2009 Review of the On-Line Research Business in Asia

Recessions are good for many suppliers of low cost products and services.  As a result of tightening consumer budgets, Walmart and McDonalds have been some of the few companies benefiting from the economic crisis as consumers seek lower cost alternatives for retail and dining.

In the same way, hard pressed research companies and corporations who are seeing their budgets reduced are turning to the Walmarts and McDonalds of the market research industry – the on-line panel providers.

It was not the large agencies who lead the way in on-line research (some had pretensions in doing so, but failed) but instead the specialist on-line panel companies.  Based on Asia Research’s own on-line survey of research firms, about half of all researchers engage external on-line panel companies, and the leading companies in this field in Asia are GMI, SSI, and Research Now.

According to Martin Filz, Client Development Director for Research Now, they have experienced an increase in both outbound and inbound research in Asia.  Martin comments “We believe that organizations are looking to increase revenues through new market tactics and are therefore conducting research to identify new territories. The large populations of Asia are certainly attractive to Western manufacturers and service providers”.   Although many research companies are seeing a decline in revenue due to budget cuts, Martin comments that it is not just the lower unit costs of on-line research that is driving growth, but also for the benefits of speed, accuracy, and consistency of the methodology.

Although Asia tends to lag Western markets in on-line usage, two markets in Asia, Japan and Australia actually rank 2nd and 3rd globally (after Canada) in terms of share of on-line spend as a proportion of total spend on market research.  Like Canada, one of the benefits of on-line research in Australia is that it solves logistical issues of conducting national surveys in large geographies.

For Japan, high mobile and Internet penetration is one reason for wider usage of on-line research, although it is argued that cultural considerations play an important part in choosing this method over conventional research methods.  Even before the advent of on-line research, self complete surveys were quite common in Japan, sometimes involving recruiting the respondent by conventional means, handing them the questionnaire to fill out, and then collecting the questionnaire on completion.  The theory is that Japanese respondents are too willing to please an interviewer, e.g. giving positive responses, as opposed to giving more truthful dontevaluations of questions that can be made in private through a self completion method.

The corporations themselves are also becoming more sophisticated in their use of e-based data.  Many companies now track and analyse hit rates on their websites, and some have set up customer blogs.  This in itself is generating interest in using even more Internet based research.  Today the on-line panel companies are sourcing around 10 to 15% of their business directly from corporations and this is growing.

The Barriers to Growth of On-Line Research:

Some argue that there will be a natural ceiling to on-line research.  Evidence suggests that in Europe and the US, on-line usage as a proportion of all data collection methods might have reached saturation point.  However, Martin Filz from Research Now comments “Although there has been some leveling off in share of on-line in these markets, as Generation Y (who is growing up with Facebook and Twitter) move into the work place, we might see another lift in on-line research or spin offs from these data collection methods.”

Specifically within Asia, the main barriers to growth in on-line research in some markets are poor internet connectivity, and also the general economics of on-line research versus conventional methods.

In China, the major cities have an Internet usage of around 50% whilst regional towns are lower than 20%.  Typically as Internet penetration increases, online research grows at a slower rate.  Several reasons for this are that in developing countries the cost of other research methodologies are lower than online, many companies in-market have made significant investments in developing telephone-based data collection services and have a vested interest in maintaining these.  It also takes a lot of time to build online panels in emerging markets, there is usually a shortage of skilled online researchers, and the clients in market require some educating and convincing on the merits of online research.

However Bill Zuo, APAC Director, from SSI sees strong potential for growth in on-line research in emerging markets.  Bill comments “Australia saw the highest growth in on-line research in recent years due to ‘do not call regulations’ which made telephone-based research difficult, and high labour costs associated with conventional survey methods.  However growth is slowing here, whereas we are seeing more growth in places like China, although this is driven mainly by growth in demand for research in China in general”.  Bill continues, “Despite low internet penetration, some companies are using Internet cafes as Central Location Tests (CLTs).  These have their applications, but usually respondents have a much younger profile and there tend to be more distractions in Internet cafes, and surveys tend to be more rushed.”

But aside from technical issues, the old arguments against on-line research still prevail.  Although research companies and their panelists have gone to great measures to demonstrate how representative their panels are compared to the total population, some question how attitudes and buying behaviour of opt-in respondents, who are mostly ‘professional respondents’, really compare to the general market.  However, some argue that ‘representativeness’ is not really the issue, and those who choose to opt in to research are often the trend setters and early adopters for the rest of the market and therefore should be listened to.

Martin Filz says that part of the skill of panel management is to motivate the respondent, not just with financial incentives, but to make surveys more interesting and engaging.  A lot can be done to convince respondents to give honest, open, and insightful survey responses by informing the respondent that they are part of an on-line community that can shape the future of products, services, and even Government policy.  He also argues that on-line research provides the researcher more breadth and depth of respondent, for example representing minorities who might be encountered in very large on-line samples but who might otherwise be missed in smaller conventional surveys.  Some also argue that some research, such as in-person, is self selecting since interviewers tend to approach only those they expect to get a partake in a survey.

What’s next?

Technology itself is the main driver behind further advances in on-line research methodologies.  Some of the new techniques under development exploit mobile technology to provide ‘moments of truth’, but also use of blogs to ‘listen in’ to what consumers are saying about brands and products.  The new methods, applications, and benefits are summarized below:

Mobile Research, including:

1. SMS

2. Applications

3. GPS

Benefits: •Speed of research •Relevance of surveys •Delivery of multimedia, e.g. video, images, sound •Moment of truth – “where are you now?”

Combining behavioural data with attitudinal data, including:

1. Track online activity through meters

2. Deliver surveys based on particular activity

Benefits: •Can see where someone went and as a specific question •Could be applied to ad awareness, propensity to buy, brand affinity when the individual has been exposed to advertising

Communities, including:

1. Build online communities rather than static panels

2. Using polls, discussion forums, blogs

3. Word-of-mouth research

4. Monitoring blogs to understand what people are saying about brands and products

Benefits: •Creates true two-way conversations •Enables group input, feedback and opinions •Wider audience capture •Broader variety of research ability •Engaging for the respondent •Continual relationship

The Holy Grail:

Despite the range of new technologies, the one area of on-line research that remains mostly unconquered is business-to-business research.  Current efforts to build on-line business panels have been within specific industry sectors such as medical (e.g. on-line GP panels and specialists), IT managers, tradesman, sole traders or professionals.  Some of these groups are simply recruited through consumer panels and allocated to sub-panels according to panelists’ occupations.  Companies like E-Rewards have been successful in pulling together business decision makers through frequent flier schemes.  Asia Research itself maintains a ‘panel’ of around 3,500 market research professionals in Asia who we tap twice a year to understand the sentiment of the industry and record trends in the industry.

However, no market has yet been able to develop on-line panels representative of all businesses. The challenge here is to obtain representation of the main industry sectors and the different size of businesses within each.  For consumer panels, their lifespan ranges from 8 months to 3 years; and due to attrition rates, panel companies typically have to recruit 2 million new panelists each year.  For business panels, it is about 4-5 times more expensive to develop business panels compared to consumer panels and the life span of panelists is relatively short.  However, the company who can crack the B2B on-line panel market will certainly be the next big thing in the research industry!