Interview with Kristin Luck – President of ESOMAR

Asia Research spoke with Kristin Luck in October 2021 to assess the state of the consumer insight industry and the key developments to expect in a recovering market.

\"\"Kristin became President of ESOMAR in March 2021. She runs her own growth strategy consulting firm, and also provides investment banking services to those investing in or buying/selling businesses within the marketing consulting/insight sector.

Kristin comments that the consumer insight industry globally has fared much better than analysts were expecting. By the end of 2020, the industry had seen just a 6% decline, when many were expecting a decline of 20% or more. There were considerable variations by geography, partly due to when the pandemic impacted the various global markets. Asia Pacific saw the earliest recovery, and there has been some rebound in the UK and Europe, while Latin America has been the slowest to recover.

However, the biggest positive impact on the global position for the consumer insight industry is the US market. The research tech sector actually experienced growth during the pandemic, and with it, investment and growth in tech-related consumer insight. In 2020, the US accounted for 54% of the global spend on market research, compared to 44% in 2016. The Asia Pacific share still stands at 15% (the same as 2016), but has grown in absolute terms from USD$6.52 billion to USD$13.78 billion.

This growth is partly attributable to some redefining of ‘market research’ in the market sizing calculations, as technology providers within the consumer insight arena are now included. This reflects clients seeking insight from ‘data’ and not just from traditional consumer insight.

‘Traditional research’ has been in decline since before the pandemic, although Kristin points out that clients still value traditional methods, but want to see the marriage of both primary and secondary data to obtain the ‘bigger picture’. With a huge shift towards online shopping, online media, and e-commerce, corporations also benefit from having far more data to use from online activity and transaction information.

Another key development is faster-turnaround research, which means that corporations can respond more quickly to changing markets. The pandemic was an unpredicted and highly disruptive event, requiring corporations to respond very quickly to lockdowns but also to the reopening of markets. There has been development of platforms and end-to-end solutions to provide both speed and value for money, and consequently we have witnessed huge investments and M&A activity among technology providers in these fields, such as Qualtrics, FocusVision, Confirmit, and Quantilope.

In parallel, we see M&A activity among traditional research firms. Most of the big firms cannot grow organically, as many of the key global research markets have almost reached saturation. The big firms have relied instead on acquiring others to grow or maintain market share. Some of the more generalist boutique research firms have been ‘eaten up’ in this manner, or have gone out of business if they cannot demonstrate a sufficient level of specialism. Kristin summed this up: “It used to be the case that if you were all things to all people, you would grow. Now it is the opposite – the more specialised you are and the more specialist advice you can bring, the more business you will get.”

The opportunity with changing business models

Kristin comments that the pandemic has also fundamentally changed the way consumer insight firms do business. Clearly, lockdowns have forced employees to work from home more, and as a result, companies have been able to reduce their facilities costs by taking smaller offices and/or operating a hybrid office- and home-working arrangement for the longer term. It also means that the location of the office is less crucial if employees only have to make the commute two or three days a week.

But the bigger opportunity is how remote working takes away the limits of hiring by geography. While firms have offshored work to cheaper locations for many years now – e.g. locating back-office work in low-cost markets – the bigger opportunity is now in identifying and hiring talent nationally, regionally, or even globally that is the best fit for the company – people who never have to relocate, and can come to the office or other centralised meeting point perhaps once a quarter while on a tourist visa. There are even HR firms (like Deel) that specialise in managing staff scattered around the world, e.g. handling payroll, legality, and healthcare.

Kristin points out that if there are two firms competing with each other, a “remote-first” firm – the firm that utilises global talent and has lower overhead costs – will likely outcompete the firm with an “office-first” approach, which is limited to hiring within its city catchment area.

The threat of big consulting

We have seen how ‘big data’ can work in harmony with traditional research, but Kristin raises the issue of ‘big consulting’. With easier access to data, management consulting firms are increasingly offering consumer insight as part of their services. Market researchers have for too long been ‘wrapped up in tables and charts’, whereas management consultants are better at storytelling, identifying the ‘so what’, creating hypotheses, and interpreting what consumer insight means for the whole business.

They have the advantage of having much more strategic relationships with their client organisations and contact with the C-suite. Kristin comments: “The difference between research agencies and ‘big consultant’ is that the latter ‘thinks like a CFO and presents like a CMO’.”

It seems like clients might be willing to pay large premiums for consumer insight after all!

Move to More DIY Research

\"\"The Asia Research Stakeholder Survey showed that 48% of clients put ‘faster turnaround of research’ as a ‘high priority’ for their research needs in the next year, and 37% also state it is a high priority to undertake more DIY research.

These findings reflect some of the challenges clients will face in markets severely impacted by the COVID-19 crisis, including lower budgets for research and having to deal with more volatile markets. This means that consumer insight will have to be cheaper, faster, and undertaken more frequently.

Online panel companies have long since moved on from just being providers of consumer access panels, and now position themselves as ‘data management companies’ providing a suite of services for clients to access and use survey and customer data.

Asia Research interviewed Ludo Milet, Managing Director of Toluna (Asia Pacific), to understand how data management companies are responding to new client demands for data.

Ludo comments that from around 2016, clients were looking more to automation in the reporting of data. Hence, instead of waiting on agencies to provide standard PowerPoint reports taken from data tables, dashboards were developed not only to increase the speed and accuracy of data delivery, but also to extend the visibility of data within client organisations, i.e. with more individual users of the data.

These dashboards lent themselves well to more templated types of research, e.g. brand trackers that generally followed standardised questionnaires. However, clients increasingly looked to a wider range of research that can be delivered seamlessly without the involvement of research agencies, including pre- and post-product/advertising testing and more general surveys, e.g. usage and attitude studies.

With more client organisations developing internal insight departments, much of the design work of surveys can be undertaken by the in-house research teams. Toluna has invested in a new platform that allows clients to script their own surveys, select their audiences for research, launch online surveys, and have results delivered automatically and in real time through a single platform.

A key component of the new platform is making the scripting that much easier for researchers who lack the programming skills of more complex survey-hosting software. This requires the data management companies to understand more about the nuances of survey design and combine this with better usability. While Toluna has avoided becoming a full-service agency in their own right, in 2014 they acquired Harris Interactive, with full- service sector expertise and award-winning research designs. This design expertise helped Toluna to develop a platform for more tailored surveys that can also include ‘quick communities’ and online qualitative research, al- though the main demand is for more standard quantitative surveys.

While these solutions might be seen as a response to the new demand for research in a COVID-19 research world, Ludo comments that Toluna had anticipated this demand prior to the onset of the crisis, and they have been undertaking product development to meet this anticipated need since 2015.

Ludo also discussed the current impact of COVID-19 on their business. Like most companies, staff have been forced to work from home, which generally suits sales and account management personnel, but puts challenges on the data processing teams, who need more interaction with teams. There are also additional pressures on staff in some markets such as Hong Kong where staff usually live in small apartments which mean that ‘stay at home’ directives can be more stressful, and also in India where they have large data processing teams but where there is quite a severe lockdown environment.

But the future looks bright for the data management companies – based on Asia Research’s stakeholder survey, 70% of clients expect to go direct to panel companies in the next year (up from 40% currently), and among these, 68% state they will use them more than before COVID-19.