Few researchers will recall a more challenging year than the last one, as the global slowdown took its toll on research spending. The near future also looks as though it will be a difficult one, as major agencies, such as the Aegis Group, predict that 2002 will bring little relief for the world’s advertising and research communities. In its recent company report it says: “Although there may be some recovery in ad spend in the third or fourth quarters, it is expected that, for the full year, growth will be flat to negative.”
This downturn has been reflected in the response of research agencies to these challenges. Much has been written recently about the speed of industry consolidation, and the rate of job losses in the industry, but these dark stories hide the real technological revolution that is taking place in society at large and in the market research industry’s response to it.
Society is becoming ever more connected through a host of new technologies and this is creating both new markets for the industry to monitor and new opportunities for it to exploit. The Internet is the oldest of these new technologies and it is still growing. Almost half of Britons are now users and 7,000 more join them every day. This growth is reflected in increasing research expenditure. The European Online Spending Index is predicting 23 per cent growth in online research in 2002. While this is a long way short of the 159 per cent registered in 2000, it does indicate that the advantages of Internet research, such as speed, ease of set up, dynamic reporting and cost, are establishing online research as a mainstream offering.
This has changed the nature of the research debate. As with the early days of telephone research, the debate has focused on the nature of the panels that many agencies build. The tendency, in the early days, was to build as large a panel as possible, by whatever means were available – including advertising and viral marketing. In reality, these were not really “panels”, but large databases. The so-called “panellists” did not have the same relationship with the research company as was established when they were recruited in their homes or on the telephone. This initially led to low response rates, and high cost bases.
However, research agencies have learnt how to overcome many of these problems. In particular, they have established detailed demographic and propensity weighting models to calibrate their results so that they are representative of the universe from which they are drawn. Recently, online agencies claim to have been at least as successful as their more traditional rivals in predicting the outcomes of the US and UK elections. That online polling has become mainstream is demonstrated by the fact that The Sunday Times has regularly used online polling in 2002 to measure the political temperature of the UK and has run such stories on its front page.
Online panels also present researchers with a unique opportunity to passively collect real-time behavioural data and link it to their survey data. The rise of the passive data collector, which has been a major new technological development in the online arena, typifies it. ComScore has recruited a large panel by offering them software that speeds up the panellists’ Internet connection. The technology allows comScore to capture the complete detail of all the communication to and from each individual’s computer, including every site visited, page viewed, ad seen, promotion used, product or service bought, and price paid. The power of passive data collection is clear. For, after they have downloaded the software, panellists have nothing else to do. Yet they are providing the researchers with a continuous stream of information about customer behaviour and preferences across the entire Internet. Once collected, this behaviour can be linked to other data sources, such as site registration data, to provide client side researchers with a powerful analytic tool.
If you do not think that passive data collection is capable of revolutionising the industry then consider the case of TiVo – the maker of the personal digital video recorder (DVR), that not only records the type of programme it knows you may like, but which allows the viewer to pause live television for up to 30 minutes, as well as slow-motion live TV. At present TiVo boxes are in some 280,000 US households, and because it is a real-time system, TiVo provides a continual monitor not only of what TV programmes are being watched, but how they are being watched. TiVo compiled a report on the US Super Bowl, by aggregating anonymous data from 10,000 households, and it showed that portions of the broadcast were paused or replayed an average of 44 times per TiVo household. It produced a top ten list of the most replayed TV commercials and proclaimed that the two Britney Spears commercials for Pepsi were “the highlight of the game”. This must be one of the most powerful findings ever produced and it was carried out by a DVR company, using passive data collection, rather than a research company.
However, there are research companies that are active in this interactive space. A good example is Knowledge Networks. It has created a large representative national panel of households, which it has equipped with interactive TV devices and Internet service. Because it has provided free hardware and connection to the Internet to every household on its panel, it claims to be the only Web survey providers which can reach people whether they own computers or not, or have ever before used the Internet.
