Research Industry

The Asia Research Annual Stakeholder Survey

The 2021 Asia Research annual stakeholder survey gives cause for optimism for the research industry. When we conducted this survey in October 2020, a net 40% of clients expected a decline in research budgets for 2021, and 26% said that the status of consumer insight was declining in their organisation.

This year, a net 16% of clients say budgets for research will increase in 2022 and only 17% state that consumer insight is declining in status vs 67% increasing (the remainder unchanged).

Correspondingly, on the supply side many agencies in 2020 reported salary/benefits reductions and redundancies, but in 2021 agencies said they made more hires than redundancies, and a net increase in compensation. 65% of agencies state that new hires were made by their firms in 2021 vs 17% reporting redundancies, and 36% say that salaries and benefits have increased vs 17% decreasing.

The impact of the pandemic was less than predicted in some respects. In 2020, 47% of clients said that their pre-COVID tracking data and segmentation models would need ‘a lot of’ or ‘complete’ updating, but in the 2021 survey only 16% reported significant changes to their models – the rest stated that pre-COVID models were still mostly relevant.

Through the pandemic, there was a big hit to the amount of research being conducted in the first half of 2020, with a marked drop in every research area (see chart). There has been a recovery in 2021 that reflected what the industry was expecting, with most research areas restored to pre-COVID levels. The results highlight growth in key areas including pricing research (possibly due to disruptions in shopping behaviour as more consumers switched to online shopping), but most notably for usability research that is expected to grow further into 2022. As corporations place more emphasis on customer experience, this has encouraged more research into usability, as well as more use of self-service channels, including online.

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Market sizing and segmentation research should be in greater demand in 2022, while tracking and U&A remain steady, and along with product testing remain the backbone of the industry.

Many forecast a large rise in analytics on the recovery, but far fewer agencies see this as being part of their portfolio in 2022. But this could be down to clients undertaking analytics in-house, and indeed 43% of clients used this in 2021, and this is expected to rise to 53% in 2022.

Neuro-insights remains a niche area and sees little prospect for growth. Ethnography did not recover as expected and still faces some limits due to social distancing, although digital ethnography is an option. Staff research and competitor intelligence have recovered but are not growing past pre-COVID levels.

CHANGES TO BUSINESS MODELS

The far bigger changes that have occurred during the pandemic have been to the business models of supply-side companies. In 2020, a net onshoring and insourcing was reported as a means for protecting jobs, but we now see the opposite, and this is expected to continue into 2022. It is possible that the industry had to lose a lot of blood in 2020, but does not want to take back the overhead in the recovery.

Furthermore, agencies are now using remote working as a means of casting their recruitment nets much wider, even internationally. 29% say that in response to the challenges the industry is facing, their companies are hiring talent from a much broader geography to work remotely. Another initiative to meet the changing market is to specialise, including for  methodology and for specific industry sectors, although relatively few firms say they are looking to identify new, less contested markets to sell to.

Remote working has also helped companies reduce their costs. 34% of companies have reduced costs by moving to cheaper locations or downsizing their facilities and having more people work from home. This is now becoming a longer-term norm.

Changes are also happening on the client side. Almost all client-side researchers are learning new skills, partly because they are undertaking more research in-house. Mostly notably, 83% of clients are looking to integrate primary research with other data sources, e.g. in-house data held on customers. 73% are advancing their data visualisation to design their own internal presentations, and 43% are training themselves on self-serve, online survey platforms.

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THE OUTLOOK

Even though client budgets are expected to recover, competition remains stiff for suppliers of research. Clients expect to reduce the range of vendors they use, and similar to the 2020 survey, the net loss is higher with multinational agencies. While the portfolio of vendors used might go down, some stand to benefit more, including both the generalist and specialist agencies and the panel companies, although the panel companies might not see the same gains as before. But it is the strategic consultants who could benefit most from the changes, with 50% of clients expecting to use them for their research needs (compared to 41% in the 2020 survey), and a net increase in their usage of +20% compared to –4% the previous year.

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These shifts reflect the changing needs of clients in the new market. When clients were asked what factors would determine whether a research vendor was ‘in their consideration set’ for new projects in 2022, the highest consideration was ‘their ability to provide higher-level business and marketing context to the research findings’. This is likely to push business not only to the strategic consultants, but also to the smaller agencies where clients can usually obtain more senior level involvement in their projects.