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Sunday, October 4, 2009

Marketing Research RIP 2029: Why marketing research will not exist by 2029 (or by 2019 for that matter) - Guest Post by Ted Morris

Note: A mid-September tweet from #Researchlive asked for short posts about what the market research industry will look like in 2029. A retweet by @amamrc prompted Ted Morris to comment that by 2029, market research will be a dead industry. Amid a conference theme challenging us all to imagine "What's Next," we reached out to Ted to expand on his challenging idea. Here are his perspectives on the developments paving the way for the market research industry, as we know it, to die away:

These are times of transformation for an industry reputed to see the world through a rear-view mirror rather than drive marketing innovation. This current recession / depression is a good time to us to rethink, retool, and re-launch.

So here are a few things to think about when going to your next client meeting:

Mobile and the Generation ‘Effect’: Verizon just announced it's getting out of the land line business by 2012. Telecom industry analysts have suggested that the general public will have completely disconnected from land lines by 2020. Most consumers aged 16-29 currently do not have a landline subscription and are one of the most difficult target markets to contact for survey research. If you think your teenage son or daughter are hard to reach because of their preoccupation with mobile devices and the Internet, just imagine how mobile the world will be in 20 years. Focus groups won’t be taking place in stuffy rooms with one-way mirrors, fancy sandwiches, and droning moderators.

Community Building: While some say “the consumer now controls the brand”, brands have commissioned companies such as Communispace to establish brand communities – online aggregations of consumers who have a specific loyalty, interest and adherence to a brand. Communispace has built over 300 online brand communities for clients such as HP, Kraft, Reebok, Starwood, and GSK. Brands use communities for direct feedback on product experience, innovation, service ideas, and value augmentation, allocating dollars that would normally go to marketing research budgets.

Social Media Monitoring Platforms: Five years ago the marketing research industry scoffed at such listening platforms. I can say that from first hand experience having held a corporate development role for a technology startup that was looking to the MR industry for capital. The biggest objection I heard was that social media monitoring "wasn’t market research." While I never suggested it was, social media monitoring is a way to passively listen and quantify brand conversations consumers choose to undertake online. This would have been like saying that digital advertising wasn’t true advertising since it did not use traditional creative, media and pricing models.

Aptly, Digitas recently referred to the Internet as ‘one large focus group”. Indeed.
Some early adopters, notably TNS/Kantar, Nielsen and J.D. Power & Associates took the early lead in making acquisitions. In turn they gained competitive advantage in meeting emerging client requirements: provide a capability to monitor and understand the nature of online consumer content, coined as WOM – Word of Mouth. WOM was coined by WOMMA, Word Of Mouth Marketing Association. WOMMA was founded by Andy Sernovitz, one of the nation’s most influential marketing and social media observers. Public Relations agencies, consultancies and OEM’s are also partnering with companies like Radian6 and Sysomos in order to have their own capability to monitor brands and emerging consumer trends.

Big Brands/ Big Digital Branding: Pepsi, Ford, Dell, NCR, General Mills are going digital, or at least migrating in that direction, when it comes to online consumer engagement. Ford for example, invests heavily in social media to manage, monitor, measure and position Ford as the most “social” automotive manufacturer. Pepsi is using various social media platforms to engage consumers, while Dell and Marriott are generating revenues from social media platforms. All are using social media to ‘sense and respond’ to customer requirements at times bypassing traditional marketing research as the need for "real time/on demand" consumer feedback grows.

Advertising Agency networks: WPP, for example, now has a portfolio that is roughly 50% digital. The WPP network is in the process of consolidating the back offices of its four major traditional ad agencies that are, one, unnamed WPP executive was known to have said “dying profitably”. As more advertising dollars go digital so are dollars allocated to traditional marketing research: the Social Media listening industry has been pegged at $150M according for Forrester. That’s up from $0 in 2003. Publicis, MDC, Ominicom, Havas have all stocked up on digital companies the past 3 years.

Marketing Research: By contrast the market research industry has been consolidating for 10 years to the point where the top 10 global MR firms own about a 40% share of revenues. In the past 3 years, revenues have barely kept up with inflation and have actually declined in 2008 along with the drop in ad spend. In fact, according to the 2008 Honomichl 50 report, with the exception of 2004, the US MR industry has not kept up with the rate of inflation since 2001 – the dawn of social media.

Our current economic recession has also seen some client companies completely eliminate their entire global MR spend – and you know who they are. There are exceptions: Comscore has grown 400% in the past 5 years according to Inside Research. Comscore focuses on measuring in the digital world. Makes sense as digital ad spend will rise by 9% next year, according to GroupM and mobile will rise by 19%.

By contrast, traditional ad spending is seeing drops of 23- 35% in the US, depending on the industry sector – not good for the MR industry. Moreover, WPP’s Sir Martin Sorrell sees digital has having a 20% share of marketing budgets by 2014.

Haven’t heard the same about marketing research? Is that food for thought or a call to action for the industry? You decide. As Yogi Berra aptly put it, “When you get to a fork in the road, take it”. The clock is ticking. - Ted Morris ©4SceenMedia

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Kathryn Korostoff said...

The title should be, "Traditional, conventional Market Research RIP." Like many things, market research must evolve or it will die.

Anonymous said...

Hey there Ted,

Very cool post. You bring up some really interesting stuff to think about going forward. Thanks for the Radian6 shout out as well. I'm with you on the mobile phone prediction - in fact it may happen even soon than that. I wonder if we will even call them "phones" in the future because they are really mobile computing devices aren't they?

cheers. David