Market Research Industry Insight from the AIMRI Rome 2010 Conference

By Michael Stanat, Research Executive, SIS International Research

The SIS team headed to Rome to share our perspectives and research to industry leaders and gain a barometer on industry conditions.  A SIS Research Director and I attended the 2010 AIMRI Online Market Research and Panel conference in Rome on behalf of SIS International Research on March 5, 2010.

There, I delivered a presentation called “Harnessing Social Media” on an emerging field—social media market research.  The presentation focused on how researchers can harness social media to make conventional methodologies more robust, persuade clients of the need for this research and provide actionable ways for researchers to make their existing operations more efficient.  In the interest of disseminating our thought leadership, the presentation is available (here) for download.

During the conference, we observed the following trends and discussions occurring in the market research industry:

• The rise of price-competing, commoditized panel exchanging systems
• The slowdown in European research markets
• The issue of probabilistic, statistical representativeness in online panels, particularly with longterm tracking surveys
• Australia, Canada and the US’ dominance in online research
• Industry-wide “supplier abuse”
• Clients’ DIY in marketing services
• The rise of infeasible methodologies proposed by clients for cost considerations
• The increase in professional survey takers and respondents taking multiple surveys per month, including in Emerging Markets
• The need for more customized, robust quality safeguards in online panel research in Emerging Markets
• The new research model: volume increase in RFPs/RFQs and the fall in conversions

Concern over price/quality death-spiral

Specifically, I want to make explain of the price/quality death spiral, which is a topic I have been discussing for months.  Currently, there is price competition in the research industry because of few buyers and many research providers.  As prices decrease industry-wide to win few accounts, quality deteriorates because no matter their efficiency, firms have to sacrifice quality to meet certain plummeting price points.  Even low-cost suppliers in developing countries are struggling to cut costs.

What realistically emerges is a fall in both prices and quality, which can cause end-clients to discount the value of research in the future.  I fear this industry “self-cannibalization”, where no party benefits in the end.   Ideally, researchers demand to compete on a value proposition, but client needs and budgets are stymied by cost considerations.

Outlook

Although Researchers face new conditions and challenges in servicing their clients’ needs, there was optimism that the marketing research industry will return to some semblance of normalcy at least in North America by the second half of this year.  Eventually, the Market Research industry is projected by industry bodies to regain revenues at parity with 2007 levels (a loss of 5 years of growth and employment levels!).  While the industry may improve this year, one thing is certain: the industry will never return to the same conditions as in 2007.