If you’re involved in genetic genealogy, you’ve probably noticed the recent announcements by both 23andMe and Ancestry relative to workforce layoffs as a result of declining sales.
In January, 23andMe announced that it was laying off 100 people which equated to 14% of its staff.
Following suit, Ancestry this week announced that they are laying off 100 people, 6% of their work force. They discuss their way forward, here.
One shift of this type can be a blip, but two tends to attract attention because it *could* indicate a trend. Accordingly, several articles have been written about possible reasons why this might be occurring. You can read what TechCrunch says here, Business Insider here, and The Verge, here.
Depending on who you talk to and that person’s perspective, the downturn is being attributed to:
- Market Saturation
- No Repeat Sales
- Privacy Concerns
- FAD Over
Ok, So What’s Happening?
Between Ancestry and 23andMe alone, more than 26 million DNA tests have been sold, without counting the original DNA testing company, FamilyTreeDNA along with MyHeritage who probably have another 4 or 5 million between them.
Let’s say that’s a total of 30 million people in DNA databases that offer matching. The total population of the US is estimated to be about 329 million, including children, which means that one person in 10 or 11 people in the US has now tested. Of course, DNA testing reaches worldwide, but it’s an interesting comparison indicating how widespread DNA testing has become overall.
This slowing of new sales shouldn’t really surprise anyone. In July 2019, Illumina, the chip maker who supplies equipment and supplies to the majority of the consumer DNA testing industry said that the market was softening after a drop in their 2019 second quarter revenue.
Also last year, Ancestry and MyHeritage both announced health products, a move which would potentially generate a repeat sale from someone who has already tested their DNA for genealogy purposes. I suspected at the time this might be either a pre-emptive strike, or in response to slowed sales.
In November 2019, Family Tree DNA announced an extensive high-end health test through Tovana which tests the entire Exome, the portion of our DNA useful for medical and health analysis.
In a sense, this health focus too is trendy, but moves away from genealogy into an untapped area.
23andMe who, according to their website, has obtained $791 million in venture capital or equity funding has always been focused on medical research. In July of 2018 GlaxoSmithKline infused $300 million into 23andMe in exchange for access to DNA results of their 5 million customers who have opted-in to medical research, according to Genengnews. If you divide the 300 million investment by 5 million opted-in customers, 23andMe received $60 per DNA kit.
That 5 million number is low though, based on other statements by 23andMe which suggests they have 10 million total customers, 80% of which opt-in for medical research. That would be a total of 8 million DNA results available to investors.
Divide $791 million by 8 million kits and 23andMe, over the years, has received roughly $99 for each customer who has opted in to research.
We know who Ancestry has partnered with for research, but not how much Ancestry has received.
There’s very big money, huge money, in collaborating with Big Pharma and others. Given the revenue potential, it’s amazing that the other two vendors, Family Tree DNA and MyHeritage, haven’t followed suit, but they haven’t.
Additionally, in January, 23andMe sold the rights to a new drug it developed in-house as a potential treatment for inflammatory diseases for a reported (but unconfirmed by 23andMe) $5 million.
It’s ironic that two companies who just announced layoffs are the two who have partnered to sell access to their opted-in customers’ DNA results.
I’ve been asked several times about my thoughts on this shift within the industry. I have refrained from saying much, because I think there has been way too much “hair on fire” clickbait reporting that is fanning the flames of fear, not only in the customer base, but in general.
I am sharing my thoughts, and while they are not entirely positive, in that there is clearly room for improvement, I want to emphasize that I am very upbeat about this industry as a whole, and this article ends very positively with suggestions for exactly that – so please read through.
Regardless of why, fewer new people are testing which of course results in fewer sales, and fewer new matches for us.
My suspicion is that each of the 4 reasons given above is accurate to some extent, and the cumulative effect plus a couple of other factors is the reason we’re seeing the downturn.
Let’s take a look at each one.
Indeed, we’ve come a very long way from the time when DNA was a verboten topic on the old RootsWeb mailing lists and boards.
