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Credibility In Short Supply In The Digital Asset Management Research Report Market

by Ralph Windsor on May 10, 2016

Near where I live in North London, there are a large number of takeaway kebab shops.  One premises which comes to mind (with reference to the topic under discussion) has written on the sign above its door: “Probably the best kebab in the UK”.  Another competitor over the road has countered with “The best kebabs on the planet” (plus additional tick symbol for added effect).  Apparently, others have noted this epic battle between these two titans of the North London fast food market also.   It is some time since I last consumed a kebab (and based on prior experiences, I hope it will be an even longer period before I repeat the exercise) so I will have to take the author’s word for it on the vexed question of which venue offers the superior post-drinks, Friday night supper.

The North London kebab shop scene has remarkable similarities with the spate of DAM research reports published recently.  They also seem to be eager to out-do each other with bombastic claims.  Based on a few updates I have read on Twitter recently, I don’t think I am the only one to wonder about them.

Last year, one research firm based in Pune, India declared that the DAM market would be worth $4.12bn by 2019.  A year later, their 28.67% CAGR (Compound Annual Growth Rate) prediction had been raised to 30.6% for 2020 with a valuation $5.36bn.  A week ago, another research firm, who (in a similar vein to the aforementioned kebab vendors) also happen to operate across town in Pune as well are predicting it will be $7.48bn by 2024.  According to their numbers, by 2024 the DAM industry will be worth more than the entire $6bn GDP of Monaco, despite the presence of the Monte Carlo resort (including its casino) and some of the most expensive property in the world.

I don’t buy into these predictions and I contend that anyone who accepts them at face value (and makes key decisions using them as a primary research source) is taking an unacceptable risk.  That should also include trade journalists who want their articles about DAM to have some credibility. I am aware of the turnover of a number of pure-play DAM vendors and let’s just say they are really going to have to put in the hours to transform all this from irrational over-exuberance into cash cash in the bank, so they should all cancel those summer holiday plans for the next few years and invest heavily in machinery for the production of caffeinated beverages (which could be where the real growth opportunity in DAM lies).

I strongly suspect a lot of double-counting of revenue from larger vendors who offer DAM, amongst other solutions has gone on here.  As such, I note that several of the companies cited as being ‘major players’ in DAM offer a range of enterprise software in addition to Digital Asset Management (plus other non-technology business interests too, in some cases).  I also question how many of them are really ‘major players’ and in fact are more like ‘major brands’ who just happen to offer DAM software.

In both cases, the publishers of these reports also service many other markets across lots of verticals.  As well as ambitious North London kebab shops, a further comparison which could be made is with generic review sites and their treatment of DAM software which I discussed on DAM News a couple of months ago.  Since then, I have had email correspondence from a number of vendors who were also dubious about the business model and practices employed by these sites.  I suspect something similar has taken place with these research reports: the up-tick in demand for DAM has been noticed and some well-worn content-factory production processes utilised to create (at low cost) a fairly generic product which can be rapidly marketed to take advantage of the current trend.  It also seems quite likely that there has been a fair amount of homework copying going on too, where material from one report has been replicated, re-written and presented as original research.

Unlike the review sites, they are not free, nor even cheap and (as is common practice for a lot of analyst reports) they have licences based on the number of the number of users with higher fees for organisation-wide options.  ROI inflation has been discussed at length on DAM News before so it doesn’t seem at all unlikely that the same thing happens with research reports.  For anyone who questions this, ask yourself what kind of demand is there likely to be for a report on a technology market with pedestrian levels of growth?  Big numbers with charts heading upwards in a 45 degree (or higher) trajectory generate interest and help to sell research so there is a built-in bias towards inflating the size of the opportunity.

I gather that some customers who buy lots of reports have bulk-purchase agreements where they pay a fraction of the list-price, providing they meet a minimum annual commitment.  If you cannot find an alternative and the cost of hiring a consultant to carry out some bespoke research for you is prohibitive, I would at least ask for a substantial discount because you will almost certainly get it.  I know one of the companies discussed cut their fees by 50% recently, so I doubt these reports are exactly flying off the shelves at present.

I need to make it clear there are a number of other analyst research reports available elsewhere which are of a far higher quality, but whoever is offering them needs to have some demonstrable specialism and track record in our subject.  In addition, while the ‘thud factor’ should never be the key criteria for buying a report, if you are being asked to hand over thousands of dollars of your organisation’s hard-earned funds for what is essentially a document, it needs to be of a length which suggests it took more than a day or two for the authors to assemble.

I certainly acknowledge that there will be more digital assets in circulation over the next few years.  The range and scope of uses they are put to will also expand significantly, however, I do not agree with the ‘hockey stick’ growth numbers being suggested.  Just as happened with web/internet technologies and the debacle which was the dot com era, there might well be some extreme ‘volatility’ along the way, which is a code-word economists use to indicate that a few unfortunate people who over-played their hands are likely to take a bit of a hiding.  As ever with this kind of stuff, if it looks too good to be true, it probably is.

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