Methodologies such as these raise fascinating research issues. Although they provide powerful and valuable findings, it is debatable how representative a panel can be in measuring online behaviour, if the research tool itself speeds up that very behaviour. However, the world of research is becoming a more pragmatic place, and one in which utility is more likely to prevail than theoretical purity. Marketers seem increasingly prepared to accept the trade-off between the ability of these methodologies to produce actionable data and their lack of a traditional theoretical foundation. This propensity could have profound implications for our methodologies in the future.
Without doubt, the Internet is here to stay as a research tool, but the challenge for researchers is how they will utilise the opportunities that the increasingly connected consumer environment presents in the broadband, wireless and interactive television spaces. A milestone was passed in January, when broadband usage in the US outpaced narrowband for the first time, according to the latest Nielsen NetRatings data. Broadband offers the possibility of an “always on”, faster Internet connection. It also presents online researchers with the opportunity of inserting video and audio clips into their web surveys and having them assessed by the broadband population.
BT has been reported as setting a target of 1 million broadband subscribers by summer 2002 and one in four of the population by 2005. If these targets are reached, the research landscape w
ill also be dramatically changed, both in terms of our relationship with our panellists and the nature of the research we will conduct. This rollout will allow us to conduct, in home, the type of research that NOP has been offering, in the UK, through its chain of Internet Cafés and Opinion One offers, and in the US through its broadband mall facilities. Indeed, we have recently seen WebPoint, a provider of broadband Internet kiosks in UK stations and airports, allow these kiosks to be used for market research purposes.
The proportion of households in Europe with access to interactive services through television is also growing rapidly and is expected to outstrip Internet penetration by 2005. Indeed, ITV Digital estimated that “about 35 per cent of households in the UK have access to interactive services through digital television, with some predicting that this will have grown to 85 per cent by 2006”. If that is the case, we could see a rapid deployment of this medium in the research space.
In the meantime, researchers respond creatively to the opportunities presented by the fastest growing new media, personal text messaging. The explosion of personal text messaging or “short message service” (SMS) has been remarkable. It is estimated that 1 billion message are sent every month in the UK and a similar number every day in the European Union.
A research paper by Colin Strong, director at NOP Business, has described how the large databases of mobile phone-owning individuals, built to provide SMS, can be used for conducting market research. He notes that: “Many companies that offer brand managers a route to the consumer through this medium are also offering the opportunity for clients to solicit consumer opinion through text-based surveys to tailored markets. Big brands are starting to express interest in this research route to the consumer, including Mars, who have recently run a trial of the methodology with The Mobile Channel. With vast databases, turnaround times which look like miracles, and initial signs of healthy response rates, (a recent survey conducted by The Mobile Channel for a national newspaper saw 34 per cent respond) should research houses be looking at how to incorporate this into their tool kit?”
His answer is that the visionary ones will do so, and indeed we have already seen the deployment of the interviewing software and the rise of suppliers to provide an integrated research offering. Advertising will drive this trend. SMS already offers the advertiser a personalised, targeted audience and it can reach this audience when they are away from home.
We have concentrated so far on the consumer’s adoption of new media and shown how the market research industry is adopting them as new data collection tools. It is worth mentioning that the industry has developed a host of new reporting technologies, with which it can deliver market intelligence and replace the printed tabular reports that have dominated market research. The Internet has facilitated the provision of automated data reporting, where data is continually fed into the databases and reported, in real time.
Portal technology has allowed agencies to provide clients with a unified window through which to analyse the world, taking data from all their competing agencies and ordering it so that that they have a coherent view of their customers. Data-mining tools are being used with far greater frequency, to understand attitudes and behaviour, and to develop predictive “what if” models, from both passively collected data and traditional survey data.
And yet despite the speed of technological change, the challenge for market researchers is the same as always: to understand the consumer and turn that understanding into competitive advantage for clients. Our proven ability to interact with consumers, on a “Martini” basis (anytime, anyplace, anywhere), through all the changing media they use in their everyday lives, and to deliver that understanding in real time, promises an exciting future for the industry.
Mike Cooke is brand development director at NOP Research Group