Early DNA adopters back then were accused of “cheating,” and worse. Our posts were deleted immediately. How times have changed!
As the technology matured, 23andMe began offering autosomal testing accompanied by cousin matching.
Ancestry initially stepped into the market with Y and mitochondrial DNA testing, but ultimately destroyed that database which included Y and mitochondrial DNA results from Relative Genetics, a company they had previously acquired. People in those databases, as well as who had irreplaceable samples in Sorenson, which Ancestry also purchased and subsequently took offline permanently have never forgotten.
Those genealogists have probably since tested at Ancestry, but they may be more inclined to test the rest of their family at places like Family Tree DNA and MyHeritage who have chromosome browsers and tools that support more serious researchers.
I think a contributing factor is that fewer “serious genealogists” are coming up in the ranks. The perception that all you need to do is enter a couple of generations and click on a few leaves, and you’re “done” misleads people as to the complexity and work involved in genealogical research. Not to mention how many of those hints are inaccurate and require analysis.
Having said that, I view each one of these people who are encouraged for the first time by an ad, even if it is misleading in its simplicity, as a potential candidate. We were all baby genealogists once, and some of us stayed for reasons known only to us. Maybe we have the genealogy gene😊
But yes, I would agree that the majority, by far, of serious genealogists have already tested someplace. What they have not done universally is transferred from 23andMe and Ancestry to the other companies that can help them, such as MyHeritage, FamilyTreeDNA and GEDmatch. If they had, the customer numbers at those companies would be higher. We all need to fish in every pond.
Advertising and Ethnicity
The DNA ads over the last few years have focused almost exclusively on ethnicity – the least reliable aspect of genetic genealogy – but also the “easiest” to understand if a customer takes their ethnicity percentages at face value. And of course, every consumer that purchases a test as a result of one of these ads does exactly that – spits or swabs, mails and opens their results to see what they “are” – full of excited anticipation.
Many people have absolutely no idea there’s more, like cousin matching – and many probably wouldn’t care.
The buying public who purchases due to these ads are clearly not early adopters, and most likely are not genealogists. One can hope that at least a few of them get hooked as a result, or at least enter a minimal tree.
Unfortunately, of the two companies experiencing layoffs, only Ancestry supports trees. Genealogy revolves around trees, pure and simple.
23andMe has literally had years to do so and has refused to natively support trees. Their FamilySearch link is not the same as supporting trees and tree matching. Their attempt at creating a genetic tree is laudable and has potential, but it’s not something that can be translated into a genealogical benefit for most people. I’m guessing that there aren’t any genealogists working for 23andMe, or they aren’t “heard” amid the vervre surrounding medical research.
All told, I’m not surprised that the two companies who are experiencing the layoffs are the two companies whose ads we saw most often focused on ethnicity, especially Ancestry. Who can forget the infamous kilt/leiderhosen ad that Ancestry ran? I still cringe.
Many people who test for ethnicity never sign on again – especially if they are unhappy with the results.
Ancestry and 23andMe spent a lot on ad campaigns, ramped up for the resulting sales, but now the ads are less effective, so not being run as much or at all. Sales are down. Who’s to say which came first, the chicken (fewer ads) or the egg (lower sales.)
This leads us to the next topic, add on sales.
No Repeat Sales
DNA testing, unless you have something else to offer customers is being positioned as a “one and done” sale, meaning that it’s a single purchase with no potential for additional revenue. While that’s offered as a reason for the downturn, it’s not exactly true for DNA test sales.
Ancestry clearly encourages customers to subscribe to their records database by withholding access to some DNA features without a subscription. For Ancestry, DNA is the bait for a yearly repeat sale of a subscription. Genealogists subscribe, of course, but people who aren’t genealogists don’t see the benefit.
Ancestry does not allow transfers into their database, which would provide for additional revenue opportunity. I suspect the reason is twofold. First, they want the direct testing revenue, but perhaps more importantly, in order to sell their customer’s DNA who have agreed to participate in research, or partner with research firms, those customers need to have tested on Ancestry’s custom chip. This holds true for 23andMe as well.
