I’ll be blunt. I historically have found the various reports produced by industry associations underwhelming. I have no problem with the quality of the data or the report itself; far from it, those aspects are usually stellar. My problem is that they are either too limited in scope and/or just don’t go far enough in looking at implications of their findings. I challenge their vision of the state of the industry for being short sighted. It’s that frustration that has largely driven the GRIT initiative; I wanted answers to the questions that the other reports were not giving me.
Well, I am eating crow now because I have to say that the 2013 ESOMAR Global Market Research report exceeded every expectation I have for an industry report by a trade organization.
With this report ESOMAR has risen to the level of earning their de facto status as THE global industry trade organization. If they can wrangle the rest of the industry to take the learnings from this report to heart to help navigate all of the market complexities MR is facing then they will absolutely deserve the support of us all.
What has me so excited about this report? It’s pretty simple: ESOMAR has embraced the reality of a changing industry and begun to accept it. Similar to a 12 Step program, they have accepted there is a problem, have sought help from others, and are working to change. Specifically 3 things caught my attention:
1. Following on from the market re-sizing effort the MRS recently conducted, ESOMAR has begun to expand the definition of what constitutes the Market Research industry with the formal inclusion of Advisory Services into the mix (Forrester, Gartner, etc…). Now personally I think this doesn’t go far enough to accurately reflect the industry,but the great thing is that they acknowledge that as well. They go on to outline the sectors that they will be working with industry partners (especially Outsell, whom I have discussed this issue with extensively as well) to investigate as candidates to continue to refine their segmentation.
Here are ESOMAR’s targets for potential inclusion in the MR extended family and the industry sizing for each that Outsell came up with:
(click on any of the graphics to open them up in a larger format)
As a point of comparison, here is my own view on how the marketplace breaks out:
ESOMAR and Outsell actually go farther than I do in defining more granular segments, which I applaud. While arguably there is the potential for some double counting here (sample providers for instance), as the industry fragments further due to new technology entrants and existing companies look to new models to grow, my belief is that we’ll see a leveling out process where more and more companies will enter the marketplace and clearly fit into clean categories. This will be especially true for the big sample companies like Research Now, SSI, Toluna, and uSamp who will likely emerge from the shifts occurring now as either tech players or something akin to online analytics or digital information aggregators.
2. The report also goes through an extensive market sizing exercise by country and region. Here is a snapshot of the overall findings:
Global market research turnover increases to US $39,084 million, representing a year-to-year increase of 3.2% and 0.7% after inflation. Fast-growing emerging markets buoyed the global market research industry and countered losses and sluggish performances elsewhere in 2012.
• Inclusion of Advisory Services adds a minimum of US $5 billion to global market value. • In Latin America growth surges 5.6%, making it the best performing region for the research industry in 2012. • Market research turnover increases in 46 countries or sub-regions in 2012, and declines in 39. • Asia Pacific records another year of solid growth, thanks largely to a return to growth in Japan. • For the first time, Africa and the Middle East are reported as distinct regions. • Research revenues for Africa grow to uS $399 million, fuelled by a further increase in foreign investments. • North America’s recovery continues, whilst Europe suffers another year of overall decline, with most of the Eu 15 markets posting losses. • The Middle East sees turnover decline by 4.3%, reflecting continued unrest and international sanctions.
While I applaud the inclusion of Advisory services and the retro activation of that for 2011, there is a downside to this change. On the surface ESOMAR shows decent growth of MR due to the inclusion of Advisory Services, but if we back out the additional $5B added, that means traditional MR is at $34B, a very troubling $.2B “growth” from last year.
It is that sluggishness in research growth that is the reason the industry clearly needs to be redefined. Based on looking at the growth of sectors such as Big Data, Social Media Analytics, Enterprise Software and other related areas my belief is that the flat growth of MR isn’t due to client budgets not growing; in fact much is being spent elsewhere with companies outside our traditional definitions of “insight-enabling” approaches. It’s because we’re not delivering the same speed, cost effectiveness, and impact that others are. Closely related sectors that increasingly competitive to MR are growing and we are struggling to maintain an upward trajectory: the implications are clear.
