Market research spend slumps as shift to digital and Covid hit

With the coronavirus crisis causing marketers to pull back even further on market research expenditure, how can the sector rebound and stay relevant?

MarketResearchGroupMarket research is suffering from a long-term decline in investment that is being heightened by the Covid-19 pandemic, according to data exclusively compiled by Marketing Week.

Using the IPA’s quarterly Bellwether report, we found that market research has been on a resolutely downward trend for the past five years, with that decline accelerating over the past 18 months.

The last time more marketers planned to increase than decrease spend was back in the second quarter of 2015, when a net balance of just 0.6% said they would increase investment. The proportion planning to increase spend has only been greater than the proportion planning to decrease it four times in the past seven years.

However, while planned investment has been declining long-term, this trend has become noticeably worse since the second quarter of 2019, when an at the time record net balance of 16.9% of marketers said they planned to reduce spend.

During the first quarter of 2020, a net balance of 21% of marketers said they planned to cut spend. By the second quarter this number had plummeted to a nadir of 42.2%, although in the third quarter it rebounded slightly to 32.6%.

MW_Marketing expenditure_chart- 2Looking at the situation longer term, many within the industry are clearly thinking about online technology as the main framework for future research, but using that shift as a hopeful catalyst for further cost-cutting may badly backfire.

Doing pretty much anything face-to-face has been tricky this year and while the necessity to move to a digital setting hasn’t just been Covid-led (there were plenty of anxious reports about budgeting before lockdown struck), market researchers have spent much of the past 12 months coping with drastic changes in the way interviews are carried out, information collated and results assessed.

The danger seems to be that many companies believe data gathering from social and other online sources is an easily available and cheaper shortcut. The drive to be flexible and speed up data harvesting, so brands can be seen to be more reactive, is putting added pressure on old school methodologies.

However, vice-president of insight and analytics at PepsiCo, Tim Warner, readily admits a total shift to digital would mean losing out on that crucial human touch.

“My personal view is that this isn’t a time to slow down, it’s a time to speed up,” Warner explains. “We’re having to work far harder to understand this rapidly shifting consumer marketplace, but I definitely do not believe that face-to-face research is dead. There are many instances where that will continue to be a critical part of the toolkit.”

It’s a view echoed by Market Research Society president Jan Gooding, who insists that any kind of reboot will still need to adhere to the basic building blocks.

“As has always been the case, the research industry is heaving with incredibly bright people who are very interested in what makes people tick and are genuinely motivated to try to get to the truth of what’s happening and realise that different methodologies can produce different kinds of results,” she says.

Clearly, market research has had to evolve quickly in the context of the pandemic and migrating online offers a range of advantages, one of which is inevitably cost-cutting.

But being able to distinguish blips from long-term trends, keep a tight grasp on ever-shifting consumer landscapes and determine what the future holds will always need a deeper dive beyond scooping up a few tweets and trawling online forums.

In a series of articles, Marketing Week will be taking a closer look at the current state of market research, asking whether it needs a reboot, if it’s suffering from something of an identity crisis and, in the spite of the IPA data, why it’s still one of the best investments a brand can make.