The Asia Research Buyer Survey 2016

  • In both, Singapore and Indonesia, research markets are stagnating
  • Corporations are concentrating their business on mainstream research agencies – are ‘alternative suppliers’ going out of fashion?
  • There is an increase in the direct engagement of online panel companies in Singapore, though they have yet to make traction in Indonesia, and community panel development is struggling in both markets

The 2016 Asia Research Buyer Survey was conducted in June and July in Singapore and Indonesia. Our flagship industry survey is conducted among corporations’ market/ insight managers or marketing personnel who engage external firms for full service market research at least once a year.

Singapore and Indonesia are markets that are geographically close, but they contrast in terms of market size, the level of international research, and the use of online survey technology. The Asia Research Buyer Survey shows, however, that they are becoming more similar in some aspects, for example in their practice of insourcing research, their increased use of in-house analytics teams, and, to a degree, their misgivings with their current suppliers of market research.

Singapore and Indonesia are also markets under pressure, reporting little to no growth in research spend. The once-buoyant Indonesian market, where a net 60%+ of corporations reported growth in research budgets year-on-year, has now dropped to a net 5% increase. In Singapore, the market has softened with fewer companies reporting growth in budgets in the last year (down from 28% to 18%) and the same number reporting a decline in budgets, producing zero net growth.

Today, almost all corporations use a combination of insourced and outsourced research but an increasing amount of research is now being conducted within client organisations. In-house research departments use desk-based research and leveraging customer and transactional data from their own internal databases. Indonesia in particular reports far more insourcing of research, rising from 69% in 2015 to 96% in 2016.

Within Singapore, the most notable development in the last year has been an increase in the direct engagement of online panel companies by corporations. From 2012–2015, this stood at about 40% of corporations and has since risen to 60% in 2016. This demonstrates that insight departments are increasingly cutting out research agencies and undertaking their own analysis and reporting. However, the use of community panels has not grown in the last year, and remains at less than 20% of corporations.

In Indonesia, panel companies are yet to make much of an impact, with only around 10% being engaged by corporations directly, and community panels making little impact so far, at just 3% (no change since 2014).

The use of agencies

Corporations usually use a combination of multinational agencies and smaller independent agencies. In Indonesia, the multinational agencies used to dominate the market, but independent agencies have increased their market penetration significantly in the last year, from 70% in 2015 to 89% in 2016. However, the actual number of individual vendors used in Indonesia has fallen from an average of 4.7 per client in 2015 to 3.6 in 2016, and clients seem less open to considering new agencies as they had been in previous years.

In both Singapore and Indonesia, the use of alternative suppliers for research has fallen in the last year, including less use of management consultants, branding consultants, specialist analytics firms, and freelance consultants.
Furthermore, ‘DIY research’ that had been growing in both markets from 2014–2015 is now less popular. In Singapore, this might be due to the convenience of using the various online panel companies who can undertake more complex programming that might not be possible through the more basic DIY online platforms such as SurveyMonkey.

The issue with agencies

There is no shortage of complaints about research agencies from the corporate clients’ point of view, and this is particularly the case in Indonesia. The biggest issues in Indonesia are the lack of knowledge of the client’s industry, leading to weak recommendations. This can be an outcome of less senior researchers being assigned to projects, resulting in projects being poorly designed in the first place. A third of clients also complain about the lack of clarity in reports and the inflexibility of the agency in terms of accommodating client requests.

Common complaints across both markets are the lack of depth of analysis, suggesting that agencies are simply not dedicating enough ‘brain time’ to projects. There were generally fewer complaints from Singapore, but while there are evidently more senior researchers assigned to projects, clients still feel that their agencies do not understand the key business issues behind the research. Singapore-based clients complain more about the turnaround time of projects and the quality of the final delivery, e.g. presentations. The need for a faster turnaround of results might also be pushing more clients to go directly to online panel companies, as well as the need to lower overall costs of research. The latter is one of the leading complaints about agencies in Singapore.

 

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In Singapore, the research agencies that have gained ground in the last year include ABN Impact, BDRC Asia, Flamingo, and Kadence. In Indonesia, according to the survey, research agencies gaining include BDRC Asia, GfK, and especially Nielsen.

The top factors that might push a client to consider a new agency tend to be in areas where shortcomings in the agency can be seen, e.g. lack of insight, lack of knowledge of the client’s business, etc. But in Indonesia, a client might also be tempted by a cheaper agency, even though the cost of research ranks relatively low on their list of complaints about agencies. Indeed, the considerable growth of Nielsen’s market share in Indonesia in the last year could also account for some clients now associating them with lower prices (19% against an average of 4% across their peer group of MNC agencies including Ipsos, TNS, and Millward Brown).

In the client’s view, the level of differentiation between agencies overall is still quite limited, particularly so for Indonesia where only 18% of clients could name an agency that they felt was different from the others, and only 5% stated that they had recently met a new agency with which they had been impressed. This contrasts with Singapore, where 42% of corporations could name agencies that were ‘different’, and 20% had recently met an agency with which they had been impressed.

Conclusion

Both Singapore and Indonesia are currently rather tight markets, where growth has mostly petered out and where clients can enjoy access to a much wider range of agencies. Based on the 2015 Stakeholder Survey, most clients stated that it is either ‘fairly’ or ‘very’ easy to on-board a new agency. Hence, we can expect more shopping around, and further rises and falls in the fortunes of individual agencies as they battle it out for business.

Although Indonesia is less buoyant the market than it was in previous years and less open to new agencies than it used to be, the country still provides some of the better opportunities for agencies. Firstly, there are more complaints about agencies in this market regarding issues of delivery, and there is still a lack of differentiation between the agencies currently operating there. Based on the Organization for Economic Cooperation and Development’s (OECD) economic forecasts, growth in Indonesia is expected to pick up in 2017 to 5.5% and public spending should also gather pace. In contrast, the Singapore Purchase Manager’s Index has fallen for the 12th straight month in June 2016, with global demand subdued, suggesting a more challenging outlook for the industry in Singapore.