Looking at the related category market sizing estimates above that is borne out. Every category other than sample providers experienced growth, with Communities, Syndicated Research and Survey Software experiencing double-digit growth. Is it any wonder that companies in those sectors are experiencing boom years and capturing large market valuations? I would bet you just about anything that the growth in the Survey Software business is almost entirely driven by DIY.
The report also goes into deep levels of detail on market performance per country and by region, with the key findings being that even with the re-sizing of the market, Europe and North America overall turn over is either in decline or anemic, with emerging growth markets driving the organic increases. This also supports the theory that spend is flowing elsewhere in well established markets while traditional research is aggressively staking claims on emerging markets where other alternatives to traditional research may not have an established market presence yet.
Finally, It’s interesting to look at the Honomichl Top 50 and ESOMAR 25 rankings and think about what the inclusion of companies like McKinsey, Bain, Google, Axciom, Experian, IBM, Adobe, e-Rewards, Qualtrics, Survey Monkey, Twitter, MuSigma and a host of others would do to these rankings. While I don’t have all of their revenue numbers at hand, It’s a pretty safe bet that their inclusion would radically alter the rankings and would likely generate a whole new Top 10, and quite possibly an entirely new list.
It’s also instructional to look at the differences between the 2 rankings. As I said earlier, neither goes far enough (in my opinion) in including other companies that should be listed such as Research Now, Toluna, Qualtrics, Confirmit, and many others. Without those companies that are explicitly part of the traditional research ecosystem this exercise is incomplete at best, and perhaps even downright wrong. My arguments above, as well as the data on the market sizing for these related segments, should underline the fact that our estimation on the size of our industry is flawed. There is also one stark difference between the 2 lists that is not simply due to geographic focus (H50 is US only, whereas ESOMAR is global). ESOMAR leaves off Dunnhumby. Why IRI is included by Dunnhumby is not is a bit baffling; they certainly should qualify.
Here are the Honomichl 50 and ESOMAR 25 rankings. Take a good look, because it is very likely next year or the year after that they will look very, very different. It’s also informative to look at who is growing and who is shrinking (and the relationship between growth/retraction and home markets).
And just for grins, I have integrated the 2 lists here:
|Company||List Source||List Rank||Global Revenue (US M)||% Change From 2011|
|nielsen Holdings n.V.||Both||1||$5,429.0||4.0|
|IMS Health Inc.||Both||8||$775.0||NC|
|Information Resources Inc. (IRI)||Both||5||$763.8||2.4|
|The NPD Group Inc.||Both||10||$272.0||2.5|
|Video Research Ltd.||ESOMAR||12||$250.2||4.0|
|ICF International Inc.||Both||14||$239.7||9.5|
|J.D. Power and Associates||Both||15||$234.4||8.5|
|Abt SRBI Inc.||Both||18||$175.6||(4.7)|
|symphony Health solutions||Both||15||$153.5||2.7|
|Harris Interactive Inc.||Both||17||$140.7||(9.8)|
|Lieberman Research Worldwide||Both||18||$101.8||12.9|
|Nikkei Research Inc.||ESOMAR||23||$97.5||43.7|
|Vision Critical Communications Inc.||Honomichl||23||$78.4||6.3|
|National Research Corp.||Honomichl||19||$74.2||14.0|
|Market force Information Inc.||Honomichl||24||$65.9||(2.5)|
|Market strategies International||Honomichl||20||$64.0||(12.8)|
|Perception Research Services||Honomichl||30||$61.9||4.0|
|Market Probe Inc.||Honomichl||40||$47.9||1.4|
|Public opinion strategies LLC||Honomichl||26||$46.0||194.2|
|directions Research Inc.||Honomichl||28||$38.0||(8.7)|
|Phoenix Marketing International||Honomichl||32||$37.4||(2.7)|
