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OPINION7 April 2010

The race is on for selling MROCs to agencies

News Opinion

This week, Passenger announced that it is officially selling its online community software and services into agencies in the digital marketing and market research space. Here are some quick reactions on what this means.

First, this puts it in competition with other vendors (such MarketTools, Vovici, Globalpark) that will also sell into agencies and have a proprietary platform that they can decouple from their services.

Why would Passenger announce this as an explicit strategy? I can tell you from the calls I have with agencies that they see MROCs as a value-add to clients they are working with on social media or research. Also, community services (planning, ongoing management, facilitation, reporting) are the most expensive part of the equation, and it’s likely that many of the agencies that Passenger sells to either already have some services capabilities or will be willing to take more of them on at some point. This move meets a market need and diversifies Passenger’s business channels with a potentially higher-margin offering.

Second, this announcement got me thinking about where the market for MROCs is headed, and I’ve got three main ideas:

  1. Agencies will build efficiencies of scale with communities. More agencies in marketing and market research will start using communities as a way to serve many clients. They can spread the cost of community upkeep across their accounts. Agencies will obviously still charge a premium for their expertise and services such as ongoing studies, custom projects, or even syndicated reports. However, clients will benefit from having the flexibility of being able to engage with communities as they please — and at price points that are easier to manage.
  2. End user clients will continue to need services. Because MROCs are so labor-intensive, most client-side researchers and marketers will continue to prefer to outsource this work and expertise to outside resources that can do the heavy lifting. Again, agencies are in a great position to play this role because of their broader human resources and ability to distribute investment costs.
  3. The line between marketing and market research will blur. Passenger’s announcement included quotes from its new clients. One from Direct Partners states that communities allow it to, “bring their customers into their virtual board room and [send] them back out to the social Web with positive messages.” Participating in discussions with your customers inevitably influences their perception of your brand. In social media, market research essentially becomes marketing, regardless of whether advocacy is the end goal.

Thoughts?

Tamara Barber is an analyst with Forrester Research serving market research professionals. She blogs at http://blogs.forrester.com/tamara_barber. Reprinted with permission of Forrester Research, Inc.

@RESEARCH LIVE

4 Comments

10 years ago

Great analysis. Our mantra is "it takes a researcher" to build a strong panel community. While strong researchers can often be found within corporate environments, MR agencies have research talent to spare: they're in a great position to ride this new wave of research. Additionally, while the marketing department has realized that every consumer survey is a mini-PR event with a central message (e.g. "we're listening" and "we care"), it's not methodologically valid to cross the streams between your advisory panel and your advocacy panel. We have customers that successfully leverage both types of consumer interaction, but they are careful not to characterize what they hear from brand champions as scientific research nor do they ask research panelists to "spread the word" about a new product or offering.

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10 years ago

Passenger's announcement is no great surprise - it's simple business sense for both them and their potential clients. At a time when research businesses need to look after the pennies and think carefully about making major investments in technology, it makes good sense to outsource it. Indeed, this is what mine and a plethora of other business provides - technology (social software) and complimentary set of supporting research services such as moderation and community management. Research business are not necessarily well versed in the complexities of digital user-behaviours and building and managing online communities, let alone ever-shifting web technologies, hence Software-as-a-Service and outsourced solutions make a wise investment. What Passenger's approach and others like them provide is a more seamless, expedient way to capture knowledge and insight, and firmly plant it in the heart of business decision-making (with the helping hand of some smart software).

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10 years ago

Thanks for bringing up these ideas Tamara, but is this really new? We've been working closely with agencies on insight communities since 2005. In fact, I think almost all of the companies that build insight communities have been working closely with agencies for years now. It's true that agencies see a ton a value in MROCs and think they are important for getting deep insight but I disagree that agencies just want a platform and feel that they can effectively provide the services. In fact, we've seen the opposite and it's gaining steam, now more than ever as agencies trim staff and get focused on what they do best, they want full service solutions from community providers to help them be successful with their initiatives. If they wanted to be in the market research business they would be. As well, many of the MROC providers have their own "meta-community" offering where you can "rent" space with a population in a community they don't need to go to agencies for this- the challenge is that occasionally dipping into this kind of community is never going to deliver the kind of insight that having your own, ongoing, continuous connection to your customers in a community brings. It's still useful and good, but it's just not the same thing and agencies totally get it. On your last point, organic advocacy is in fact a benefit of doing communities well and that's a bonus (however it's not going to move the needle in a significant way for B2C), what it also means though is better insight because community members will be more honest with you and do more for you if they really believe you're listening.

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10 years ago

Really enjoyed reading your comments so far. To respond to a few of the points here: While I agree that selling MROC platforms and services into agencies is not unusual, Passenger’s announcement that this is an official channel strategy reflects the fact that the MR and Marketing agency world is becoming a broader market for these kinds of tools. Regardless of whether agencies use just the platforms or full services (and I think many research agencies can easily ramp up to deliver services on their own), the fact of the matter is that their ability to spread one community across multiple clients puts price pressure on business models that rely more heavily on business from long-term, private communities. And, it actually widens the options for end-user clients (brands) who don’t have the budget or the need for the latter solution. With regard to research vs marketing/advocacy…this is a very interesting topic, and one that is relevant to tapping any kind of social media for insight. Ethically, companies need to maintain a separation between projects with these two different end goals. Market researchers understand and feel very strongly about this; and as you stated here, you must realistic about any marketing ‘halo effect’ in closed MROCs. On the flip side, though, what about social media activities and communities that are used for marketing, word of mouth, or what have you? These activities can also produce real consumer insights that aren’t necessarily integrated back into market research activities for testing, refining, or simply adding to the overall customer knowledge base. I’ll be sharing more of my thoughts on this in some upcoming research, but I do believe these lines will blur as a result of these activities.

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