This moment could best be described as one of flux for the big market research firms in the United States and beyond. Nielsen, WPP and Ipsos have all recently released reports that seem to signal a decline in traditional market research.
Martin Sorrell, WPP’s CEO, recently described the sluggish state of advertising as one of “hand-to-hand combat in the trenches”. Proctor & Gamble, with its annual ad spend of $5 billion, has just announced a top-to-bottom overhaul of the way it spends that budget after two years of frustratingly hit-and-miss results with Nielsen and its IBM-supplied service DemandTec.
Meanwhile, Plano, Texas-based digital data collection firm Research Now has just announced a partnership with Vancouver’s Vision Critical, a long-time innovator in the field of market research. You may not have heard of Research Now, a global leader in digital data collection, since they’re nowhere to be found in the 2012 Honomonichl Report, the go-to reference on the state of the industry. Which is why, if all you’re paying attention to are the fortunes of traditional market research, you might have the impression that the industry is going down, and going down hard.
A recent report from GroupM pegged 2012’s global digital ad spend at $99 billion, up 16.2% from the previous year, in sharp contrast to the sluggish 2-3% growth for advertising in general spoken of by WPP’s Sorrell. The report goes on to predict that 2013’s numbers for digital ad spend will reach $113.5 billion.
GroupM’s Global Chief Digital Officer Rob Norman wrote in the introduction to his report, “The internet no longer belongs to the old world and eastern Asia, nor does it depend upon evolution of infrastructure conceived a generation or more ago, but instead reaches every continent and economically active individual.”
So who stands to benefit from the seismic shift currently taking place in the advertising and market research industries?
Kurt Knapton, Research Now’s CEO, in one particularly informative Skype chat with Vision Critical’s Scott Miller and GreenBook Blog’s Leonard Murphy, says, “I think the companies that can put pattern recognition together along with the opinions and the self-reported information will really have something special.”
Scott Miller, Group CEO of Vision Critical, concurs that while the industry and buying are slowing down, “At Vision Critical, Q4 new orders for insight communities were up 40%, orders for Q1 for insight communities were up 100% from the prior year. Those insight communities are being engaged and driven by market research science and art.”
In other words, the revenues streams are being redistributed. Market research, at the same time as it is being fragmented, is being broadened and not very well reflected in numbers that terrify large agencies like WPP.
Marc Pritchard, global marketing and brand building officer at Proctor & Gamble, caused chuckles throughout the industry last year when he stated that P&G’s goal is to have a “one-to-one” personal relationship with every consumer on the planet. The thing is, he wasn’t joking. He was talking about digital, and it’s this mentality that is shaping his company’s decision to overhaul its buying strategy.
In 2012, mainstream media pundits laughed at Nate Silver and his New York Times-affiliated 538 blog, suggesting that he and the Times were biased in favour of the incumbent. In the end, his analysis jibed with election results to the tune of almost 100% accuracy. The pundits? Not so much. His secret? He looked at the actual data. Market research firms and agencies who are selling the ROI equivalent of “What does your gut tell you?” should be looking at numbers like those in the GroupM report and panicking in recognition.
Vision Critical, in partnering with Research Now, has positioned itself to reap the benefit of the changing media landscape. And contrary to reports on the health of the large firms and agencies, their future seems set to grow by double digits.