FEATURE1 August 2009

Winds of change

Features

What changes is the recession bringing to the research industry? Robert Bain asked some of the people on the frontline what they’re seeing and what they think the future holds.

Mike Jaxa-Chamiec, head of expertise at FreshMinds, says agencies need to innovate – but not for the sake of it.

?It’s interesting, because there are so many conflicting pushes and pulls at the same time. You need to find ways of giving people great stuff for not very much money. Innovation itself is not necessarily going to win you anything, because tried and tested things win out. It’s about finding better ways to do the things we’re doing.

For example, online communities are exactly the kind of thing clients love talking about, but when it comes to actually taking their wallets out it’s more tricky because, however exciting it is, for some of them it’s not so tried and tested. It’s probably only a matter of time because the potential for insight is enormous, but if you’re in a business that needs to justify its expenditure, people might struggle to bet their money on a big exciting new approach, on a semi-experiment.

“A lot of client-agency relationships are about setting expectations and delivering to them, so if during a downturn research agencies spend time delivering beyond the brief, that will have a lasting effect”

Mike Jaxa-Chamiec

A similar kind of thing applies to moving things online, like focus groups. Costs are reduced, you can get introverts to talk to each other, you can get clients to monitor the group from anywhere in the world and yet a lot of the buyers are not so sure about it. The tangibility of focus groups is something they’re very keen on. Once enough solid case studies start circulating, I think they will come round to it.

Another dynamic that I suggest exists is that good supplier relations are becoming increasingly important. A lot of client-agency relationships are about setting expectations and delivering to them, so if during the downturn research agencies spend time delivering beyond the brief, that will have a lasting effect. When before they might have had junior guys coming over, now they have the senior consultants, and that might raise eyebrows in future.

?Graeme Lawrence, director of Virtual Surveys says agencies pushing innovative approaches are in a strong position – if they can prove their worth.

?When we started doing online research communities a few years ago it was all about participating more closely with consumers, but the interesting thing that’s come out amid the downturn is the cost benefit of using them.

The classic scenario is that this approach allows clients to replace traditional projects but also to do work that wouldn’t have been done before. I think quite a lot of clients are beginning to home in on this. Set-up cost can be a slight barrier but the challenge a lot of clients have is not necessarily the cost itself, it’s the fact that they need to make a bigger ongoing investment of time than they did with other approaches. It’s a different way of working for them.

“Speaking to people on the ground, they envisage budgets being even tougher in 2010, so for us the challenge is to get organisations to see the benefit of what we do”

Graeme Lawrence

But there is a lot of pressure internally at client organisations. A lot of clients don’t want to change their ways – it’s a bit too scary a time to be trying something new. What communities often do is replace ad hoc qual and quant, and a lot of clients are cutting their ad hoc qual and quant because they just haven’t got the budgets for it.

Speaking to people on the ground, they envisage budgets being even tougher in 2010, so for us the challenge is to get organisations to see the benefit of what we do. It’s not as easy for them to have that leap of faith as it would be if things weren’t so bad.

Something that came out of our client survey is that they’re looking for agencies to come up with things that are outside the box and inside the budget. There’s still a desire to hear about exciting new ideas but there’s this overwhelming cloud that might rain on the ability to do that at the moment.

Rowland Lloyd, ?head of operations at Ipsos Mori, says we need to work smarter and faster, and resist the temptation to compromise.

?With all significant recessions what you definitely get out of it is a push for both clients and agencies to think harder about what they’re doing. It’s pretty clear that a lot of clients believe they need more actionable research and guidance than they had before.

“There’s been long-standing pressure for speed but it’s more significant now because the issues the client is dealing with are changing more rapidly”

Rowland Lloyd

But decisions need to be faster as well as more accurate. There’s been long-standing pressure for speed but it’s more significant now because the issues the client is dealing with are changing more rapidly. They need to move faster to adapt themselves to the financial crisis and get out the other end, and agencies that can cope with that will be much more attractive.

The recession is challenging the cost of research, which will push yet more work online. But we’ve got to make sure the quality and the way we do things does not get compromised because of price pressure, and that’s a tough one when you’re up against buyers looking at the purchase price as if it’s a commodity. Sometimes it’s better to walk away than to take on a project only to have the client come back and say it’s not good enough – that has a more lasting effect. For the market research profession to be credible and important to the client it does sometimes have to stand up and say no.

I think the pressure is on the industry to demonstrate its worth, and perhaps when times get easier that just means more money will be spent on research because it’s seen to be more powerful to some that it previously was.

Mike Page, founder of Cognicient, believes it’s high time we started harnessing technology to take inefficiencies out of the insight process.

?In the boom time people knew there were inefficiencies in the system but I don’t think anyone particularly cared. What we hear people saying now is, “I’ve got to pull my research together to make it work better – there must be better opportunities to use this collectively in our business.”

“?In the boom time people knew there were inefficiencies in the system but I don’t think anyone particularly cared”

Mike Page

The data they’ve already got tells them a lot more than they realised and allows them to go forward in a much more effective way. It used to be: “I’ve got a question, I’ll go and commission a survey.” But if there isn’t the money to commission it, it doesn’t make the question go away. You’ve got to do something.