Through the 23andMe financial information in the earlier section, it’s clear that while the consumer only pays a one time fee to test, multiple research companies will pay over and over for access to that compiled consumer information.
Ancestry and 23andMe have the product, your opted-in DNA test that you paid for, and they can sell it over and over again. Hopefully, this revenue stream helps to fund development of genetic genealogical tools.
MyHeritage also provides access to advanced DNA tools by selling a subscription to their records database after a free trial. MyHeritage has integrated their DNA testing with genealogical records to provide their advanced Theories of Family Relativity tool, a huge boon to genealogists.
While Family Tree DNA doesn’t have a genealogical records database like Ancestry and MyHeritage, they provide Y DNA and mitochondrial DNA testing, in addition to the autosomal Family Finder test. If more people tested Y DNA and mitochondrial DNA, more genealogical walls would fall due to the unique inheritance path and the fact that neither Y nor mitochondrial DNA is admixed with DNA from the other parent.
Generally, only genealogists know about and are going to order Y DNA and mtDNA tests, or sponsor others to take them to learn more about their ancestral lines. These tests don’t provide yearly revenue like an ongoing subscription, but at least the fact that Family Tree DNA offers three different tests does provide the potential for at least some additional sales.
Both MyHeritage and FamilyTreeDNA encourage uploads, and neither sell, lease or share your DNA for medical testing. You can find upload instructions, here.
In summary of this section, all of the DNA testing companies do have some sort of additional (potential) revenue stream from DNA testing, so it’s not exactly “one and done.”
Health Testing Products
As for health testing, 23andMe has always offered some level of health information for their customers. Health and research has always been their primary focus. Health and genealogy was originally bundled into one test. Today, DNA ancestry tests with the health option at 23andMe cost more than a genealogy-only test and are two separate products.
MyHeritage also offers a genealogy only DNA test and a genealogy plus health DNA test.
In 2019, both Ancestry and MyHeritage added health testing to their menu as upgrades for existing customers.
In November 2019, FamilyTreeDNA announced an alliance with Tovana for their customers to order a full exome grade medical test and accompanying report. I recently received mine and am still reviewing the results – they are extensive.
It’s clear that all four companies see at least some level of consumer interest in health and traits as a lucrative next step.
Medical Research and DNA Sales
Both Ancestry and 23andMe are pursuing and have invested in relationships with research institutions or Big Pharma. I have concerns with how this is handled. You may not.
I’m supportive of medical research, but I’m concerned that most people have no idea of the magnitude and scope of the contracts between Ancestry and 23andMe with Big Pharma and others, in part, because the details are not public. Customers may also not be aware of exactly what they are opting in to, what it means or where their DNA/DNA results are going.
As a consumer, I want to know where my DNA is, who is using it, and for what purpose. I don’t want my DNA to wind up being used for a nefarious purpose or something I don’t approve of. Think Uighurs in China by way of example. BGI Genetics, headquartered in China but with an Americas division and facilities in Silicon Valley has been a major research institute for years. I want to know what my DNA is being used for, and by whom. The fact that the companies won’t provide their customers with that information makes me makes me immediately wonder why not.
I would like to be able to opt-in for specific studies, not blindly for every use that is profitable to the company involved, all without my knowledge. No blank checks. For example, I opted out of 23andMe research when they patented the technology for designer babies.
Furthermore, I feel that if someone is going to profit from my DNA, it should be me since I paid for the sequencing. At minimum, a person whose DNA is used in these studies should receive some guarantee that they will be provided with any drug in which their DNA is used for development, in particular if their insurance doesn’t pay and they cannot afford the drug.
Drug prices have risen exponentially in the US recently, with many people no longer able to afford their medications. For example, the price of insulin has tripled over the last decade, causing people to ration or cut back on their insulin, if not go without altogether. It would be the greatest of ironies if the very people whose DNA was sold and used to create a drug had no access to it.
