2020: Asia Research Stakeholder Survey

In August 2020, Asia Research undertook its 2020 Stakeholder Survey, with the objectives of assessing the impact of COVID-19 on the market research industry in Asia and how the industry might recover in the next year.

A total of 190 surveys were conducted, including clients, suppliers, and support companies. This sample included 52 managing directors and another 38 directors, providing a good ‘top-down’ view of the industry.

The survey shows that COVID-19 has had a big impact on the industry, with 24% of supply-side and support companies stating that their firms have already made redundancies. There are notable differences between the global research firms in Asia, and the local companies headquartered in Asia. The global agencies are more likely to have made redundancies or intend to make more (43% vs 26% of Asian agencies), while the Asian agencies have resorted more to reducing salaries of staff.

This indicates that Asian agencies and their staff are taking a more flexible response to the crisis that will give them the advantage on the recovery in terms of having retained staff. Asian agencies (which tend to be smaller) have also been able to downgrade their offices during the crisis (31%), whereas only 18% of global agencies have been able to do so, e.g. they are locked into longer and more expensive leases.

During the lockdown, and with fewer projects to manage, many agencies have increased their staff training. Global agencies have increased training internally, whereas Asian agencies have used external training firms (maybe lacking internal resources), and more Asian agencies are looking into further training in the second half of 2020.

Impact on suppliers and response to COVID

Shorter-term prospects

Three-quarters of MDs in our survey had developed business/strategic plans during the lockdown – one in five expect to invest more in licensing products, e.g. IP, platforms, enhanced reporting software, etc, and a similar number intend to use external training companies to develop their staff (in addition to one-third of companies who will increase internal staff training).

On balance, there are more firms that intend to insource and onshore services, particularly among the global research firms. This can be used as a measure to protect jobs, but 24% of companies expect further redundancies in the second half of 2021; this is offset by 26% expecting to make new hires, indicating a mix of restructuring or shifts in employment between different types of research supplier.

We asked clients in our survey what would put a research vendor ‘in the consideration set’ for new projects in the next year. Compared to the last stakeholder survey in 2018, competitive pricing has shot up the rankings in consideration, and team members/leads have dropped down the list. Having a track record of undertaking similar projects and a reputation in their field of research (e.g. methodology) remain of high importance to clients. Being a ‘big name’ and the familiarity of the agency to the internal clients remains of stated low importance, but these can be much higher subtle drivers of importance, especially given that the multinational agencies are the most commonly used type of research vendor among the clients surveyed.

That said, when asked who would be the gainers and losers among their research suppliers in the next year, clients are more likely to drop the multinational agencies. With price becoming more important, clients are also more inclined to engage panel/data management companies directly, but prospects for the more specialised research agencies also look better.

Type of research vendor clients will use in the next year

Longer-term prospects

The short term, i.e. the next year, will continue to be tough for the research industry. 52% of clients expect their research budgets to be lower in 2021 than in 2019, vs just 11% stating they would be higher (the remainder being the same or could not say). However, as a result of COVID-19, 44% of clients state that research/consumer insight is gaining status in their organisation vs 26% stating that it is losing status (30% state no change).

When weighing up the balance of opportunities and threats in the research industry, a net +2% of stakeholders see more opportunities than threats. This is higher than those we surveyed outside of Asia (albeit a small sample), where a net 26% see more threats than opportunities.

The main opportunities for the research business are summed up as follows (% are those who rank the opportunity in the top 3 out of 10):

  1. Leveraging on technology (48%) – this has ranked number 1 since 2015 and involves more use of online research
  2. Faster turnaround/more agile research (47%) – a new measure for 2020, this can be related to ‘1’ above, but will also need to include faster and more iterative reporting
  3. More value-add research (41%) – defined as providing greater insight, this has been in the top three of opportunities for the industry since 2015
  4. New research methods (34%) – can include big data, new qual, neuroinsights, etc; also in the top four since 2015
  5. Refreshing/updating research in a post-COVID-19 world (26%) – a measure unique to the 2020 survey, but only ranking number 5 out of 10; only 9% cite it as the top opportunity

The main threats are as follows (% are those who rank the threat in the top 3 out of the 10). NOTE: for threats, there are more significant differences in perceptions between clients and suppliers (less notable for the opportunities):

  1. Clients scaling back on research (62%) – rising from third place in 2018, the absolute amount spent on research is expected to fall, and this was confirmed by clients in this survey when asked about their expected budgets for 2021
  2. General economic uncertainty (44%) – also rising in saliency (sixth in 2018), although clients are less likely to cite this as a threat (33%)
  3. Clients using low-cost, tech-based solutions to replace mainstream research (43%) – number two in 2018 and still salient today
  4. Price pressure (35%) – specific to open tenders and procurement, although clients rate this less as a ‘threat’ (23%), but this will not affect them negatively!
  5. Clients undertaking more research in-house (35%) – clients rate this much higher at 53%, perhaps because they know they are going to do this!

Conclusions

The fall in optimism for the research business has been highly influenced by the prevailing economic conditions, with many companies having to lay off staff and expecting to do so for the second half of the year. Clearly this is dampening the mood of the stakeholders.

What is clear is that the rate of change for the industry is accelerating. 51% of the stakeholders state that in the next five years the industry will see ‘big changes’ in terms of the type of research organisations there are in the market, including 8% stating that the kinds of research departments and suppliers present today will no longer exist. This compares to 38% when we conducted the survey in 2015.

For the more immediate term, e.g. 2021, the research industry will be lower in revenue, but clients will have higher demand for insights in a more changeable world. They will be investing in faster, more tactical research, and are likely to postpone investment in reassessing their segmentation partly due to cost, but also because the market remains volatile and uncertain, which could make these new models obsolete again.

Suppliers have already made significant cuts to their overheads, and there will be more pain to come. Encouragingly, there is still some hiring going on, with 34% of suppliers already hiring or intending to hire new staff, and making efforts to retain staff through more flexible work arrangements and a net insourcing of services.

Suppliers might need to emulate what clients are doing and to focus on their existing clients and business, i.e. ‘customer-centricity’ and ‘enhancing customer experiences’. They are also taking steps to invest in new IT and the licensing of new products. They see a greater need for faster, more agile research, but clients seem to be more satisfied in these areas. There will need to be a change in the way agencies report data, with clients looking for better data visualisation than the ‘storytelling’ that was more in vogue a few years ago, but with agencies seeing this as a higher priority.

Clients also report that consumer insight is, on balance, gaining status in the client organisation. While we might need another year to ride out this dreadful storm, we can still tell our children that consumer insight is a worthy profession to go into…

By Piers Lee LinkedIn, Deputy Editor of Asia Research

Asia Research would like to thank Toluna for hosting the survey and data processing.