These changes are bound to happen. One of the earliest driving forces for this integration was this desire to have benchmarks for everything - people are looking to evaluate the effectiveness of research in very material, ROI terms.

Most organisations have lots of business intelligence and information on what their sales are, but generally the research data is somewhere else. The right place for it to be is in front of the right manager who can do something about it. The recession has accelerated these things, but they would have happened anyway even without it.

In terms of innovation, there’s a lot of exciting stuff going on, but it’s not coming from the big agencies, it’s coming from the new start-ups. There are a lot of very smart people who’ve been caught up in the recession and let off from client companies or agencies, who have some frustration at things they’d like to do, and so they say, “OK, I’m going to have a go at this.”

Neil Swan, ?managing director of RS Consulting, sees clients and agencies being forced to think harder about what research is for, and what it’s not for.

?It’s hard to unpick whether some of the changes that are going on are because of the recession or because there’s a big transition going on in research at the moment. We’re at the confluence of two distinct changes: there’s the economy and there’s a social change in how people deal with each other.

Part of how the recession has affected agencies is that it’s just harder getting clients to commission things. They’ve found it difficult especially with larger projects to get stuff through their internal systems, and you almost end up working with them against those systems. The difficulty is that it gets in the way of their ability to make decisions on the basis of quality. Unless we’re careful, research is likely to be pushed into a commodity status.

“The hunt for the new is a bit of a problem in this climate because people believe that something new has to be the answer, rather than a recontextualisation of something you’ve done”

Neil Swan

The hunt for the new is a bit of a problem in this climate because people believe that something new has to be the answer, rather than a recontextualisation of something you’ve done. A lot of the time creativity in research comes from seeing previous opportunities, putting them together and making something different out of them.

But commercial pressures are making clients ask questions about why certain parts of their portfolio haven’t been as successful as they might have been, and that creates opportunities to question strategic decisions that have been made in the past. The challenge I would throw down is, what business decisions are you going to make as a result of doing this, and is this really going to help you make those decisions?

We’re talking to clients about using the ‘fingertips’ of their organisations instead of doing deep dives. There are a whole lot of people out there in touch with customers all the time. They know pretty well what’s on people’s minds, and there’s a lot of knowledge there that’s not being tapped.

Jo Young, ?managing consultant at MarketingReality, believes that as marketing becomes increasingly complex, research and analytics are badly needed to provide clarity.

?The problem of measuring ROI on your marketing has always existed but it fitted into the ‘important but not urgent’ category. Now it’s become urgent to understand where your marketing budget’s going, what customers think and how they’re being influenced.

“You have to be credible. You can’t go out to market without having tested what you’re doing – you need to prove that it can work and that clients can benefit from it”

Jo Young

Companies are certainly more risk-averse in this climate. What they used to guess at, they’re not willing to guess at any more; they have to absolutely know. Boards are asking more questions about what’s working and what isn’t working, but because there are so many silos within organisations, nobody fully understands what’s going on, and that’s not good enough anymore. Marketing has got a lot more complicated than it once was. This hasn’t affected any particular industry more than others – it’s public sector, it’s retail, it’s telecoms. So a lot of the conversations we’re having with clients haven’t been had before, because there’s so much cross-channel behaviour they weren’t tracking.

You have to be credible. You can’t go out to market without having tested what you’re doing – you need to prove that it can work and that clients can benefit from it. Before, perhaps clients wanted to innovate with you. Now they need suppliers because they want a problem solved now, cost effectively. They get outside help for things they can’t do themselves or don’t want to do themselves.

The mathematical techniques aren’t necessarily new, it’s how they’re being used that’s changed. And if they’re working and people are getting the ROI from them, they’ll continue to be used. I’m a firm believer that you can’t unlearn what you’ve learned.

?Richard Smith, associate director at BDRC, says online research may be growing its market share amid the recession, but its methods still have a lot of maturing to do.

?We’re finding that the quant we’re being asked to do at the moment is more tactical than strategic – it’s what’s happening now rather than the big segmentation projects, because the data that comes out this month is going to be superseded by what comes out next month. That will go on until its clear whether we’re in a V-shaped or W-shaped or – as I heard someone suggest – saxophone-shaped recession. Once clients think they’ve seen the bottom of that, they’ll probably start planning more strategically.

There’s pressure coming from the top for senior management within client organisations. They’ve got restricted budgets and they need to juice every last ounce out of each project they commission.

“There’s pressure coming from the top for senior management within client organisations. They’ve got restricted budgets and they need to juice every last ounce out of each project they commission”

Richard Smith

As far as methods are concerned, I think we’ve only just scratched the surface of what’s possible with online research. We’re seeing that online is great as long as you adopt an online approach to get the best value from it. One example is online focus groups which are awful. It’s like you’ve got all the drawbacks of an offline group but not very many of the benefits. You get so much more out of online bulletin boards, because they’re a genuine online solution, rather than an offline solution that’s been plugged into an online world.

What we’re seeing at the moment with online surveys is the beginnings of a realisation that you have to do something that is going to work in an online environment. A few years ago we were just taking CATI surveys and plugging them into an online system and thinking that will work just the same as it did when it was a phone survey, and it doesn’t.

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