Of course, Ancestry and 23andMe are not required to inform consumers of which studies their DNA or DNA results are used for, so we don’t know. Always read all of the terms and conditions, and all links when authorizing anything.
Both companies indicate that your DNA results are anonymized before being shared, but we now know that’s not really possible anymore, because it’s relatively easy to re-identify someone. This is exactly how adoptees identify their biological parents through genetic matches. Dr. Yaniv Erlich reported in the journal Science November 2018 that more than 60% of Europeans could be reidentified through a genealogy database of only 1.28 million individuals.
I think greater transparency and a change in policy favoring the consumer would go a long way to instilling more confidence in the outside research relationships that both Ancestry and 23andMe pursue and maintain. It would probably increase their participation level as well if people could select the research initiatives to which they want to contribute their DNA.
The news has been full of articles about genetic privacy, especially in the months since the Golden State Killer case was solved. That was only April 2018, but it seems like eons ago.
Unfortunately, much of what has been widely reported is inaccurate. For example, no company has ever thrown the data base open for the FBI or anyone to rummage through like a closet full of clothes. However, headlines and commentary like that attract outrage and hundreds of thousands of clicks. In the news and media industry, “it’s all about eyeballs.”
In one case, an article I interviewed for extensively in an educational capacity was written accurately, but the headline was awful. The journalist in question replied that the editors write the headlines, not the reporters.
One instance of this type of issue would be pretty insignificant, but the news in this vein hasn’t abated, always simmering just below the surface waiting for something to fan the flames. Outrage sells.
For the most part, those within the genealogy community at least attempt to sort out what is accurate reporting and what is not, but those people are the ones who have already tested.
People outside the genealogy community just know that they’ve now seen repeated headlines reporting that their genetic privacy either has been, could be or might be breached, and they are suspicious and leery. I would be too. They have no idea what that actually means, what is actually occurring, where, or that they are probably far more at risk on social media sites.
These people are not genealogists, and now they look at ads and think to themselves, “yes, I’d like to do that, but…”
And they never go any further.
People are frightened and simply disconnect from the topic – without testing.
If, as a consumer, you see several articles or posts saying that <fill in car model> is really bad, when you consider a purchase, even if you initially like that model, you’ll remember all of those negative messages. You may never realize that the source was the competition which would cause you to interpret those negative comments in a completely different light.
I think that some of the well-intentioned statements made by companies to reassure their existing and potential customers have actually done more harm than good by reinforcing that there’s a widespread issue. “You’re safe with us” can easily be interpreted as, “there’s something to be afraid of.”
Added to that is the sensitive topic of adoptee and unknown parent searches.
Reunion stories are wonderfully touching, and we all love them, but you seldom see the other side of the coin. Not every story has a happy ending, and many don’t. Not every parent wants to be found for a variety of reasons. If you’re the child and don’t want to find your parents, don’t test, but it doesn’t work the other way around. A parent can often be identified by their relatives’ DNA matches to their child.
While most news coverage reflects positive adoptee reunion outcomes, that’s not universal, and almost every family has a few lurking skeletons. People know that. Some people are fearful of what they might discover about themselves or family members and are correspondingly resistant to DNA testing. Realizing you might discover that your father isn’t your biological father if you DNA test gives people pause. It’s a devastating discovery and some folks decide they’d rather not take that chance, even though they believe it’s not possible.
The genealogical search techniques for identifying unknown parents or close relatives and the technique used by law enforcement to identify unknown people, either bodies or perpetrators is exactly the same. If you are in one of the databases, who you match can provide a very big hint to someone hunting for the identify of an unknown person.
People who are not genealogists, adoptees or parents seeking to find children placed for adoption may be becoming less comfortable with this idea in general.
Of course, the ability for law enforcement to upload kits to GedMatch/Verogen and Family Tree DNA, under specific controlled conditions, has itself been an explosive and divisive topic within and outside of the genealogy community since April 2018.
These law enforcement kits are either cold case remains of victims, known as “Does,” or body fluids from the scenes of violent crimes, such as rape, murder and potentially child abduction and aggravated assault. To date, since the Golden State Killer identification, numerous cases have produced a “solve.” ISOGG, a volunteer organization, maintains a page of known cases solved, here.
