Dynata's Debt and the Data Quality Revolution

On May 22, Dynata filed for Chapter 11 bankruptcy, following weeks of rumors that the industry giant could no longer service its massive ($1.4B) debt.

For those not as familiar with the market research world, Dynata claims to be and possibly is the “largest first party data platform in the world.” “First party data” means that people like you and me willingly share opinion and behavioral data with the company, which passes it on to clients to help them better market their products and services. The company claims some 70 million participants in its survey and data-tracking network.

In practical terms, if you want to survey a niche population of 500 US consumers, Dynata is likely to be a viable option and perhaps the cheapest one. With such a large network of potential research participants, studies are supposedly viable for Dynata that are not for many smaller survey sample purveyors. Want to survey Hispanic health care workers in Nashville? If anyone can do it without additional custom recruiting, it’s probably Dynata. Whether those in Dynata’s network who claim to be Hispanic health care workers in Nashville actually are is another story, and whether Dynata is rigorous in verifying panelists’ identities is also another story, one we will tackle on another day. The point is, Dynata is a massive player (they have 1,460 employees), and if they were to cease to exist, there would be major implications for the market research world, right? It’s just hard to say exactly what those might be.

So, what happened? Word is that the company simply had too much debt, having been acquisition-happy in recent years, and high interest rates were making it increasingly tough to pay off lenders and keep the doors open. I find that explanation to be plausible but also one that’s convenient for Dynata’s current leadership.

The company’s own filing, however, admits a “business slowdown” due to a “steep drop in M&A deals, post-pandemic struggles to rebuild its base of survey-takers and a failure to keep up with rivals.”[i] It should be noted also that Moody’s downgraded the company’s rating in September 2023 because of “weak earnings and negative cash flow.”[ii]

The point about keeping up with rivals is interesting considering the company’s past acquisitions and its 2022 Greenbook GRIT report designation as the most innovative company in market research. Dynata’s own CFO, Steven Macri, however, said “Dynata was slow to deploy a new product that connects its clients directly to panelists.”[iii] Is the Samplify platform not doing well? If I had to guess, I’d say this is Dynata lamenting that they didn’t buy P2Sample and its programmatic sampling technology before Cint did in 2019.

Dynata has proposed a deal that will allow the company to write off $520M in debt in exchange for all of the company’s equity and the implementation of a thirty-six month “transformation plan.” The company also secured $81.5M in new financing. The company claims that if its bankruptcy plan is accepted in court in early July, the company can maintain business as usual and even achieve growth in 2025.[iv]

Word is that the company is, in fact, telling its clients that nothing is going to change, that it is business as usual. One might wonder the extent to which this is going to be possible, however, when the company still faces $900M in debt and has some very disgruntled high-level staff whose equity just got wiped out. Not to mention the ominous-sounding transformation plan. Will there be layoffs? Corners to be cut when it comes to core services?

Keep in mind, also, that well under fifty percent of companies that enter Chapter 11 bankruptcy survive. What happens if Dynata just…doesn’t make it?

Those feeling the biggest impact would, of course, be Dynata’s employees, of which there are almost fifteen hundred. It would be a bad day for the industry if there were layoffs of any size but especially if they encompassed a majority of Dynata’s operations.

If you are a panelist or otherwise a member of Dynata’s first party data network, not much would change for you. If Dynata’s traditional panels were to dissolve, you could just join one of many other networks and perhaps make more money on better incentives elsewhere. Likewise, if you are providing Dynata with internet behavior data.

That leaves two other key groups to consider—market research buyers and other survey sample providers.

Market research buyers have put downward pressure on survey sample pricing for several decades now. Dynata has not been alone in facilitating this, though some have implied that Dynata’s current woes are a comeuppance of sorts for this. Commentors on LinkedIn, such as Amplifi Consulting’s Finn Raben, have referred to a “race to the bottom,”[v] implying that when sample prices go down, survey data quality goes down too—a contention with which I agree. Cheap panel sample has been a problem, but widespread use of cheaper programmatic sampling has been a major culprit too, and the specter of synthetic sample looms with its premature promises of cheap, fast, and quality insights.

While a Dynata exit from the market could help spark a data quality revolution, that is not likely to happen without some coordinated effort. As Raben noted, ceding credit to FlexMR CEO Paul Hudson,[vi] market research could take the opportunity to impose something like an “airport tax”—a baseline fee that guarantees survey sample is sold at the minimum price required to compensate survey-takers fairly and implement rigorous anti-fraud measures. Of course, the industry cannot impose a tax on all survey projects (it’s not a government authority), but an organization like the Insights Association could have some sort of guild or accreditation program where, at the least, survey sample is sold by its members in accordance with key criteria, such as that all online surveys pay respondents at least five cents for each question answered.

It's a nice thought, but I don’t see the Insights Association getting involved in such a heavy-handed way.

What I hope will happen at the least is that many market research buyers will finally see the light and agree to pay more for higher quality sample. Not all will be savvy enough to understand the need to do this, but if, say, a third of buyers started paying higher prices for sample, that would help quality-focused sample providers survive, and maybe one day there will be an even broader data quality revolution in market research. Most buyers, however, will continue to use low-quality programmatic sampling data, and some will gamble too much on synthetic sample. Low prices are addictive. A majority of market research buyers, perhaps, will always chase them, quality-be-damned. Hence the calls for industry-level action.

I guess what I’m wondering is how any of this would be different if Dynata were or were not in the picture. Certainly, if Dynata sold its panel to, say, Cint, the sample market would be less competitive and even a small data quality revolution might be stymied. I’m not convinced that’s true though. It’s possible that Cint could be free to raise prices, and that could kickstart an upward trend in pricing that benefits smaller players.

So which is it? Would Dynata’s exit from the market lead to more widespread use of programmatic and synthetic sample, or would it boost smaller, higher-quality panels? Could it be both?

I think the point is moot, as it’s most likely that Dynata will pull through, losing some market share along the way. Maybe they will raise their online panel sample prices. Maybe they won’t. People will continue to experiment with synthetic panels, and, I hope, there will still be a quality revolution lead by a new wave of smaller quality-focused panels. In other words, change will continue to happen but more slowly. And so, I see Dynata’s bankruptcy as an opportunity for smaller panels but I don’t see a big power vacuum/power grab or realignment of forces in the market research world. Programmatic sampling will continue to be popular, and synthetic sample is coming one way or another. The industry will not stop looking for tech solutions to management problems.

At the end of the day, some Dynata employees are getting screwed—losing equity and potentially facing layoffs. That might, unfortunately, be all that happens, though some on LinkedIn have pointed out that any opportunity to keep a discussion of online survey data quality front and center is a good thing. Clients have been mislead about survey data quality for too long. It’s time to focus on new sample providers. It’s time for a change.

CW

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[i] Russ, Hilary. “Data Research Firm Dynata Hits Ch. 11 With Over $1B Debt.” Law360.com. May 22, 2024. https://www.law360.com/bankruptcy-authority/articles/1840035/data-research-firm-dynata-hits-ch-11-with-over-1b-debt

[ii] Kelce, Ayse and Madalina Iacob. “Dynata exploring bankruptcy amid looming maturities and unsuccessful sale.” Ion Analytics. May 7, 2024. https://ionanalytics.com/insights/debtwire/dynata-exploring-bankruptcy-amid-looming-maturities-and-unsuccessful-sale/

[iii] Russ, op cit.

[iv] Ibid

[v] https://www.linkedin.com/posts/finn-raben_dynata-exploring-bankruptcy-amid-looming-activity-7198792872131731459-izYa/

[vi] Ibid