Among all the talk of cutbacks, one beacon of hope has shone out. While the fall in UK advertising revenues has been in double figures, market research has proved itself to be a core business requirement by dropping a comparatively slight 4.7%, according to the Market Research Society (MRS).
“The market research industry has been protected from the recession because people recognise there is value in understanding the customer,” states Andy Moore, former insight director at Vodafone and now strategic director for research and consultancy agency Nunwood.
Clients are well aware of the need for market research to remain at their core, but budgets are under the microscope. Procter & Gamble (P&G) invests more than $350m (£235m) on consumer research every year, but Claire Gomersall, director of consumer and market knowledge at P&G, explains that her department and the agencies it works with have to continually raise their game to justify such a large investment.
She says: “In tough economic times, it is more important than ever to be in touch with our consumers and markets because our customers are facing tough choices and more life changes. We want to understand how to serve them better through these changes. But of course our research budgets have faced the same type of scrutiny as all spending and so we need to raise our expectations of ourselves and our research suppliers.”
As well as clients’ overall thirst for information, technological advances have boosted the market research industry by allowing the sector to innovate in a number of areas.
Several online trends have provided market researchers with large volumes of data at a much lower cost. Techniques previously viewed as expensive and niche, such as the use of fMRI scanners for neurological projects, have come down significantly in price.
But as digital and technological advances become more widespread, so too has clients’ scrutiny of their value. Although market research has proved its worth to marketers’ core business strategy, budgets remain tightly squeezed.
“The industry is rebuilding and rejustifying itself with a strong focus on value for money. The focus is on return on investment because clients feel it is something they can measure,” reports MRS director general David Barr.
The insight imperative
Although there is a shortage of funds to go round, there is an abundance of information available. Where once a client would devise an online survey to extract information quickly, now they can simply listen to the consumer cacophony on social media. “There has been a scramble to get hold of blogs and Twitter content. However, getting hold of raw information is interesting but not great for insight. Getting a feed of what people are saying about your brand without insight doesn’t give you strategic and actionable information,” he says.
Alistair Leathwood, managing director of research agency FreshMinds, elaborates: “Trying to build online communities where consumers can talk about you is interesting.”
But he pleads with marketers not to rely on the information gleaned from these communities. “Tracking social media can tell you what is going on, but it’s quite imprecise. Overall, it’s just a sensible way of gaining another perspective.”
To some, this is evidence that there is now a true distinction between raw data and insight. “Our industry needs to be careful not to mistake data for insight; we don’t need more data, we need more pattern recognition, understanding of drivers, integration of data from multiple sources and insights that point us to change the way we’re doing something,” says P&G’s Gomersall.
This in itself has thrown up an interesting dichotomy between what some clients want and what agencies want to provide. For some, the market research agency is there simply to provide quality data. The client wants to be sure that its information is from the best sources and it is as clean as possible. However, some brands feel that the interpretation of that data and its relevance to brand strategy is best left up to them.
In contrast, others feel that the interpretation of data and its relevance to the brand business case is as important a function of the market research agency as the collection of data itself. In fact, they view the latter as the bare minimum in terms of servicing the client’s account.
Lightspeed Research global chief executive David Day says: “There is no question that certain clients with in-house insight teams want to focus on excellence in collecting data. But historically they see these agencies more as a commodity. A current trend is that now clients recognise there is a variety of standards out there, they are looking for both value and excellence.
“But on the other hand some clients are asking us: ’What does this data mean?’ and ’How do I distil this into insight?’ These issues require us as agencies to understand exactly how the clients operate.”
Paul Say, head of marketing at First Direct bank, adds: “For us, the information and how it is collected is all a hygiene issue. As is having it presented in a clear way.
The point of differentiation comes from the people that a [market research] agency can provide and their ability to work with us to answer the business case. We expect them to provide not just numbers but insights. In some cases, we even want them to help us decide what questions to ask. That is their expertise and their unique selling point.”
Emperor’s new clothes?
It is for this reason that agencies need to be wary of selling technological innovations as the next big solution to research questions. Where once the prospect of using hospital grade scanners and eye-level scanners to capture the consumers’ unspoken thoughts seemed futuristic, and even downright sexy, there is a new realism to contend with. There is an argument that says despite the increased capabilities of many technologies, including the new generation of smartphones, the key is in not trying to overthink the issue. Stephen Phillips, chief executive of Spring research agency, warns: “Technology works really well when it enables you to do something that you’ve always wanted to do. When we use mobile as a solution, for example, we use simple texting rather than mobile internet because we want people of all ages and technical ability to be able to participate. There’s nothing to be gained from making it over-technical.”
TNS-RI chairman Paul Edwards cautions against being blinded by science. “With things such as neuroscience, it is very difficult to know what you are getting. It is certainly overcomplicating the issue if you are just trying to find out if someone likes Pepsi or not. There is a lot you can do much cheaper.”
Equally, the use of online as an inexpensive and speedy source of data must be approached with caution. Lucy Burnham, managing director of SPA Research, insists the important question to ask is “what is my business goal?”
Gomersall at P&G adds: “Technology isn’t valuable in itself; it needs to be married with solid research methodology and embedded in a business process to influence marketing decisions.”
So as the market settles down to some sense of normality following a rollercoaster few years, what do clients expect from the market research industry? And are the agencies in a position to be able to provide it?