GEDmatch encourages people to opt-in for law-enforcement matching, meaning that their kit can be seen as a match to kits uploaded by law enforcement agencies or companies working on behalf of law enforcement agencies. If a customer doesn’t opt-in, their kit can’t be seen as a match to a law enforcement kit.
Family Tree DNA initially opted-out all EU kits from law enforcement matching, due to GDPR, and provides the option for their customers to opt-out of law-enforcement matching.
Neither MyHeritage, Ancestry nor 23andMe cooperate with law enforcment under any circumstances and have stated that they will actively resist all subpoenaes in court.
ISOGG provides a FAQ on Investigative Genetic Genealogy, here.
The two sides of the argument have rather publicly waged war on each other in an ongoing battle to convince people of the merits of their side of the equation, including working with news organizations.
Unfortunately, this topic is akin to arguing over politics. No one changes their mind, and everyone winds up mad.
Notice I’m not linking any articles here, not even my own. I do not want to fan these flames, but I would be remiss if I didn’t mention that the topic of law enforcement usage itself, the on-going public genetic genealogy community war and resulting media coverage together have very probably contributed to the lagging sales. I’d also be remiss if I didn’t mention that while a great division of opinion exists, and many people are opposed, there are also many people who are extremely supportive.
All of this, combined, intentionally or not, has introduced FUD, fear, uncertainty and doubt – a very old disinformation “sales technique.”
In a sense, for consumers, this has been like watching pigs mud-wrestle.
As my dad used to say, “Never mud-wrestle with a pig. The pig enjoys it, you get muddy and the spectators can’t tell the difference.” The spectators in this case vote with their lack of spending and no one is a winner.
DNA Testing Was A FAD
Another theory is that genealogy DNA testing was just a FAD whose time has come and gone. I think the FAD was ethnicity testing, and that chicken has come home to roost.
Both 23andMe and Ancestry clearly geared up for testers attracted by their very successful ads. I was just recently on a cruise, and multiple times I heard people at another table discussing their ethnicity results from some unnamed company. They introduced the topic by saying, “I did my DNA.”
The discussion was almost always the same. Someone said that they thought their ethnicity was pretty accurate, someone else said theirs was awful, and the discussion went from there. Not one time did anyone ever mention a company name, DNA matching or any other functionality. I’m not even sure they understood there are different DNA testing companies.
If I was a novice listening-in, based on that discussion, I would have learned to doubt the accuracy of “doing my DNA.”
If most of the people who purchased ethnicity tests understood in advance that ethnicity testing truly is “just an estimate,” they probably wouldn’t have purchased in the first place. If they understood the limitations and had properly set expectations, perhaps they would not have been as unhappy and disenchanted with their results. I realize that’s not very good marketing, but I think that chicken coming home to roost is a very big part of what we’re seeing now.
The media has played this up too, with stories about how the ethnicity of identical twins doesn’t match. If people bother to read more than the headline, and IF it’s a reasonably accurate article, they’ll come to understand why and how that might occur. If not, what they’ll take away is that DNA testing is wrong and unreliable. So don’t bother.
Furthermore, most people don’t understand that ethnicity testing and cousin matching are two entirely different aspects of a DNA test. The “accuracy” of ethnicity is not related to the accuracy of cousin matching, but once someone questions the credibility of DNA testing – their lack of confidence is universal.
I would agree, the FAD is over – meaning lots of people testing primarily for ethnicity. I think the marketing challenge going forward is to show people that DNA testing can be useful for other things – and to make that easy.
Ethnicity was the low hanging fruit and it’s been picked.
Slowed Growth – Not Dead in the Water
The rate of growth has slowed. This does not by any stretch of the imagination mean that genetic genealogy or DNA testing is dead in the water. DNA fishes for us 365x24x7.
For example, just today, I received a message from 23andMe that 75 new relatives have joined 23andMe. I also received match notifications from Family Tree DNA and MyHeritage. Hey – calorie-free treats!!!
