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Is Traditional Market Research Threatened by the Digital Industry?

As the Market Research Industry battles redundance  in a digital world, this article will try to investigate how the Market Research industry is impacted by the all-digital economy and how it can take advantage of it. This post will try to define threats posed by digital advancements to the Market Research industry, and explore the future of market research and how mobile market research is poised to lead the market industry.

digital-researchThe Market Research industry is traditionally divided between qualitative and quantitative market research. Both regroup multiple techniques whose primary target is to collect data (complex or simple) in order to know the current and future state of a specific dimension of a business. These studies can be punctual or are conducted on a regular basis and become barometers or indexes that help define and anticipate trends. Used over the past century, those techniques are indeed threatened by the digital economy.

As with any traditional business, the Market Research industry should expect digital enterprises to set up a budget to perform market research activities. For instance, e-commerce businesses need to know their customers and the trends with regards to goods sold. Mobile Application developers need to know what are the next features they should focus on, etc. However, those businesses rarely work with traditional market research companies for three reasons:

1. Market Research is all about data

“Voice of the customers” market studies have lost value in the Web 2.0 economy as digital enterprises know exactly their customer behaviour, and do not need to survey them. It takes a few clicks for a web product manager to follow up in real time their customer behaviour: how the customer interacts with the products, what he likes and dislikes, how much he is willing to pay. These data can be collected directly by the company digging into their backend system or by plugging into a third party system. You can create your website heatmap in seconds with crazy egg, view and analyse your customers’ segment with Kiss Metrics and perform advanced customers’ behaviour queries with Google analytics. Similarly, some mobile application with tracking systems such as Flurry Analytics or Capptain helps to track all in-app behaviour. When it comes to the TV screen, the new platforms such as Hulu, Netflix, or Apple TV are doing a much better job at tracking real-time audience and viewers’ behaviour than did the Nielsen tracking system over the past century.

Digital businesses are great with data

Hence, you do not need to ask market research companies what their customers do and feel. They just know it in real time. Last year acquisition of Vizu, a web advertising tracking solution, by Nielsen was a right move to keep in the game of measuring audience and delivering recommendations to brands.

2. Prospective research is all about statistics

Analysing historical data to predict future behaviour has long been the job of statisticians using complex models ensuring unbiased forecasts… which seldom materialized. In the digital world, the future is now and we can question it on the spot. Digital companies are often familiar with lean management methods and the need to improve through iteration. Based on current customer behaviour, digital companies can tweak their product instantly and rapidly calculate whether their predictions were correct or not. Continuous iteration allows seeking for the optimal product strategy without the need for a Market Research firm. In this area as well, off-the-shelf software such as Unbounce or Optimizely exists in order to conduct A/B or multivariable testing on web pages.

Digital businesses are great at statistics

Amazon probably epitomises the threat that well managed digital businesses pose to the Market Research Industry. Amazon knows all the information they need about prospects and customers (maybe even more data than only what they need) and Amazon collects a massive amount of data across tons of verticals that can be aggregated and segmented to predict behaviour. Specifically, Amazon periodically analyses user-browsing histories to identify correlations between purchases, viewing events or other actions performed with respect to particular products. As a result, Amazon can recommend the best products to their visitors, using only their internal data.

Note that there’s no mention here of “social data” or other “big data” to make market research irrelevant. Simply mentioning internal data combined with smart analytical tools.

3. Pure software companies the new ‘Market Research Leaders’

software-serviceIf most of the software and tools listed above work for product/company specific analysis, there’s still a need for broad data and research at an industry/ecosystem level. Here again, traditional data collection methods are fast becoming irrelevant. You need research about the web?  Turn to SEO data companies such as Alexa Ranking or Google to drill down the World Wide Web and get instant and accurate data. You need research about the Mobile application market? Turn to mobile analytics companies such as App Annie or Distimo to dig deep Lexapro into the intimacy of the Apple AppStore market or Google Play marketplace. You need research about the Facebook app ecosystem? Visit a specialist data provider such as Appdata and gain access to your favourite social network trends.

Digital businesses trust their budget with a digital company

Market Research in the digital world is about automatic data collection and analytics. Most traditional Market Research companies did not invest in this area or did not provide the right ecosystem to attract relevant talent to build these products.

 

NOW: HOW TO TURN DIGITAL THREATS INTO OPPORTUNITIES FOR MARKET RESEARCH COMPANIES?

 

Smart market research companies could use those threats to their advantage.  Key trends that we believe will emerge in the near future:

1. Market Research Company will become Software Company

Market Research companies that do not invest enough in software will loose the game as they will not be able to collect the right data at the right moment. Market Research Companies will need to become technological companies or else build strong partnerships with technological companies. This can be quite challenging, as the mind-sets of those industries are quite different.

2. Market Research will become Consultancy

Usually, most software won’t be able to provide directly actionable recommendation for brands. The modern market researcher should master IT tools to get accurate data, but human brains would do the final recommendations. For instance, understanding the impact and opportunities arising from Meme website for a traditional pet food company is clearly a job for the smart market researcher. A superlative Market Research Company will provide insight and consultancy.

3. Primary market for Market Research will be… mobility

mobilityHowever large the digital sector may be, brick and mortar companies are here to stay. People will still buy at retailers, supermarkets and coffee shops, go out, travel, visit their banks and local brokers. Traditional customers of Market Research will never be able to only rely on their Facebook page to understand and anticipate their customer’s needs. Where software is not available, market research should be. Collecting data on-site, at the point of interaction between brands and customers will become more and more relevant. It’s a safe bet to believe that in the near future, brands will add kiosks and tablets at all points of interaction with their customers. Offline businesses will then be able to instantly and globally collect relevant customer data. This may provide a chance to regain a trusted position for those investing in the right technologies. Tablet based technology such as Datafield will be ubiquitous, with instant and fun data collection methods, taking advantage of stickers, smileys, thumbs up or any other non-text method to collect customer feedback.

4. Face-to-face survey will still exist, but empowered by mobile

Market Research companies focusing on the distribution sectors, performing mystery shopping and retail audit works, have already taken advantage of rugged devices. They scan barcode at the speed of light and report key data instantly. The ubiquity and power of smartphones will spread the use of mobile devices to almost all onsite research. Simple customer satisfaction surveys delivered at the point of interaction, whether it is through the customer smartphone or the brand’s screen, will be the norm. Brands will monitor instantly and in real time customer happiness in the offline world. Customers will take back control of when and how much they want to share when interacting with a brand.

5. CAPI will be mobile only

The current use of phone, mail or email methods to conduct interviews is bound to diminish as those intrusive and easy-to-reject methods are becoming less and less efficient. Direct, face-to-face, methods with the use of tablet and mobile will probably be cheaper and bring higher response rates. Several survey apps are already flourishing on the market. Kantar took a stake in Lumi mobile, Survey Monkey is preparing its own, and independent players such as Datafield  are providing platforms on which the market research industry and panel providers can make profits. Market Research companies will need to adopt a Mobile First strategy in developed countries and Mobile only strategies in emerging markets.

 

Indeed, the market research industry is at a crossroad, and should decide whether it will be taken over by technology companies or to integrate software and improve their value proposition to stay relevant to brands. Anyhow, mobility is poised to be the key element  which determines whether Market Research companies will survive or decline.

Antoine Déroche is CEO and Co-founder of Datafield, the mobile form builder available for iOS and Android. He has founded several successful companies, included a mobile agency based in HCMC, Vietnam. Antoine is now focusing on helping enterprises measure and improve customer satisfaction with mobile applications. He can be reached @Datafieldapp or via LinkedIn