Abstract The phylogenetic placement of the morphologically simple placozoans is crucial to understanding the evolution of complex animal traits. Here, we examine the influence of adding new genomes from placozoans to a large dataset designed to study the deepest splits in the animal phylogeny. Using site-heterogeneous substitution models, we show that it is possible to obtain strong support, in both amino acid and reduced-alphabet matrices, for either a sister-group relationship between Cnidaria and Placozoa, or for Cnidaria and Bilateria (=Planulozoa), also seen in most published work to date, depending on the orthologues selected to construct the matrix. We demonstrate that a majority of genes show evidence of compositional heterogeneity, and that the support for Planulozoa can be assigned to this source of systematic error. In interpreting this placozoan-cnidarian clade, we caution against a peremptory reading of placozoans as secondarily reduced forms of little relevance to broader discussions of early animal evolution.