These new matches are nothing to sneeze at. I remember when I was thrilled over ONE new match.
I have well over 100,000 matches if you combine my matches at the four vendors.
Without advanced tools like triangulation, Phased Family Matching, Theories of Family Relativity, ThruLines, DNAPainter, DNAgedcom and Genetic Affairs, I’d have absolutely no prayer of grouping and processing this number of matches for genealogy.
Even if I received no new matches for the next year, I’d still not be finished analyzing the autosomal matches I already have.
This Too Shall Pass
At least I hope it will.
I think people will still test, but the market has corrected. This level of testing is probably the “new normal.”
Neither Ancestry or 23andMe are spending the big ad dollars – or at least not as big.
In order for DNA testing companies to entice customers into purchasing subscriptions or add-on products, tools need to be developed or enhanced that encourage customers to return to the site over and over. This could come in the form of additional results or functionality calculated on their behalf.
That “on their behalf” point is important. Vendors need to focus on making DNA fun, and productive, not work. New tools, especially in the last year or two, have taken a big step in that direction. Make the customer wonder every day what gift is waiting for him or her that wasn’t there yesterday. Make DNA useful and fun!
I would call this “DNA crack.” 😊
Cooking Up DNA Crack!
In order to assist the vendors, I’ve compiled one general suggestion plus what I would consider to be the “Big 3 Wish List” for each of their DNA products in term of features or improvements that would encourage customers to either use or return to their sites. (You’re welcome.)
I don’t want this to appear negative, so I’ve also included the things I like most about each vendor.
If you have something to add, please feel free to comment in a positive fashion.
Family Tree DNA
I Love: Y and Mitochondrial DNA, Phased Family Matching, and DNA projects
General Suggestion – Fix chronic site loading issues which discourage customers
- Tree Matching – fix the current issues with trees and implement tree matching for DNA matches
- Triangulation – including by match group and segment
- Clustering – some form of genetic networks
I Love: Theories of Family Relativity, triangulation, wide variety of filters, SmartMatches and Record Matches
General – Clarify confusing subscription options in comparative grid format
- Triangulation by group and segment
- View DNA matches by ancestor
- Improved Ethnicity
I Love: Database size, ThruLines, record and DNA hints (green leaves)
General – Focus on the customers’ needs and repeated requests
- Accept uploads
- Chromosome Browser (yes, I know this is a dead horse, but that doesn’t change the need)
- Triangulation (dead horse’s brother)
I Love: Triangulation, Ethnicity quality, ethnicity segments identified, painted and available for download
General – Focus on genealogy tools if you’re going to sell a genealogy test
- Implement individual customer trees – not Family Search
- Remove 2000 match limit (which is functionally less after 23andMe hides the people not opted into matching)
- DNA + Tree Matching
In summary, we, as consumers need to maintain our composure, assuring others that no one’s hair is on fire and the sky really is not falling. We need to calmly educate as opposed to frighten.
Just the facts.
Other approaches don’t serve us in the end. Frightening people away may “win” the argumentative battle of the day, but we all lose the war if people are no longer willing to test.
This is much like a lifeboat – we all succeed together, or we all lose.
As genealogists, we need to:
- Focus on verifying ancestors and solving genealogy challenges
- Sharing those victories with others, including family members
- Encourage our relatives to test, and transfer so that their testing investment provides as much benefit as possible
- Offer to help relatives with the various options on each vendor’s platform
- Share the joy
People share exciting good news with others, especially on Facebook and social media platforms, and feel personally invested when you share new results with them. Collaboration bonds people.
A positive attitude, balanced perspective and excitement about common ancestors goes a very, very long was in terms of encouraging others.
We have more matches now than ever before, along with more and better tools. Matches are still rolling in, every single day.
New announcements are expected at Rootstech in a couple short weeks.
There’s so much opportunity and work to do.
The sky is not falling. It rained a bit.
The seas may have been stormy, but as a genealogist, the sun is out and a rising tide lifts us all.
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