPD’s acquisition by PE shows the fierce competition for great data-driven assets and how rare the dying breed of a founder-led business of significant size is in the market. Like IDG, JD Power, and a few more before it, most others take the “hare” route, relying on multiple funding rounds with low or no profits and ridiculous valuations. Perhaps Bloomberg and Holtzbrinck are the last assets standing. We’ll watch FiscalNote and a few of the new breed to see whether old-fashioned financials have the last laugh.
Opportunities Abounded for Picking Up Tuck-Ins
Amid the realignment, assets get spun off for both greater focus and to address regulatory concerns. Given the volume of rollups and combinations underway, this means a plethora of small spin-offs are happening today, allowing others in the industry to up their games at a lower cost. For instance, take how Dow Jones has stayed in the game by picking up key divestitures from S&P and IHS Markit, like OPIS and PetroChem. We expect similar actions circling in 2022 around Informa’s spin-outs.
The Prominence of All Things Data Continued to Rise
Strategically, Clarivate’s realignment is all about becoming a data business, focusing on how data is interrogated and put into the workflow through machine intelligence rather than human research. We also saw this in the moves by B2B Media provider IDG: The company made a series of moves to put up walls around its proprietary data. The move signaled that B2B data was not going to be left to ZoomInfo, Bombora, and the other tech platforms out there. Big media was invested in keeping their data in their own walled gardens and, as such, this was the biggest announcement in the B2B media space this year.
Demonstrating that the value of data can be commercialized in many ways, we saw the likes of Demandbase acquiring InsideView and Demand Matrix to do a data, workflow, and services rollup to take on D&B and ZoomInfo. The new company’s modular go-to-market cloud approach creates multiple entry points, so customers don’t have to lock themselves into a single platform, pay for features they won’t immediately need, or toss away existing tools and data relationships. In other words, some across the industry see equal opportunity in removing walls. Providers need to look closely at their market dynamics to see which approach — closed or open — will yield the greatest value for their firms.
Partnerships Got Creative
As the pandemic created a host of new needs and market opportunities, we saw arise what might have first appeared as strange bedfellows. Take, for example, Equifax partnering with AWS Data Exchange and Snowflake Data Marketplace to make its unregulated data available in new ways. Why would a well-established provider of data with a long history of serving clients start directly utilizing a generic data marketplace? The firm saw how its data could yield a new level of insight into consumer financial behavior for users — enhancing customer targeting, decision-making, and risk mitigation — and decided it could not get there by itself. Providers across the data and information industry must look for similar arrangements to expose their underlying data assets in new and unique ways.
The Government Found Itself Funding ReInvention
When the government thinks a sector need be reinvented, we have reached a low point, yet we saw this occur multiple times. For instance, consider the announcement that the British government research funding body UK Research and Innovation (UKRI) had awarded a grant of £650,000 to Dr. Elizabeth Freeman at the University of Cambridge to develop Octopus, a system for publishing research articles as a searchable record of academic results. The commercial sector is seen by many as inadequate to the challenges of technology or communication, and markets are increasingly taking direction from non-commercial participants. This is happening in sectors like standards as well.
ESG Became the Latest Golden Child
If prior years were about making bold statements about what was being done in AI or, to a lesser degree, blockchain, ESG became the new number one marketing hype in 2021. Fortunately for the earth, some of this hype was real.
An example was Bloomberg’s move to spearhead net zero in financial services. Bloomberg launched its NetZero Pathfinders platform to help companies play their part in supporting climate change. This was a major step in advancing ESG solutions beyond reporting on the corporate impacts on the environment and toward how companies can save it.
We saw other providers boost ESG capabilities as well; the ones that do this in meaningful ways will benefit in the coming years. Meanwhile, for those of us watching, we expect the ability to discern true advancements within ESG to be a bit more challenging near term as the hype continues to rise and the market experiences an inevitable shake-out.
Big Tech Came in from the Cold (Sort Of)
Google and Facebook’s copyright deal with French news publishers to pay for their news content perhaps signaled a change among the big tech firms. Could this be the start of a new direction, where aggregators pay publishers for reusing their content online? Can we expect other countries to follow?
For its part, Twitter partnered with AP and Reuters to address misinformation on its platform. Fact-checking partnerships such as this is also critically important, as this helps improve the reliability of the information consumed by millions of users daily. Yet, in the grand scheme of things, these moves remain minor ones for a group of companies that have brought many advances but also wreaked havoc in a myriad of ways. Is this a sign of change or a small token to appease? We worry that it’s the latter unless outside pressures remain, and we continue to believe that regulation has a place with these behemoths.
The Death of Content Containers Continued to Spread
Long under pressure, the idea that content containers could withstand digital transformation continued to break down, even in those markets that had been relatively immune. We saw this in the education market, with Argos Education’s new Sojourner platform acting as a marketplace, providing the opportunity for any provider of educational learning objects to sell these resources on an object-by-object basis. This moves the textbook market into a position much like the journals market in that journals and textbooks are breaking down as containers, with real value coming from individual articles and data (for journals) and from learning objects (for textbooks). Componentizing content remains an imperative.
A Crisis in Talent Spurred New Approaches
In early 2021, Multiverse raised a $44 million Series B round (the largest venture round ever for a UK EdTech company) and followed that up later in the year with a $130 million Series C round. The funding highlights the burgeoning opportunity to solve the talent crisis in new ways. Knowing how to best identify, source, and channel individuals into our workplaces will remain a critical need in the coming year as the pandemic-fueled Great Resignation continues to impact the industry. We expect to see startups emerge that solve this talent shortage in novel ways. In the interim, we expect greater reliance on acqui-hires: M&A driven solely by the desire to bring in talented teams.
And the Bots Kept Marching On…
One relief point for the talent crisis is the automation that’s well underway. Take, for example, Morningstar’s deployment of bots to create fund research. Morningstar has been using robots to create analyst ratings on thousands of small funds; now the financial information provider is scaling up its robotic content authoring to create actual fund research.
Or consider Google’s spin-off of DeepMind into a standalone company: Isomorphic Labs. Deep Mind made the news in 2020 with its powerful AI-driven technology for protein folding, which is already impacting research techniques and practices in the life sciences. Perhaps most ambitious was the Salesforce acquisition of Narrative Science, an automated authoring platform that will be bundled with its data visualization tool Tableau. The stated rationale was to drive AI-generated insights; we wonder how long it’ll be before these bots start to close sales.
Implications for 2022
With all these changes, we don’t expect the pace of activity to slow in 2022. Amid the accelerated pace of digital transformation caused by the pandemic, 2021 saw dramatic changes that will only fuel more of the same. The great work-from-home / work-from-anywhere shift continues to drive changes in how we organize, produce, and monetize. The talent crisis continues to grow as wealth levels rise and tolerances shrink — and this will likely drive a greater portion of the workforce out for good. And those changing mindsets are elevating ESG to higher focus.
When will M&A cool? We doubt it will be next year. With trillions of dollars in dry powder still out there, we only anticipate the market froth accelerating in 2022. It simply has to get spent (er, “invested”) even if rational models seem in lower supply. But if interest rates rise — and they likely will — we’ll see companies overextended where the silly money was in play.
Which brings us to the one item we are certain about: We love the work we do in supporting all of you. Here’s to a joyful, healthy, and prosperous 2022!