There has been some excited chatter on Twitter recently over the issue of regulation, guidelines, ethics, and legislation (well to be accurate, I was the one who added legislation to the mix by posing the question whether ethical/responsible market researchers should be pressing for legislation rather than self-regulation in some cases). This post is intended to clarify my position and hopefully spark a wider debate on the topic.
I think there are basically three elements in a regulatory context, from guidelines, to self-regulation, to official regulation.
Why have guidelines?
Guidelines tend to have two functions, the first is inward looking, to provide guidance as to what constitutes good practice (ranging from best practice to minimum criteria), the second function is outward looking, telling others what to expect from people who follow the guidelines.
In terms of market research a good example of a guideline is the list of 26 questions about an online panel published by ESOMAR, these are suggested questions that a buyer of research might want to ask a supplier, and they imply that providers should have suitable answers. Buyers do not have to ask these questions, vendors do not have to have answers to them.
Guidelines are often unpopular with the public, legislators, and buyers as they tend not to offer any redress for services that do not meet the guidelines and they tend to leave all the responsibility with the buyer (i.e. caveat emptor – buyer beware). Guidelines can also be unpopular with vendors as those vendors who follow them can find that their costs are higher, but that the buyers are not able assess the extra value). In most markets, most of the time, ethical companies are at a commercial disadvantage to unethical competitors – the big companies did not get big by being nicer than other people.
Guidelines tend to work best when the vendors tend to know them, to stick to them, and where the buyers are knowledgeable and are able to assess the product or service.
Guidelines can also be really useful when they are helping organisations understand a new field. Back in the mid-nineties the emergent guidelines from organisations like ESOMAR helped market researchers understand the issues that online research was creating and provided guidance on how issues such as cookies should be assessed. Regulation would have been impossible as the field was changing too fast, but some generalised guidelines were helpful.
Self-regulation tends to spring from three key sources:
1) To avoid external regulation, for example by legislation.
2) To protect quality vendors from unfair competition.
3) To gain specific benefits, for example exemptions.
In many cases organisations feel that self-regulation is preferable to external legislation because it is likely to be less expensive and more informed. However, when the public are polled they usually prefer external regulation as they feel that self-regulation usually favours companies over them and that the sanctions tend to be too weak.
In terms of protecting quality vendors from unfair competition the key issue tends to be where it is hard for the buyer to assess whether a product is inferior or not. In this context, quality vendors tend to band together to keep each other from dropping their standards. Two examples of this process are the call-backs that used to operate with face-to-face research, and the age rules for interviewing children.
In the days of face-to-face interviewing there was a perceived need to check to see if interviews were genuine, had the right people been interviewed, had the interviewer just filled in the forms at home? So, in many markets a call-back system was put in place where a percentage of the people who had been interviewed were called to check that the interview had really taken place. This process added to the cost of the surveys and organisations wanted to ensure that everybody who claimed to be a quality provider was doing at least the minimum specified number of call backs. The sanction for companies that cheated was that they could be thrown out of the system, and most buyers at that time felt the quality system was worth paying extra for.
In terms of interviewing children, the market research bodies have established rules about asking for parental permission before interviewing children, this was done for ethical reasons and in most cases were much strict than the law required. Having agreed these rules it was then important for the market research organisations to stick to these rules, otherwise companies that broke the rules would have a commercial advantage, particularly as some buyers of research made it clear they did not like the rules and would seek to get round them.
The thirds reason for self-regulation is the attempt to gain exemptions. In several countries market research organisations are able to do things that most other companies can’t do, for example ringing people without permission, holding data for longer than six months, and linking data together. These exemptions have been negotiated by the national and international research bodies with governments, in return for ‘guaranteeing’ certain practices, such as keeping respondents anonymous. One source of tension in international discussions about regulation is that the benefits vary greatly by country. In Germany, for example, the benefits given to market research institutes are considerable, so German researchers often call, quite rationally, for better self-regulation.
Self-regulation relies on two key criteria
1) Sanctions that act as a deterrent
2) That most organisation are inside the system
My feeling is that market research is moving out of the self-regulation era because too small a proportion of the total amount of research is conducted by market research companies, creating major economic advantages to organisations that are not bound by the regulations.
I should also mention another reason for self-regulation, one much less-high minded than the three mentioned above, restriction of trade. Since the times of the Roman Empire and probably before there have been guilds who have sought to create rules to keep competitors out, from the makers of urns in Pompeii to today’s restrictive practices in getting taxi permits in some of the world’s leading cities the aim as not been to raise standards, but simply to limit competition. In terms of market research this issue is one that has impacted the discussion of ISOs and the FTO. Are ISOs about improving standards and avoiding unfair competition or are they about raising barriers to entry that favour those creating the standards? Is the FTO about increasing transparency and avoiding unfair competition from countries whose standards are lower, or does it have the whiff of protectionism, nationalism or worse?
