Size Doesn’t Matter – the 4th annual research buyer survey (2011)

Asia Research implemented its 4th annual survey of corporations who engage external market research firms.  This survey has become the centre piece for this publication, and one of the leading research-on-research programs in the Asian market research industry.

Conducted by telephone, the 2011 Buyer Survey again had a SE Asia bias, with 214 interviews conducted with ‘active’ research buyers in Singapore, Malaysia, and Indonesia, typically engaging external research firms once every two to three months.  Within this sample, nearly half (46%) had market research / consumer insight job titles, up from 37% from the previous year.  This demonstrates how corporations are placing more importance on having dedicated research functions within their organizations.

The survey also showed that the research industry has sustained its recovery from the recession.  A net 25% of clients predict an increase in their research budgets for the year ahead, slightly up from 23% in the previous year’s survey, and of course a significant improvement from the appalling year experienced in 2009 when the industry went into reverse the first time in history.

The ‘threat’ of procurement departments turning research into a price driven business is still there, but they are not making as much headway as might have been forecast in the previous year.  19% of corporations use procurement departments in ‘all / most’ of their contractual negotiations in 2011, compared to 17% the previous year.  But a fairly significant rise in the use of procurement is seen in the banking and finance industry from 24% to 44%, actually close to that forecast in last year’s survey.

There is also some rationalization in the number of vendors used by clients; in 2010 an average of 3.9 research suppliers was used, falling to 3.5 on average in 2011.   The range of vendors used is still quite broad with most using both the large multi-national agencies and independent Asian agencies.  However there is some loss of market share across all the Big 4 agencies (Nielsen, Synovate, TNS, and Millward Brown).  While retaining some of their bigger accounts, evidently they are not winning as much work across the range of clients and industries represented in this survey.

Correspondingly there is an increase in the use of freelance consultants and boutique agencies.  This trend has been observed since the first industry survey in 2008 when clients indicated that they will slowly give more business to the emerging boutique agencies, often perceived to deliver better value and insight.  But notably these types of vendors are used more among the senior research buyers, e.g. board directors, where 43% of these more senior buyers are using freelancers and 19% using the small boutique agencies.  This shows that these types of research vendors are able to access more strategic levels within the client organization where their specialism is more valued.

How agencies are selected

By far the most important quality as rated by clients is ‘the quality of the interviewing teams within the agency’ – 77% of clients rate this as ‘very important’ with another 19% rating ‘quite important’.  The interviewers are the very bed rock of the industry and yet there is an increasing tendency to outsource fieldwork to low cost vendors sometimes of dubious quality.

Nearly all clients in the survey voiced some level of dissatisfaction with their current research suppliers.  While concerns over fieldwork quality (the most important factor) was highlighted, this tends to be in the back of client’s mind, with most concerned primarily about 1) research quality, e.g. insight, accuracy of reports, and thought leadership, 2) speed of project turnaround, and 3) client servicing issues such as responsiveness and lack of staff buy cipro 500 mg online continuity within agencies.

Consequently the qualities of agencies that rank highest (after interviewer quality) are the strength of the research teams’ record in their industry or product category, commitment to having senior staff working on client’s projects, and having service quality standards in place.

‘Cutting edge analytical techniques’ was ‘very important’ with only about a third of clients demonstrating that the industry these days demands more consultative research rather black box solutions.  Some clients complain about the lack of transparency of black box solutions, although dedicated market research managers and those working in FMCG companies place greater importance on cutting edge solutions than average – partly because they are research trained and have at least partial understanding of these solutions!

Of similar importance, are agencies with staff having previous client-side experience.  This is more important where the research buyer has a marketing function within their organization rather than a purely research function.  Clients in banking & finance also place more importance on agencies that have researchers with former client-side experience.

Towards the bottom of the rankings is exclusivity.  While sometimes a pre-requisite for some clients, this can be hard to ensure in practice.  Many clients view insight into the competition as an advantage, so long as it is not their organization that is being spied on!  Again, research buyers who have marketing job titles place more importance on exclusivity probably because their research is more product-specific and therefore research is more sensitive in nature.

‘Absolute lowest price’ is ranked 3rd to bottom, demonstrating that research buyers these days have a much better understanding of value add.  The obvious exception to this are the Government research buyers who have a notorious reputation for hiring at the bottom of the market on open tender resulting in all sorts of problems for their internal stakeholders in terms of reliability of research, particularly data integrity.

And finally the absolute size of the research agency is the lowest rated attribute.  While international network is important to some (25% rate this as very important, higher among B2B clients), most recognize that the size of agency no longer guarantees quality, or more resources on a project.  In fact many clients have observed that the larger agencies are more likely to be overstretched compared to smaller agencies that are more willing to devote more senior resource to their account.  In short, size doesn’t matter!

The future

While there was no increase in the direct use of on-line panels among end-clients (generally around 30% in Singapore), what is evident is that the use of mainstream research agencies is falling.

While there are few seismic changes to the research industry predicted in the next 5 years, many do talk about the increasing influence of digital and on-line research, social media, and neuroscience.

But most of this is already with us, and some of the more insightful comments about the future of the research industry talk about the changing roll of market researcher, and the need for researchers to become more like business consultants.  One client comments that researchers should harness their ability to look at a bigger picture and to use the knowledge that they already have about markets and categories.  They state that the current ‘process’ of research is for the agency to pretend to know nothing at the start of a project, to implement a survey to induce answers rather than deduce answers based on what they already know.  But with 77% stating quality of interviews ‘very important’, there will always be the demand for new information, including from traditional Q&As.