New York – In February 2008, Integrity Research Associates released a study on the expert network industry. At the time, we estimated that the industry to contain about 25 providers. Of course, as is the case in many industries, a large portion of revenue of the industry emanates from a small number of participants. In the expert network space, Gerson Lehman Group attracts the lion’s share of the revenue. As indicated in that report, GLG was about 2/3rds of the entire industry on an estimated revenue basis at the time of writing.Since the report was released the size of the expert network research industry has expanded for two reasons. The first reason is that we have found more firms than the 25 providers we identified in our report. Up to and including 2006, we now estimate that the number of firms in the EN space was over 30. Second, the entry of new EN firms and existing firms that have rolled out EN services has grown rapidly. Since the end of 2006, we estimate that the number of ENs that started up is about 14 making the total number of ENs we have identified 45.
Of course, the EN model has also changed somewhat. Classically, an EN was pretty much the Gerson/Vista model, where the clients were typically money managers with questions about industries, products and /or services to test or refine investment hypotheses. In this incarnation, the EN has a staff of analysts that match experts to investors and then allow the client to talk to the expert. After the call, the EN will circle back with the client to gain feedback on the appropriateness on the expert. This model lives and dies according to the quality of the match that is made, so significant screening is done to ensure a good match.
However, the classical model is not the only way to leverage experts in an informational sense. Some ENs serve the industry they are focused on. An example of this is the Sermo network that is composed of doctors sharing treatment information. Other networks might be composed of academics. Or some ENs might look more like crossing networks. These networks connect experts and clients through an electronic match and typically cost far less than the more tailored matching of the classical ENs. These crossing networks are able to serve many of the smaller hedge funds and asset managers that are not able or willing to engage a full service EN.
Almost everyone has some form of a network of experts. For example, one’s brother-in-law may provide guidance on car purchases because he has a subscription to Road and Track. So Integrity’s definition of an expert network is a company that provides clients with direct access to experts with deep domain knowledge. Conversations are private and confidential between the client and the expert and are not monitored by the EN.
Some of the newer Expert Networks are CognoLink (European), Tribeca Insights (real-time custom research), Engage Experts (mix EN and business consulting), The Shore Council (from iNano Capital Markets), and Reidel Global Experts (new product from David Reidel covering emerging markets).