External regulation tends to be a combination of action by legislators and the courts. It is not unusual in business for activities to go from legal, to dispreferred, to illegal over a period of time. For example, insider trading used to be common, then it became against the guidelines, then it became against the self-regulatory rules, and now is illegal and has resulted in some very long prison sentences. We can’t simply say “crime is crime, and ethics are ethics” because it is the legislative process that decides that something is or is not legal.
The picture of what is and is not regulated is highly varied, both internationally and locally. For example, Florida will not allow you to trade as an interior decorator without a four year degree and two year apprenticeship (the Economist), and the net of legislation is getting ever closer to market research.
In most countries data protection legislation impacts on what market researchers can and can’t do, as do distance selling directives, child protection laws, and court cases about the adequacy of market research predictions.
My views on where these elements should go next
So, what do I think should happen over the next few years? Well, I think that self-regulation is largely busted, the sanctions are too weak and too many companies are not subject to them. For example, in the area of social media monitoring I would estimate that organisation subscribing to market research guidelines account for perhaps 10% of all research.
I think that leaves market research with a combination of guidelines and external regulation (in practice what I mean is legislation for the external regulation bit).
I would like ESOMAR, CASRO, etc to shift their focus to establishing best practice guidelines, as opposed to minimum standards, with an agenda of educating researchers, buyers, legislators, and the public. I am also a fan of specific qualifications and of professional development mechanisms (quick declaration of interest, I earn some of my living from both of these).
Beyond these guidelines, if there are things that we think market researchers SHOULD do, we should seek legislation, self-regulation will simply help the unethical out-compete the ethical.
The following is my list of legislation that I would like (if I ruled the world), but your list might be different.
1) Separate research into ethical and commercial research. Ethical research would need to seek ethical approval from a recognised/license body (in way that academic research already has to). Commercial research would need to conform to general safety laws (i.e. not be dangerous, illegal etc) and be based on informed consent. Under this split, most social research would be done under the ethical code, most of the other research would then be commercial and market research companies could compete with non-research companies fairly.
2) Ban all commercial activities targeted at children (with each country defining what it meant by children), this would include marketing, advertising, market research etc,
3) Create a legal duty for vendors to explain the trustworthiness of any information or advice they sell. This would not apply just to market research, but would include market research along with other information and advice services. Companies would be free to illustrate the provenance of their information by citing industry guidelines, academic studies, philosophical traditions (for example Foucauldian Discourse analysis might cite post-modern and post-structuralist sources, whereas a somebody selling a set of cross-tabs might cite the CASRO guidelines). This duty could be tested in court if a client felt they had been miss-sold.
4) Create a duty of care for anybody about whom an organisation holds data. For example, if an organisation creates a community, they would have a responsibility for trying to avoid harm to those people, and if they mine personal information they should seek to avoid causing harm. A duty of care goes beyond informed consent, but falls well short of being responsible for their safety – it basically means that if companies are reckless AND something bad happens then they could be liable in court.
5) Some legal guidance on what comments are public, what are private, and how public comments can be used. This is needed to create clarity, a level playing field, and to help split research from stalking, and a right to privacy from a reasonable right to know.
6) Some legal guidance on whose laws apply where. This is becoming a major problem for business in general, not just market research, with most legislators not understanding that the internet has changed things. We can’t have anarchy, but we also can’t have multiple governments closing their eyes to the new facts and passing laws which they imagine work but in reality fail.
I need to note that one consequence of my wish list, if in some parallel universe it came to pass, is that market researchers would lose many of their current exemptions, which would hurt some organisations, exspecially those in countries like Germany who have adapted their business practices to match the laws of the the country and to benefit from only doing 'real market research', but I think that change is inevitable, so let's try ot have it on our terms.
I certainly would not want legislation to define what market research is, nor how it should be used. Indeed, I do not think the research bodies can move fast enough these days to define it, and I think that attempts like ISO to define a specific practice are doomed to failure; at best they will define how we used to do things.
I know some people will shudder at the idea of legislation rather than self-regulation or guidelines, but consider that without legislation we would still have: insider trading, untrained doctors, self-taught drivers, and untrained teachers. What I want are fewer rules and regulations, but for those rules and regulations we do have to be enforceable and enforced.
I am sure that not everybody will agree with my analysis or my suggestions, so I would love to hear your comments.