Gomersall is unequivocal when outlining the client’s post-recessionary research needs: “We need suppliers to deliver innovation beyond traditional research to support new marketing models and evolving consumer behaviours and choices. The industry needs to learn to leverage this conversation to uncover insights, to co-create with consumers differently. Until we start to see disruptive innovation from our agencies, we will continue to lead this internally.
“Accountability is driving continual improvement, working to increase the precision of results. We need suppliers to understand what we need and deliver on the needs proactively without ’being told’ what to do and how to do it.”
What is research?
The collection of information from a variety of stakeholders (customers, business associates, peers and experts) about your business that can help inform strategy. The theory is that a small sample of the population can provide a representative view of your company. Research not only answers questions about past and future business decisions but is also a form of communication with stakeholders, binding them closer to your organisation.
How is research conducted?
Quantitative research provides largely statistical answers to your business question, based on responses from a large group of stakeholders. Qualitative surveys tend to take place among smaller, targeted groups and provide more in-depth information around business questions. It often answers more emotive issues and can take the form of one-to-one interviews, focus groups, online studies and even so-called “listening” exercises using blogs and social networks.
IN THE MARKET
10 suppliers you need to know
1 TNS-RIA global agency formed by the merger of Taylor Nelson Sofres and Research International. Well known for consumer panels. www.tns-ri.co.uk
2 Millward BrownA large, full-service global agency providing consumer panels and well known for its research into brands and marketing.www.millwardbrown.co.uk
3 PromiseAn independent agency specialising in co-creation. www.promisecorp.com
4 SpringAn international qualitative boutique agency specialising in consumer decision-making. www.springresearch.co.uk
5 LightspeedA global panel-based research agency and part of Kantar, the insight arm of WPP. www.lightspeedresearch.com
6 SPA ResearchA full-service independent European agency, which specialises in advertising, media, FMCG, children and retail. www.spa-mr.com
7 NunwoodAn independent international agency merging research, commercial analytics, technology and consulting. www.nunwood.com
8 BrainJuicerAn independent agency that delivers qualitative research on a quantitative scale using online resources. www.brainjuicer.com
9 FreshMindsAn independent agency based in the UK that merges data analysis and consultancy, including corporate and governmental work. www.freshminds.co.uk
10 J FlyA small, independent UK agency focusing on mobile and online research .www.flyresearch.com
Market research in numbers
- Growth in Europe’s MR industry weakened in 2008 to 4.7% year on year and 0.9% after inflation, with turnover of $16,066m. The UK and Germany were relatively good performers in 2008, with net growth of 2.5%.
- In 2010, Computer Assisted Telephone Interviewing (CATI) cost 70% as much as a face-to-face panel, and online panel studies cost 70% of CATI studies.
- There is a strong correlation between GDP per person and the cost of market research in that country. The exceptions are Brazil and South Africa, which are relatively expensive places to conduct research yet have low GDP per person.
- In 2010, an advertising pre-test will cost an average of $21,000 using CATI in western Europe (including the UK); using an online survey costs almost half at $12,537.
- In western Europe, a focus group will cost an average of $20,237, an ethnography project $33,434.
Paul Edwards, Chairman, TNS-RI
The increased sophistication of online research should make performing global qualitative studies more consistent. Passive data collection from existing technologies such as Clubcard data and using RFID tracking chips in shopping trolleys could contribute much more information in the future.
Andy Moore, Strategic director, Nunwood
There is a growing demand for a more holistic view of the research brief, incorporating different sorts of insight. And the industry is crying out for a way to integrate social media insights with the more traditional projects conducted offline.
Nick Coates, Research director, Promise
Do-it-yourself research by clients using online technology is going to be a challenge for market research agencies. There is the potential for agencies to set up without the data collection element at all, focusing primarily on interpreting and making sense of the online conversations.
David Day, Global chief executive Lightspeed
Mobile marketing is going to be a key tool in developing markets and in sectors where historically it hasn’t been strong, such as social and political research.
Mobile will be particularly useful in emerging markets where there is a dispersed population that is difficult to reach in order to conduct face-to-face interviews. Tactics such as sending text messages to mobile phone owners that then drive them to internet cafés to take part in more in-depth studies is certainly a way forward.
Alistair Leathwood , Managing director FreshMinds
People will stop gathering insight that has no meaning. Simply tracking data will be cheap and come from the online space. The more interesting areas are integrating research with marketing and sales. Using crowdsourcing and co-creation techniques also means that budgets will be shared across marketing.
In an ideal world, the market research industry would ask what customers want, get them to help you make it and then have them pay you for it.
Top tips you need to know
- Consider your business case before you decide the method of research.
- Technology can provide information quickly, but beware that it is often simply another source of data and should be treated as such. Focus groups and one-to-one interviews may seem old hat and time-consuming but the route to truly comprehensive insight is often one that combines old and new methods.
- Weigh up the benefits of each agency’s specialisms. Do you need the most accurate data that your in-house team can then analyse? Or perhaps raw data is still baffling and you need an agency with a fresh perspective to break down what it means for you?
- Never underestimate how important the right question can be to the end result. Many years of experience of asking the right question in the right way can help you develop exactly the right project to answer your business case.
- Work with agencies to ensure you do not turn consumers off by being boring, irrelevant or too persistent.