The Future Place Blog

The World is Flat

My Australia/Singapore workshop tour is now 40% complete and I have spent a fair amount of time in hotels, airports, and on planes. My companion over the last couple of days is Thomas Friedman’s The World is Flat, the revised 2006 version.

Friedman makes some powerful points about the way the world has changed over the last few years. He describes the way that the international playing field is being flattened, and the way that new models of doing business are springing up.

When Friedman looks at outsourcing he quickly discovers that it is much, much more than exporting metal-bashing and call centres. He points out that India produces 2.5 million graduates a year, and almost 90,000 MBAs. As well as call centres, India is becoming home to software development, R&D, and even outsourced journalism. Friedman reports how financial information company Reuters and moved 350 analyst and journalism jobs from New York and London to India.

Friedman also talks about how jobs are being outsourced from Japan to Dalian in China, an area that is strong in Japanese language skills because of the occupation by Japan of that area in the first half of the 20th Century. China has adopted modernisation in many locations, and is pouring resources into education, science, and growth.

The book covers a great many other changes, such as technology, open-source software, work-flow, and even the fall of the Berlin Wall, and all of these will have lessons for market researchers to ponder.

However, what struck me was how slowly market research is adopting outsourcing, comparing to other industries. Hospitals are electronically sharing CAT scans with doctors in India, some McDonalds in the US are outsourcing the voice-in-the-box in their drive-ins to other establishments hundreds of miles away, manufacturing and technology is being outsourced to India and China; but we in market research are moving at a snail-like pace.

By contrast market research has made very limited progress, mostly in the area of DP and online research. Looking at the speed of change in other markets it is hard to escape the conclusion that over the next 5-10 years there will be a great unravelling. The market research organisation in the near future will have probably outsourced the following:
1)    Questionnaire scripting and hosting
2)    Data collection
3)    Data tables
4)    Basic analysis and PowerPoint creation
5)    Marketing sciences
6)    Accounts, IT, and HR

What will be left? What I hope will be left are the essential core competences of market researchers
a)    Understanding clients needs, going beyond what is simply stated in the brief.
b)    Understanding what questions to ask which people.
c)    Understanding which analysis tools to apply (i.e. to commission).
d)    Understand how to change the information in the data to the insight the client needs.
e)    Communicating the insight to the client in an actionable way.

Research 2.0 in Australia

Normal blogging service may be disrupted this week as I am running a series of workshops in Australia and Singapore for Australian agency Colmar Brunton. The client focused workshops are looking at the issues surrounding online research and how to implement Research 2.0 in Australia.

The first workshop took place today in Brisbane, where a large cross-section of clients were shown the state of the art thinking in terms of Web 2.0 and the way that agencies, such as Colmar Brunton, are responding by developing Research 2.0. Tuesday will see the road show move to Melbourne, followed by Canberra, Sydney, and Singapore.

From a workshop leader's point of view it is nice to see a company put its money where its mouth is in terms of taking the Research 2.0 message to clients, and from a personal point of view it is nice to have a reason to be back in Australia.

Neuromarketing and fMRI Scanning

2005 and 2006 saw considerable attention and a fair amount of hype paid to the subject of neuromarketing and the question of whether fMRI scanners could have a major role in market research. Several of the early papers on the subject looked at assessing the impact of TV commercials, by showing subjects the commercials whilst they were in scanners. The techniques of brain scanning appear to be useful in helping determine how stimuli are processed and exploring which research techniques work and how they work. However, there is little validation that the work to date produces results that correspond to changes in consumption.

In the short to medium term it is difficult to see brain scanning techniques having a major direct impact on market research, because scanning tends to be expensive and slow, which means it is not suitable for many research situations. Also, since most scanning is done with very small samples, it is hard to see how studies that look into the differences between people, for example segmentation or even U&As, would benefit from fMRIs.

The most likely short to medium term use for brain scanning is to increase the extent to which we understand how the brain works, and therefore to design research techniques which benefit from this knowledge.

A really good paper on this topic won best paper at the recent ESOMAR Congress in London.  The paper “Cognitive Neuroscience, Marketing and Research: Separating Fact from Fiction” by Graham Page and Professor Jane Raymond reviews what neuroscience can tell us about the working of the brain and then discusses how the learning from this can be applied to conventional research (in this case Millward Brown’s conventional research). The paper is available from Nigel Hollis’ blog and can be downloaded here.

Social networking, not as young as expected

Womma have an interesting post about a report from comScore which reports on US users of four social network sites (MySpace, FaceBook, Friendster, and Xangia). For example, only 11.9% of MySpace users are aged 12-17, down from 24.7% in August 2006.

Interestingly, 68% of MySpace, 71% of Friendster, and 43.7% of FaceBook are over 25 years old; according to comScore 71% of Internet users are over 25 years old.

One thing that these data remind us is about the speed with which things change. Social networks were a young phenomenon last year, but much less so this year.

