Data is cheap and abundant, making simple data collection a mediocre model for profit-making. Where does the research profession go from here? What skills do we need to adapt to the changing landscape?
Simon Chadwick dived into what he identified as the most interesting trends in marketing research, in a presentation at the MRA Mid-Atlantic Chapter's 2015 Spring Symposium on April 10 in Washington, DC.
Founder and managing partner at Cambiar, Simon is a professional manager, market researcher and consultant. Through over 30 years of guiding and managing companies of various sizes and stages, he has developed strategies for success in navigating rapidly changing markets. Evaluating the big picture in marketing research, and where it is headed, is Simon's bread and butter.
He posed three existential questions facing marketing researchers: What do we do, how do we do it, and who are we? Looked at against three mega-trends buffeting the industry -- an age of power skills, the spread of creative destruction, and millenial movement into marketing research -- he sketched out where we stand today.
For instance, the functions of corporate researchers and clients can be segmented into five buckets.
- The Risk Mitigators are skeptical, rational, but risk adverse.
- The Information Collectors bring in information and are happy to pass it along, but want to let others to figure out what to do with it. They are analytical, but inconclusive -- the sort of data-driven researchers who love 100-page slide decks long after everyone else in the room stopped paying attention.
- The Thought Leaders aim for proactivity and are imaginative -- they try to see things in the data and beyond the data that others miss.
- The Consumer Empaths desire to be as intuitively close to the consumers as possible, walk in their shoes, and know and care for consumers.
- The Business Drivers believe they are the ones who should be impacting decisions. They are entrepreneurs comfortable with a Good Enough Move On (GEMO) approach, and wish to simply make decisions and move ahead.
We are seeing a movement client-side from the risk mitigators to the business drivers.
“The age of correlation has come, the age of causation is dead? What a load of ----.”
Some snap decisions being made are not too bright, and Simon saves his biggest indignation for Big Data. The term, he opined, "should be consigned to the trash bin of phrases we never want to hear again." Can we make decisions based just on data and secondary behavioral insights? Of course not.
Various data groups exist in every organization and company -- none of them are working together, making the giant pools of information not particularly useful. While not all marketing researchers will have peak quantitative analytical skills, the broader marketing research profession's sweet spot will need to be at the intersection of Big Data and customer/consumer emotion -- and helping the two to play nicely together. We need to provide more value to stay relevant; our classic research skills will need to be grown and melded with newer analytics and business consulting tools to build a greater more relevant whole.
When TNS' fancy conversion model is available on a cheap MR offering like ZappiStore, at about a third of the price, you know something big is happening. Clients are being forced to rethink how they do things and, as Simon reminded the audience, “sacred cows make the best hamburger.”
Customer satisfaction tracking, the bread and butter for big brands, is being rethought, particularly since new players are offering most of what you get from big marketing research companies at less than half the price. "Brand tracking is under significant threat today, but it is being reimagined” because clients still want it, just just “have to deliver more on the same budget.”
With Big Data dominating the corporate hype machine, research clients intend to do a lot more data mining and analytics and digital ad optimization. Advancing technology, and a growing comfort with it among more business leaders, companies are planning a lot more direct customer experience and digital focus group work. Traditional brand tracking, copy testing, in-person focus groups, and ad usability studies are going to get less dollars, Simon predicted, and where big investors are going in marketing research tracks closely with those priorities. According to the Cambiar Capital Funding Index, $5.8 billion was invested in 2014 in Big Data analytics startups, mostly in the United States. Much of it will never get any return, but investors only need one out 10 investments to work. What should we expect from all that new money? Simon expects 30 to 40 new competitors in the marketing research marketplace as a result.
One current result from that cash infusion and the shifting priorities of research buyers, is what Simon calls "the mother of all battles, in terms of turf in research." Established research companies are buying up their competitors, or buying/expanding their way into different parts of the field (focus group facility owners are buying into online qualitative; traditional sample providers are getting into the full service research game; online qualitative firms are buying into quantitative analytics). All the parts of the field are converging and "foundations feel like they are shifting."
The stress you can see or feel at the top reaches of the marketing research industry is because the big companies have built such an enormous infrastructure based on collection not curation, according to Simon. “The bigger you are the harder it is to unwind it.” Data collectors are battling to own that space while full service providers are “still trying to figure out their role.” Smaller/newer companies are going to be able to pivot better. That doesn’t mean that bigger companies can’t compete; it just means that it will take bigger companies longer to pivot.
“Dampen down the angst and think a bit.”