|International Communications Research||Honomichl||34||$31.3||(6.7)|
|Radius Global Market Research||Honomichl||36||$30.2||(8.6)|
|Service Management Group Inc.||Honomichl||37||$29.4||1.1|
|Informa Research Services Inc.||Honomichl||35||$29.2||8.6|
|MarketVision Research Inc.||Honomichl||38||$26.0||13.0|
|National Analysts Worldwide||Honomichl||39||$23.2||(8.7)|
|The Pert Group||Honomichl||42||$22.2||4.5|
|Gongos Research Inc.||Honomichl||44||$20.2||(10.8)|
|LRA Worldwide Inc.||Honomichl||49||$19.6||40.6|
|RDA Group Inc.||Honomichl||43||$19.1||8.5|
|The Link Group||Honomichl||46||$17.4||(3.1)|
|Leo J. Shapiro & Associates LLC||Honomichl||45||$15.6||10.6|
|Chadwick Martin Bailey Inc.||Honomichl||47||$14.7||(12.5)|
|RTi Market Research & Brand Strategy||Honomichl||48||$13.9||(16.3)|
If I had more time I’d take a stab at actually including some of the companies I mentioned above to see how a list that included other segments would look, but alas I don’t have that bandwidth right now. Maybe some enterprising reader will take a stab at that!
As always, it will be interesting to see the correlation between how these companies show up in the GRIT 50 Innovation Ranking and to see the changes next year as (hopefully) both ESOMAR and Honomichl continue to expand their definitions to encompass more companies that should be included.
3. The final piece that impressed me is that ESOMAR opened the door to expert commentary (they must have been desperate for “experts” though since even I am included!) to add depth and context to the report, and that made a world of difference in the impact of it. The folks included in the commentary sections are:
John Forsyth McKinsey & Company
Reineke Reitsma Forrester Research
Silke Muenster Philip Morris International Management
Colin Strong GfK
Gregory Mishkin Market Strategies International
George Terhanian Toluna
Stephen Needel Advanced Simulations
Kyle Nel Lowe’s Home Improvement
Caio Casseb Scoop & Co
Anna Peters Bright young Minds
Alistair Hill On Device Research
Sally Joubert Luma Research
Martin Filz GMI
Selin Cetinelli Unilever
Annie Pettit Research now
Andrew Grenville Vision Critical
Philip Garland SurveyMonkey
Ben Page Ipsos MORI
Christian Kugel AOL
Victoria Zagorsky Citibank
That Guy From GreenBook
There is more thought leadership and strategic impact in that commentary section than you usually find in most industry reports. This commentary isn’t there to support the report findings either; in most cases it takes the findings further and discusses the implications of the findings. In others, it even challenges the data.
Including this disparate group of folks to share their thinking on a variety of topics related to the health and growth of the industry was a bold move by ESOMAR. I can’t say enough good things about this section; it makes the report well worth the price alone. Couple that with other data points such as research spend by business issue, method, and further breakdowns by country and the report becomes required reading for anyone who wants to understand the financial metrics of the MR industry.
Here are a few highlights from the data; you’ll have to get the report to read the really good stuff in the Commentary.
Spend By Research Focus 2012
So hats off to ESOMAR for a great report that moves the industry dialogue forward and arms us all with good data to inform our thinking for the next year. My deep appreciation to them for allowing me to cite so much material from their report; it’s just a small part of the great information to be found there.
We’re launching GRIT next week and will be adding to the body knowledge on many of these topics ourselves with the help of the entire industry and I can’t wait to see the results and share them with you. Come back to the blog or watch your email for more details on GRIT.
*All graphics reprinted with permission from Inside Research and ESOMAR. Thanks for working with us!