Fragmentation! The 2013 Research Buyer Survey

The 2013 Asia Research Buyer Survey has become one of the main features in the Asia Research calendar.  The 6th annual survey conducted in Singapore among around 100 clients who engage external market research agencies at least once a year shows:

  • Big increase in the use of independent agencies and a corresponding fall in use of multi-national agencies
  • Going direct to online panel companies continues to increase – now 47% do this compared to just 30% two years ago
  • About a third of corporations (32%) now engage freelancers for their market research needs, up from 19% a year ago

The survey, conducted by telephone during February and March, shows that the market research industry in Singapore is fragmenting at a very fast pace.  Note only is there an increase in the use of independent market research firms, freelance consultants, and online panel companies, but about a quarter of clients (24%) claim they now operate their own proprietary panels (or Community Panels).

With budgets static but more projects being undertaken in 2013 (an average of 8.4 compared to 7.1 for 2011 and 2012) this suggests that clients are undertaking smaller, more tactical research and usually it is the boutique agencies and freelancers who are best placed to take on this type of work.

The shift of business to more specialised agencies and consultants has perhaps been a result of some dissatisfaction with the skills set of researchers in the larger agencies.  Areas of dissatisfaction as stated by clients in the survey included some of the usual gripes with agencies including poor levels of analysis and reporting, “not thinking outside the box”, but also service issues such as having to chase for updates and problems associated with having juniors working on projects and the continual staff churn within agencies.  Fieldwork quality in terms of recruitment, especially for B2B projects comes in for criticism.

“Nowadays, the research agencies instead of giving consultation and value add, the clients have to handhold the agencies.”

“They don’t know my industry well, they merely provide pretty generic summaries which are less than ideal – they should offer more recommendation.”

“Lack of insight generation means they do not come out with bold recommendations”.

But still more chasing the same business

In 2013, a total of 46 different suppliers had been used for research in the past 12 months compared to just 25 in 2012 and 23 in 2011 demonstrating that the industry is fragmenting to a degree not witnessed so dramatically until now.

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And yet in Singapore at least, budgets remain tight – overall 22% of clients saw their market research budgets decrease in 2013 compared to the year before with a similar number (22%) seeing an increase with the remainder stating no change.

While the size of increase/decrease of budgets was not recorded, anecdotal evidence suggest that net budgets might see a net fall overall, e.g. with corporations seeing greater percentage decrease in spend than increase.  Interestingly, the sectors that saw the biggest fall in their budgets in 2012 (being financial services and business-to-business), are now propping up the industry– these sectors are seeing a net increase in their budget which might be an ‘adjustment’ from big falls in earlier years.

 

Clients in the technology and media sector are seeing net falls in their budgets on average and even the normally resilient consumer goods sector see a slight net fall in budgets.

With yet another static year in Singapore and more suppliers chasing the business, it is surprising that less than half of all clients have received sales calls from agencies in the last year – only 42% find out about new agencies by receiving sales calls which is fairly consistent with previous year’s surveys.

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The usual means for clients to search for suppliers is through consulting personal contacts within the research industry and since buyers are now becoming more experienced, tapping into their personal networks is very useful to them.  There has also been a big increase in clients seeking agencies by attending conferences and seminars, and Asia Research likes to think that this is down to our regular events with those being cheap propecia online canada held by the MRSS now becoming less frequent and less patronised, particularly by end clients.  Indeed only a third of clients now refer to professional bodies like MRSS and ESOMAR to seek new agencies.

Another big change in 2013 is the practice of undertaking formal reviews of agencies, e.g. inviting agencies to present credentials on a yearly basis.  About three-quarters of clients do this (73%) up from just half (49%) in 2012, and the success rate of agencies is generally about one-in-four, i.e. out of four presentations the client will go on to work with one new research agency (a similar figure to the previous year’s survey).

Correspondingly, there has been a significant fall in putting briefs out to open tender, suggesting that clients are taking a more ‘mature’ approach to selecting their research suppliers, for example on value add than on price.  Also, the role of procurement departments has not advanced any further within client organisations – about 60% of clients state that they have no role in their contractual negotiations with agencies and few client see their influence increasing.

So who’s gaining?

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Each year the Asia Research survey records brand recall and usage of agencies.  In terms of usage, there are no major changes in the last year.  While the large agencies have maintained if not slightly increased their market penetration, as we have seen overall use of the large MNC firms has reduced meaning that clients are perhaps using just one large agency and increasing their usage of smaller agencies.

There are no obvious gainers in the market among the smaller agencies, and there is a shift in business towards a much greater repertoire of agencies in the market as shown in the earlier findings where over 40 different suppliers were encountered in the survey.

Clients were therefore asked which agencies they viewed as ‘up-and-coming’, such as perceived as ‘growing strongly and increasing their profile’.

 

With the merger of Ipsos and Synovate now well behind us, Ipsos actually receives several votes as one agency that is ‘up-and-coming’.  This is probably due more to their ability to have attracted a new management team and also improvements in their employment image (as reported in the Q1, 2013 Asia Research).  Based on the survey, they have increased their market penetrationbut more significantly Ipsoshave increased their overall awareness among research buyers from 82% to 94%.

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However, it is the smaller and younger agencies that get more votes for being “up-and-coming”.  The agencies who received the most votes here included BDRC Asia, Kadence, ORC International, Added Value Saffron Hill, and Asia Insight.  BDRC Asia and ORC International being some of the newest agencies in Singapore have done a lot to increase their brand awareness in the last year especially BDRC Asia.  Votes for other smaller agencies also considered to be up-and-coming include Flamingo Research, Consumer Faces, and Vision Critical.

A range of other brand image questions highlight the relative strengths of the more established agencies that operate in Singapore.

Nielsen’s brand equity is still very strong and outshines their peer group for being ‘highly regarded in the industry’ and for the quality of its field operations.

Millward Brown performs quite strongly for having a good senior management team (ahead of  TNS and Ipsos), and has a slight edge in their reporting.  Millward Brown’s advantages in these areas are greater among clients who have actually engaged their services, i.e. the differences are more significant when based on the clients who have used each of these agencies.

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Few of the big agencies are thought to be responsive or flexible, and even fewer are associated with giving reasonable prices, and overall the points of differentiation between the large agencies are quite small, which might explain why usage of MNC firms in a fragmenting market is falling.

Asia Research looks forward to undertaking this survey again in 2014 where we will continue to track the fragmentation of the industry.  We thank all clients for their contribution to the Asia Research surveys.

NOTE: full survey results are available on a commercial basis from Asia Research.  Please contact surveys@asia-research.net for more information