Asia Research spoke with Kristin Luck in October 2021 to assess the state of the consumer insight industry and the key developments to expect in a recovering market.
Kristin became President of ESOMAR in March 2021. She runs her own growth strategy consulting firm, and also provides investment banking services to those investing in or buying/selling businesses within the marketing consulting/insight sector.
Kristin comments that the consumer insight industry globally has fared much better than analysts were expecting. By the end of 2020, the industry had seen just a 6% decline, when many were expecting a decline of 20% or more. There were considerable variations by geography, partly due to when the pandemic impacted the various global markets. Asia Pacific saw the earliest recovery, and there has been some rebound in the UK and Europe, while Latin America has been the slowest to recover.
However, the biggest positive impact on the global position for the consumer insight industry is the US market. The research tech sector actually experienced growth during the pandemic, and with it, investment and growth in tech-related consumer insight. In 2020, the US accounted for 54% of the global spend on market research, compared to 44% in 2016. The Asia Pacific share still stands at 15% (the same as 2016), but has grown in absolute terms from USD$6.52 billion to USD$13.78 billion.
This growth is partly attributable to some redefining of ‘market research’ in the market sizing calculations, as technology providers within the consumer insight arena are now included. This reflects clients seeking insight from ‘data’ and not just from traditional consumer insight.
‘Traditional research’ has been in decline since before the pandemic, although Kristin points out that clients still value traditional methods, but want to see the marriage of both primary and secondary data to obtain the ‘bigger picture’. With a huge shift towards online shopping, online media, and e-commerce, corporations also benefit from having far more data to use from online activity and transaction information.
Another key development is faster-turnaround research, which means that corporations can respond more quickly to changing markets. The pandemic was an unpredicted and highly disruptive event, requiring corporations to respond very quickly to lockdowns but also to the reopening of markets. There has been development of platforms and end-to-end solutions to provide both speed and value for money, and consequently we have witnessed huge investments and M&A activity among technology providers in these fields, such as Qualtrics, FocusVision, Confirmit, and Quantilope.
In parallel, we see M&A activity among traditional research firms. Most of the big firms cannot grow organically, as many of the key global research markets have almost reached saturation. The big firms have relied instead on acquiring others to grow or maintain market share. Some of the more generalist boutique research firms have been ‘eaten up’ in this manner, or have gone out of business if they cannot demonstrate a sufficient level of specialism. Kristin summed this up: “It used to be the case that if you were all things to all people, you would grow. Now it is the opposite – the more specialised you are and the more specialist advice you can bring, the more business you will get.”
The opportunity with changing business models
Kristin comments that the pandemic has also fundamentally changed the way consumer insight firms do business. Clearly, lockdowns have forced employees to work from home more, and as a result, companies have been able to reduce their facilities costs by taking smaller offices and/or operating a hybrid office- and home-working arrangement for the longer term. It also means that the location of the office is less crucial if employees only have to make the commute two or three days a week.
But the bigger opportunity is how remote working takes away the limits of hiring by geography. While firms have offshored work to cheaper locations for many years now – e.g. locating back-office work in low-cost markets – the bigger opportunity is now in identifying and hiring talent nationally, regionally, or even globally that is the best fit for the company – people who never have to relocate, and can come to the office or other centralised meeting point perhaps once a quarter while on a tourist visa. There are even HR firms (like Deel) that specialise in managing staff scattered around the world, e.g. handling payroll, legality, and healthcare.
Kristin points out that if there are two firms competing with each other, a “remote-first” firm – the firm that utilises global talent and has lower overhead costs – will likely outcompete the firm with an “office-first” approach, which is limited to hiring within its city catchment area.
The threat of big consulting
We have seen how ‘big data’ can work in harmony with traditional research, but Kristin raises the issue of ‘big consulting’. With easier access to data, management consulting firms are increasingly offering consumer insight as part of their services. Market researchers have for too long been ‘wrapped up in tables and charts’, whereas management consultants are better at storytelling, identifying the ‘so what’, creating hypotheses, and interpreting what consumer insight means for the whole business.
They have the advantage of having much more strategic relationships with their client organisations and contact with the C-suite. Kristin comments: “The difference between research agencies and ‘big consultant’ is that the latter ‘thinks like a CFO and presents like a CMO’.”
It seems like clients might be willing to pay large premiums for consumer insight after all!