Peering through the gloom to brighter times ahead

Industry confidence is returning, it seems. With cracks beginning to show in the gloom of recession Research spoke to Kevin Menk (pictured), chair-elect of the Council of American Survey Research Organisations (Casro) and managing partner of Strategic Resource Partners, and Casro president Diane Bowers in a bid to gauge what the future has in store for the industry.

Judging by recent third-quarter results it looks like we’re starting to come out of the recession. Could you give us an idea what agencies and researchers are feeling out there in the market?

Menk: What I can do is share with you the results of our state of the industry survey with our members. The most recent survey was completed at the end of June, at which time about 17% or 18% thought we would pull out of recession by the end of the year while another 50% estimated that it would be some time in 2010. So essentially we are looking at about two-thirds of our membership who think we will crawl out of recession by the end of next year. The remaining third were either uncertain or less optimistic, thinking that it might be 2011 or later.

Many have said previously that this recession will have a long-lasting impact on the research industry. Do we have any more clarity yet on what the business will look like following the downturn?

Menk: It is a foggy picture ahead. As we started to see last year, client companies and agency clients are consistently looking for more creative and economical ways to discover insights. In all likelihood that trend will continue, even as we pull out of recession.

When you say ‘more economical’, are we still talking a decent margin for the agencyside of the business? During the recession obviously prices have been squeezed but is there not a worry that it might be hard to raise prices again coming out of the recession?

Menk: I don’t think that [scenario] is limited to the research industry. I think client companies have done an incredible job of trying to squeeze margins out of all types of suppliers, including parts, inventory, services etc. And as we come out of recession I don’t think clients will immediately be willing to accept an increase in prices. I think the only way we will be able to successfully climb out of this market squeeze is to provide incremental value and find clients willing to pay for that incremental value.

Going back a year or so, the prevailing view was that we would soon see a split in the research market with suppliers either focusing on low-cost data collection or high-end analytics. Certainly a lot of the bigger companies were trying to move themselves towards the analytics end but they didn’t seem to be able to do that successfully before the recession hit. Will they be able to pick that up again?

Menk: It’s tough to forecast, but as clients also come out of recession and look for competitive advantage for their products and services there may be greater demand for more robust analytics to help them uncover new market opportunities – in which case we would hope they would be more likely to pay a slightly, if not significantly, higher margin for that additional value and insight.

Bowers: For a lot of clients who are outsourcing more than they were before – in other words they have really trimmed down their research departments – the need for the analytics is going to be increasingly important because data itself is meaningless without the analytics attached. So we [Casro] are playing a more aggressive role in marketing the value of research.

But how do you go about proving the value of research?

Bowers: It’s something that we’ve talked about many of times over the years. A lot of the difficulty we have is in the reluctance of clients to share case studies – they talk about research more in generalities than specifics because of the proprietary nature of what it is they are trying to prove or advance through research. It’s a tough problem to try to resolve but it should be an ongoing focus for the industry.

Is there anything that can be done to encourage clients to share more of their experiences with research or are we always going to be hamstrung by non-disclosure agreements (NDAs)?

Bowers: NDAs are more prevalent than they have been historically, but I do think there is an urgency for Casro and other associations to be a vehicle for being a little more assertive with clients in trying to get – even if it’s expurgated – stories out there. The recession has absolutely hurt the research industry, but it seems to me that there will be a continuing need for research. Clients have continued to conduct research even in these difficult times. Yes, it has been cut back, but it hasn’t been stopped. So while it would be helpful to measure the ROI of research, as difficult as it may be, I think the value is already known by clients – we just have to keep pushing that.