NEWS15 May 2020

Majority of UK research firms see significant Covid-19 impact

Covid-19 News UK

UK – Research businesses in the UK have experienced significant declines in revenue due to Covid-19, research from MRS and Watermelon Research has found, while the MRS has published guidelines for returning to work. 

Almost seven in 10 ( 68%) of the social and market research firms participating in the online survey said their revenue had declined significantly since the start of the outbreak, while 19% had seen a slight decline.

Most of the 176 MRS member businesses surveyed for the research ( 67%) anticipated that their revenues would decline by more than 25%, while 28% predicted a drop of 75% or their revenue to stop completely.

Smaller research suppliers have been hit hardest, the research found – micro-businesses ( 0-9 employees) were the most likely to say that their revenue would be down by 75% or stopped completely. Businesses with 49 or fewer staff and revenue below £5m were more likely to have experienced delays to client invoices being paid on time.

The research also found that 60% of businesses had furloughed staff as a result of the outbreak.

While awareness and knowledge of the government’s furlough initiative was high ( 92% knew a lot or a little about it), almost half ( 45%) of respondents had either never heard of the Self-Employed Income Support Scheme (SEISS) or knew very little about it, and there was not significantly higher awareness among independent consultants.

Respondents were quite pessimistic about prospects during the next few months, with 69% very or fairly pessimistic about the next quarter ( 63% for the next six months).

The outlook did improve slightly for the next 12 months – 41% were pessimistic, while 38% were fairly or very optimistic, but smaller businesses showed lower levels of optimism.

During a virtual round table held by MRS to discuss the findings of the research earlier this week, Quentin Ashby, head of consulting services at InSites Consulting, said: “The challenges that small agencies are facing is worrying. Smaller agencies lead some of the industry innovation and generate new talent, so I think it’s worrying for everybody if we see a decline of small agencies in the industry.”

Ginny Monk, managing director at Motif, expressed concerns that changes to payment terms as a result of clients’ financial struggles would negatively impact the diversity of research suppliers and lead to a lower level of pricing in future. “There’s going to be a race to the bottom. If research becomes really commoditised, where does that leave the industry?”

Jonathan Clough, co-founder and director, ResearchBods, agreed, adding: “The rate at which you get cash from clients – your own liquidity – is going to be a huge issue. Everyone is protecting their own cash in this situation, and there will be casualties.”

One of the impacts of the previous financial recession in 2008 was the market becoming more competitive and margins being cut, noted Corrine Moy, global vice-president of marketing science at GfK, who said the industry risked facing similar issues as a result of Covid-19 price reductions. However, she said: “There’s not much fat to be cut – agencies have got so much leaner. The issue of erosion of margins is going to be massive going forward.”

The group also discussed the potential for quick-turnaround innovative approaches and said there was a need for case studies to be shared to support the case for clients conducting more research. Furthermore, there has been an increase in response rates from consumers for online and telephone-based research, said Monk.

Face-to-face research, meanwhile, has almost entirely halted as a result of the pandemic, due to social distancing restrictions and stay-at-home guidance. The research found that 93% of face-to-face activities are on hold.

Jane Frost, chief executive, MRS, said: “While research uses an impressive range of techniques from neuroscience and ethnography to behavioural science to deliver insight, a significant part of the sector depends on face-to-face research carried out by skilled and experienced professionals. 

“However, much like retail and hospitality, this vital part of research was closed down almost instantly when Covid-19 hit, with commissions falling away even before the start of lockdown. It is now at a complete standstill apart from a small amount of largely government work. Many businesses saw their business dry up overnight and are still paying business rates on premises they can’t use, but it is the uncertainty of not knowing when or how their ability to work might return that could see their demise.”

Frost added: “Evidence-based research will be crucial in the post Covid-19 world to guide business navigating its way through the economic crisis caused the pandemic. But it will also be essential for governments trying to understand the impact on our society as they seek to develop the right policies in a whole raft of areas from the NHS and wellbeing to the environment, infrastructure and education.”  

MRS has also published a set of guidelines for research businesses returning to work, including face-to-face activity. The advice is based on the government’s safe working guidance, however the organisation has called on the government to provide ‘much greater clarity’ on the issues of movement, e.g. use of public transport, and on people aged over 70, both researchers and participants. 

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