According to Simon, the topography of marketing research is not necessarily changing, nor the reasons for our existence. The core skills necessary to do marketing research haven't changed either. However, the landscape is changing fast with many new tools and players, so marketing research business models will mutate in response. Data collection will turn to data curation; full service research will be replaced by focused expertise; insourcing will turn to outsourcing; and so on.
An audience member asked if there is a trend toward consulting companies bringing in their own marketing researchers, or turning their expertise in that direction. Simon responded that “if all researchers could be consultants, McKinsey wouldn’t exist.” There are cycles like this in multiple industries. Advertising agencies in the eighties, for instance, thought that marketing research providers were “stultifying their creativity” so they reacted by bringing marketing research in-house. In the nineties, some of those departments were excised. Now some of those agencies want the in-house capability again.
Some corporate clients are certainly building up their own research functions internally instead of buying it from traditional sources, and Simon says this is not a new trend. His original company started as the research department for Unilever. Usually, Simon notes, “the company can’t justify the resources put into it because it isn’t core to their business; they are usually spun off.”
Are companies investing in data aggregation and extraction?
Simon sees some movement that way, but notes that the biggest nightmare right now for chief marketing officers (CMOs) is Big Data. If chief research officers (CROs) and CMOs have good relationships inside an organization, that organization can over-perform its peers by 70 percent, so researchers and marketers should be striving to meet in the middle. However, few seem to be able to pull it off, since data shows a mere seven percent of companies actually have that profitable CRO-CMO relationship. According to Simon, “this is where the trough of disillusionment will occur until the technology can come around” and help get the CMOS and CROs onto the same page.
Is there a shortage of skilled analysts?
That shortage is much discussed, but hard to pin down. He does see marketing research students bailing out of their programs, and into data science instead – they are following the dollar sign indicators. That will probably fuel a glut of data scientists in a few years as everyone jumps on the Big Data bandwagon. In the meantime, the research profession needs to focus on bringing MR education into the 21st century.
Is neuromarketing ready to provide real insights?
Referring to Gartner’s marketing research hype cycle, Simon chuckled that “every year for the last eight years has been the year of mobile,” and neuromarketing is in the same bucket. “Brain science is still in its infancy, so a lot of neuro information is not yet useful.” Investors certainly feel that way and “virtually nothing” has come from investors for neuromarketing research. A few players like Nielsen have championed neuromarketing and see a future market, but Simon doesn’t expect to see it for another decade, at least “until someone can explain what do I do with it.” There remains “a long way to go” until neuromarketing can be considered relevant.
Is the Honomichl model of appraisal of MR companies still relevant?
Is it appropriate to apply the same kinds of measures that Jack Honomichl and Larry Gold innovated to chart success and relevance for the top 50 marketing research companies to the new analytics and research startups? As an audience member put it, “Should millennials be judged by the same old tools?”
Simon responded succinctly: The “value of the company when they sell it will be all that matters” to investors, and that is nothing new. Big companies don’t do innovation themselves, except by acquiring it, so “these new companies, they will be rolled up… we just don’t know by whom.”
Do humans still belong in marketing research?
With increasing automation, especially Big Data analytics and new app stores, what is “the role for humans” in marketing research provision, especially in full service research companies? Steve Phillips, who came up with ZappiStore (Simon says he sports “the most hated man in market research” on his business card), felt that the more we automate the processes and free up time for marketing researchers to get into their clients business and insights, the better. The key question, as we’ve discussed, is whether or not we can we “acquire the skills to enable us to do that fast enough to pivot.” Marketing researchers, on both the provider side and in corporate research departments, are already in competition from management consultants; “can we find our niche” and prove our skills and our value? Professional groups like MRA and traditional education providers like Burke Institute need to help us find these skills.
Are the number of research buyers growing while the dollar amounts spent on research falls?
DIY platforms have driven down the price of entering marketing research. Focus groups and surveys used to be the purview of big brands and corporate research departments, but now small companies and departments can get in on the game. Simon sees a broadening of the base of research buyers and users. DIY platforms are becoming more and more sophisticated in what they are offering, including direct competition (whether intentional or not) with traditional research providers.
Conclusion: What can we do RIGHT NOW to turn the tide?
Surveys are everywhere, Simon observes, driving down response rates. In the process of the growth of research, the chance for a respondent to have a lousy research experience is rising every day.
This highlights an important role all researchers can play in improving the fate of the whole research profession. While untrained people using DIY platforms can dismay respondents, trained researchers often do the same thing. “Frankly… we are putting out the most atrocious garbage out there right now, we don’t need the untrained” to screw up the respondent experience. Respondents hate long boring surveys, but we still deploy them. Researchers must “mend our own ways,” Simon challenged, before we can rail against the DIY marketing research trend.