New York, NY – Close to 60 independent research firms have been financial beneficiaries of the Global Research Analyst Settlement, with less than a half dozen firms receiving the lion’s share of the payments.
Unfortunately for many of these firms, the end of the Settlement is rapidly approaching (August, 2009) and most participants are desperately trying to find ways to offset the loss in revenue that is likely to occur at that time.
One firm that did quite well in the Global Research Settlement has taken an unusual approach to addressing this problem. London-based IIIR, has decided that the best way to generate more revenue from its investment research is to give away its research reports.
In the past few weeks, IIIR has made its fundamental research reports on close to 400 international companies available to investors free of charge if they register on www.researchoracle.com. The firm is now trying to build up the website’s traffic with the ultimate purpose of selling advertising on the site. The increased traffic is likely to come from getting brokers to link to the site.
In addition, IIIR is advertising its other research services to readers on Research Oracle, including its global IPO subscription service, Global Equity Offerings (GEO) Monitor, and a new research service on Indian stocks.
However, we were initially skeptical when management at IIIR explained their plan to us. After all, why would clients — particularly institutional investors — be willing to pay for research that is offered free to the masses? Hasn’t this been one of the problems facing the sell-side in recent years?
The answer is simple. Buy-side investors would not pay for the research reports, but rather to access to the intellectual expertise of the firm. This includes access to short-term trading strategies, access to IIIR’s analysts, access to IIIR’s financial models, access to company management, and access to custom research.
IIIR’s new business model is consistent with various trends we have seen in recent years where the buy-side has sharply decreased the value they attribute to sell-side research reports. In its place, buy-side analysts and PMs are paying for access to company management, access to analysts, access to sales coverage, and access to conferences.
Of course, this step is a rather bold one as no alternative research provider has tried to give away its research in an effort to generate advertising revenues. Nor has an independent research firm ever tried to segment its research offering by trying to sell access and give away their reports.
Despite this, it just might work. After all, institutional investors have made their preferences known time and time again. Individualized expertise is much more valuable than standardized research. The research report really has become merely an advertisement for a research provider’s real asset — the knowledge and relationships of their analysts.
The following is the Press Release for this new offering.
Independent International Investment Research plc
Launch of free-to-view research product
The Group today launches “The Research Oracle(TM)” a new free-to-view research product, which is available via – www.researchoracle.co.uk.
The Group has launched the product as it believes that there is a significant global audience of retail equity investors that do not require the full suite of institutional services offered by the Group. In addition, the Directors believe that, with the recent milestone achievement of providing coverage for 400 global companies together with a ranking by Investars in the top-three long-only research providers over one, two, three and four years, our library of content has significant value. The Group’s library, which will be progressively rolled out, runs to more than 10,000 pages of up-to-date research and the typical audience for this content is comparable to that of global premium publications such as the Financial Times, the Wall Street Journal, the Economist and Forbes Magazine. These publications typically achieve advertising rates in the order of US$90-120 CPM (per ‘000 impressions).
The new website, www.researchoracle.com, will publish the Group’s content concurrently with its professional distribution channels including Reuters, Thomson, Bloomberg, Factset, Capital IQ, and BNY Convergex, under a licence permitting use by a non-professional audience only. The Group has entered into an arrangement with an advertising sales network provider to source advertising clients and in addition, has recruited a dedicated media sales manager who will be responsible for developing site traffic and advertiser relationships. The Directors believe this product is innovative in that it combines the advertising revenue model, which has been successful in other business areas, with an equity research product. The Directors also believe that the launch of this product will generate additional revenues to those currently derived from the Group’s existing institutional clients, since those clients require delivery of research through specific channels.
The Research Oracle™ is designed to provide a free platform and delivery portal for the Group’s products and services, as well as a high-traffic showcase for the Group’s complete product suite The site will allow retail and institutional investors to subscribe for the complete suite of the Group’s products which comprise:
GEO Monitor™, our service which tracks and provides preliminary pre-IPO research on all non-US upcoming IPO’s from around the world;
PDF-based (advertising-free) Global Research reports for internal use or for redistribution by professional/institutional clients;
- The financial models that drive the ratings and recommendations embodied in the reports;
- Access to the analysts responsible for the reports;
- White-labelled or co-branded reports;
- Bespoke research services;
- Alerts registration, for notification by email upon any update of a company in the registrant’s interest list; and
- Also being launched today, a short term actionable trading strategies product which includes a subset of the companies currently under fundamental research coverage.
In order for the Group to be able to provide the short term actionable strategies product, it has entered into a collaboration agreement with TradingCentral SA, a highly regarded Paris-based firm. Under the terms of the agreement, TradingCentral SA will provide a short-term (5-30 day) view of opportunities available in a subset of the stocks covered by the Group in our usual 6-24 month investment horizon. TradingCentral’s recommendations are tracked and evaluated by Investars and their complete short-term long recommendation portfolio, from which the coverage for our site will be selected, has achieved a ranking similar to that of IIR’s own long-term long portfolio. This short-term actionable trading strategy product will be provided to existing and new subscribing clients at no additional charge.
The Group is pleased to begin 2008 with the announcement of these exciting new services and hopes to announce further product launches in the near future.
Tel: 020 7232 3090
John East & Partners Limited
Simon Clements/Simon Fox
Tel: 020 7628 2200