What will the entry of Google into market research mean for the industry?
Google Consumer Surveys is a deceptively simple product. Limited questions, simple (and low) pricing, and the promise of focused customer feedback. Other DIY tools such as Survey Monkey (which I use regularly), have not yet gained strong traction, perhaps because they lack the access to consumers that is an important part of an agency’s service.
I believe that Google may well be the disruptive technology that finally wakes us up to some of the changes that are about to take place in market research. I know that we have heard the cry of ‘change, change’ before, but this time it could be truly different, because Google are at the intersection of a number of trends in broader society as well as market research which when pulled together could have a profound influence on the future of the industry.
Consider the ‘benefits’ that market research provides clients. They include consultancy (business understanding), consumer understanding, research design (sampling, questionnaire, discussion guide, etc), data collection, analysis and communication of learning (report, presentation, etc).
Large agencies have a business model that is based on data collection (and they account for a large part of the industry, with the top 10 companies accounting for more than 50% of global market research revenues). They typically base charges on a cost per interview basis. These costs are already falling with changes in data collection (from face-to-face to phone to online and ultimately to mobile) and will continue to fall. Google along with other DIY research platforms offer a basic service at very low cost (and with quick turn around too). While the industry incumbents complain that the service is not quite as good as theirs (i.e. ‘poor quality, not proper research’), users will gradually shift to the quicker and cheaper version for problems that can be addressed within a simpler and more focused service delivery. And over time, the disruptive technology will improve, add features and become the mainstream. This is a classic example of disruptive innovation (c.f., The Innovator’s Dilemma by Clayton Christensen), and I believe the current business model of many agencies, as the access to sample becomes more open, and survey design, data collection and basic analysis automated.
Looking more broadly at ‘data’, the latest ESOMAR report estimates that the market for ‘business intelligence’ is at least 50% more than that currently defined as market research (and they are conservative). They include software companies, media monitoring, sample providers, web traffic measurement, social media communities and more general and business market reports.
Consider IBM who is a major player in business intelligence, although outside the mainstream industry. Their Global Business Services division alone has a turnover of US$ 20 billion (by comparison, global market research revenues are US$ 31 billion and Nielsen is the largest single company with a turnover of US$ 5 billion). In the last 3 years, IBM has acquired Cognos and SPSS, while Oracle acquired Business Objects, EMC acquired Green Plum and HP acquired Autonomy. All of these companies are moving into the business intelligence and analytics space, and market research no longer has privileged knowledge of analyzing consumer data. Arguably, we are poor cousins in the area of business analytics compared to these specialists.
Many companies have the analytic skills to be successful in business intelligence, but who has the data? I think this is where Google may have a big (and increasing) advantage. Of course, individual companies will continue to hold a mass of data about their customers, and the more they integrate this data internally as well as externally the more they will be able to leverage their understanding. Currently, that doesn’t happen, and many companies struggle to even share the information they have internally. Perhaps this will change.
It is clear that Google already have a mass of data. It will be interesting to see how they integrate this information (they have already changed their handling of privacy to allow greater sharing across their different activities). You can start to see the future if you check their “Insights” page (https://www.google.com/insights/), which has access to Analytics, Consumer Surveys, Trends and other knowledge sources. Google could potentially have more data on larger samples of consumers across more domains than any other single company in the world. When that can be linked to other behavioral data held by individual companies, who knows what might be possible?
There are three inexorable trends in the market research world:
- the quantity of customer data keeps growing and growing (read Into the River by Tony Cosentino for more on this)
- new approaches and new technologies will continue to encroach on core market research business activities
- the importance of combining data into holistic insights has never been greater
So where does that leave the industry? The current business model means that too many researchers are selected, trained and developed as project managers. The changes taking place will require a paradigm shift both in the business models of agencies and the skills required by researchers, who will need to become more knowledgeable about different data sources and have the ability to analyze and more importantly synthesize information into simple and focused stories for clients.
Many researchers already have many of these skills, and also possess one skill that the data holders and analytics experts do not have. They understand human behavior and motivations.
Big data means big changes. Those who want to take advantage of these shifts will need to have analytic, creative and storytelling skills to weave more and more threads of data into compelling stories to help client businesses succeed in an increasingly complex world. And above all, they need to understand human behavior, something data will never be able to describe adequately.