Market Research Roadkill
AdVoice, Singapore, June 2003 issue
There is trouble in the Kingdom of Market Research. Profitability is eroding, and in many developed markets response rates are sliding, showing a steady decrease in the general public’s cooperativeness.
In Singapore, things are still relatively well. Being a small market of around S$150 million annually protects it. But information knows no boundaries and since information is the end product of market research, the Singapore market will not be protected forever.
Things should be brighter. The Information Society practically guarantees steady demand growth for information as an established marketing decision support tool. Markets are fragmenting all the time, as are media, and with the rise of Internet and mobile marketing interactivity is on the rise as well. Marketing information is a growth market, and will remain so for a long time to come.
So demand is not the problem. Lack of supply? Hereabouts, scores of agencies offer their services. Every year several new ones join the fray, and amongst the established ones we find all the global players. So we are left to conclude that the supply side does not lack in quantity, but in quality.
Frankly, this doesn’t surprise me. The brisk pace of ICT developments is offset by a complete lethargy in the market research sector. Consumers become better informed all the time, in fact people are if anything experiencing information overload. They become blasé. No wonders that market researchers in mature markets increasingly complain about unwillingness to cooperate.
So will they change their ways? No they won’t. The market research sector strongly reminds me of small animals trying to cross a highway in the night. The oncoming traffic are ICT developments, and in the bright headlights the poor little creatures freeze up, helplessly hoping that they will not be hit when events overtake them.
Does that sound far-fetched? I think not. Take for instance TV ratings research. Virtually every advertised product addresses only part of the population. If you think that is slightly exaggerated, try walking into a supermarket. Countless shampoos, breakfast cereals, the list is endless. Each has its own target group. Advertising campaigns now typically address around ten percent of the population.
So what does that have to do with out-of-date market research methods? Let’s do a little math. The leading Singapore TV ratings provider operates a viewing panel of 750 households, resulting in net usable information for around 700 households.
So now a media planner wants to target his TV ads. Very popular shows will peak at 10 or even 15%. But the majority of spots are grouped around shows in the 5% range. This means that our media planner bases his decisions on a total sample of around 35 households. Within that sample, on average three or four households belong to the target group. The planner of course wants shows that have an above average fit, so he hopes for five or even six viewing households. Significant sample?
You don’t need to be a statistician to realize that hundreds of millions of dollars in expenditure decisions (Singapore’s annual TV advertising expenditure alone is around half a billion) are founded on quicksand like this.
I can practically hear the excuses. ‘We can’t afford larger numbers, research would become too expensive, and clients don’t want to pay such high rates’. And the clincher: ’We’ve always done it that way.’ But ladies and gentlemen highly educated market researchers, look around you; communication is changing so perhaps it’s time that the methods of measuring start changing too! Be creative, find and test new techniques and new concepts. Keep up with developments or face the consequences!
And it can be done. There are plenty of new entrants with new and refreshing concepts. One such example is UK-based BrainJuicer, that dusted up old methods with a combination of creativity and Internet-based technology. The technology consists of intelligent software that generates open questions and instantaneously categorizes the answers, basing the next question on those very answers. Creativity is used to make the interview more attractive. Consequently, BrainJuicer surveys are quick, respondents are well-motivated and both costs and lead-times are spectacularly low.
Despite the recentness of this initiative, established companies have already cast an eye on market research innovation. Two months ago, a big company took a 40% interest in BrainJuicer. But if you think that this was one of the big research agencies waking up from its lethargy, you’re wrong. The investor did not come from the agency side, but from the client side. It was Unilever…
There is trouble in the Kingdom of Market Research. Profitability is eroding, and in many developed markets response rates are sliding, showing a steady decrease in the general public’s cooperativeness.
In Singapore, things are still relatively well. Being a small market of around S$150 million annually protects it. But information knows no boundaries and since information is the end product of market research, the Singapore market will not be protected forever.
Things should be brighter. The Information Society practically guarantees steady demand growth for information as an established marketing decision support tool. Markets are fragmenting all the time, as are media, and with the rise of Internet and mobile marketing interactivity is on the rise as well. Marketing information is a growth market, and will remain so for a long time to come.
So demand is not the problem. Lack of supply? Hereabouts, scores of agencies offer their services. Every year several new ones join the fray, and amongst the established ones we find all the global players. So we are left to conclude that the supply side does not lack in quantity, but in quality.
Frankly, this doesn’t surprise me. The brisk pace of ICT developments is offset by a complete lethargy in the market research sector. Consumers become better informed all the time, in fact people are if anything experiencing information overload. They become blasé. No wonders that market researchers in mature markets increasingly complain about unwillingness to cooperate.
So will they change their ways? No they won’t. The market research sector strongly reminds me of small animals trying to cross a highway in the night. The oncoming traffic are ICT developments, and in the bright headlights the poor little creatures freeze up, helplessly hoping that they will not be hit when events overtake them.
Does that sound far-fetched? I think not. Take for instance TV ratings research. Virtually every advertised product addresses only part of the population. If you think that is slightly exaggerated, try walking into a supermarket. Countless shampoos, breakfast cereals, the list is endless. Each has its own target group. Advertising campaigns now typically address around ten percent of the population.
So what does that have to do with out-of-date market research methods? Let’s do a little math. The leading Singapore TV ratings provider operates a viewing panel of 750 households, resulting in net usable information for around 700 households.
So now a media planner wants to target his TV ads. Very popular shows will peak at 10 or even 15%. But the majority of spots are grouped around shows in the 5% range. This means that our media planner bases his decisions on a total sample of around 35 households. Within that sample, on average three or four households belong to the target group. The planner of course wants shows that have an above average fit, so he hopes for five or even six viewing households. Significant sample?
You don’t need to be a statistician to realize that hundreds of millions of dollars in expenditure decisions (Singapore’s annual TV advertising expenditure alone is around half a billion) are founded on quicksand like this.
I can practically hear the excuses. ‘We can’t afford larger numbers, research would become too expensive, and clients don’t want to pay such high rates’. And the clincher: ’We’ve always done it that way.’ But ladies and gentlemen highly educated market researchers, look around you; communication is changing so perhaps it’s time that the methods of measuring start changing too! Be creative, find and test new techniques and new concepts. Keep up with developments or face the consequences!
And it can be done. There are plenty of new entrants with new and refreshing concepts. One such example is UK-based BrainJuicer, that dusted up old methods with a combination of creativity and Internet-based technology. The technology consists of intelligent software that generates open questions and instantaneously categorizes the answers, basing the next question on those very answers. Creativity is used to make the interview more attractive. Consequently, BrainJuicer surveys are quick, respondents are well-motivated and both costs and lead-times are spectacularly low.
Despite the recentness of this initiative, established companies have already cast an eye on market research innovation. Two months ago, a big company took a 40% interest in BrainJuicer. But if you think that this was one of the big research agencies waking up from its lethargy, you’re wrong. The investor did not come from the agency side, but from the client side. It was Unilever…
posted by Jos. at Sunday, June 01, 2003
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