The new economy begins to bite

For most of the last 50 years, at about this time of year, MR agencies have visited their clients to discuss next years price increase, usually ahead of inflation because typically legislation and wage related issues push costs up faster than retail price inflation. But that pattern is broken, more and more clients are pre-empting the conversation by asking about what savings they can expect. After all, surely agencies are learning to be more cost-efficient, and we all know that online data collection has reduced costs.

The October issue of the UK’s MRS Research magazine reports that TNS have announced over 100 job losses in the US, and are reviewing their operations in Europe, with a ‘promise’ of redundancies in Europe. The October issue of ESOMAR’s Research World magazine reports that most UK market researchers expect budgets to remain static over the next six months, but also expect the volume of work to increase. Inside Research also report that Greenfield’s revenue for the second quarter of 2006 was down 6.8% whilst profit was down from $5.1 million to $2.3 million.

Last week we heard that UK agency RBA Research had gone bust. The comment of Managing Director Iain Sutherland (reported in MrWeb) was particularly illuminating “finances had come under strain during the last 6 months, with price competition from big agencies pushing the company to 'compromise on margins to keep the volume'”.

By contrast YouGov have recently announced a tripling of revenue from £2.9million to £9.5million, while profit grew 302% to £3.9million. A large chunk of YouGov’s growth appears to have come from the Middle East, but its UK online business grew by a reported 65%.

The next year, and then the next few years, is going to be very painful for some organisations. With fieldwork costs falling, barriers to entry falling, more outsourcing options being available (particularly from India), companies are going to have to re-structure. Traditionally research companies have made much of their money from the fieldwork, in the future they are going to have to make almost all of it from their research skills and their ability to provide insight. Life is likely to be particularly difficult for fieldwork teams, call centres, DP departments, and those researchers whose core skills relate to outdated modes of business.

Governments and online research

Although the private sector has been increasingly adopting online research (currently about 20% of global research by value is online), Governments in most countries have been slower to adopt online techniques. They express concerns about the lack of representivity, often ignoring the problems with conventional research, ignoring the potential costs savings, and the chance to reach new people.

However, it seems the Canadian Federal Government is ahead of most. The Canadian Public Works and Government Services website has a great article about how the Canadian Government is using online as a medium for consultation and surveys.

The article talks about using online surveys, online chat (one with a Government minister and bilingual rural youngsters), tracking studies, and even a project that used something which they called a workbook, but which many of us we probably think of as a wiki.

Oh, and to be politically correct I also ought to point out that the Public Works and Government Services Canada is also (bilingually) Travaux publics et Services gouvernementaux Canada.

Universal experiment with the long tail

Chris Anderson reports that Universal has released some early results from its experiment with mining the long tail. The long tail is Chris Anderson’s theory (and book) that as unit costs fall the value of a long catalogue increases and the larger the share of revenue that will be generated by small share items.

Universal released European music dating back 30 years as part of an experiment, but only in download form to minimise unit costs. The initial release in February 2006 was of 3,000 previously unavailable tracks. Since February there have been 250,000 downloads.

Universal have commented “Overall, these results lend weight to author Chris Anderson’s The Long Tail theory.  In his recently published book of that name, Anderson contends that given the growing choice and diversity of music that is legitimately available through the Internet consumers will be increasingly drawn to recordings beyond current hits.  In this scenario, the total sales of this repertoire (the long tail) can match or exceed those of the hits.”.

This application of the Long Tail raises some interesting research questions. Clearly there is no need to research which titles to offer, all titles should be offered. There might be some scope to do pricing research, particularly in areas such as multiple discounts and linked purchases. There is likely to be a pressing need to research the interface, to identify the best way to organise the catalogue, this research should ideally combine qualitative with trial and learn experimentation, to help users find the tracks they are looking for and the tracks they might be interested in.

To read the Universal press release click here.

The synergetic rise of ethnography and video

For many years the key tool of the ethnographer was the pencil and notepad. Ethnographers observed subjects, learned from their observations, made notes, reviewed their notes, and produced written reports of their findings – possibly spiced up with handful of photographs. Ethnography was expensive and produced output that was no more convincing than the output from traditional focus groups or depths. Sometime in the mid-90s ethnographers started using video to capture key moments of their observations, and as technologies advanced quickly switched to capturing 100s of hours of real-life video footage.

The output from ethnography ceased to be the traditional report and PowerPoint and started to include video clips from the project, something which massively increased to power of the communication. Increasingly, the output from an ethnography project includes a ‘leave behind’ DVD, which encapsulates the project. A good example of this was presented by Neil Mcphee and Graeme Chrystal (to the 2006 ESOMAR Congress in London), where they reported how they provided their client with a 30 minute DVD which captured the key elements of 200 hours of video, collected as part of an ethnography study into the daily lives of osteoarthritis sufferers.

Video is now a routine part of qualitative presentations, helping to bring alive the findings of focus groups, depth interviews, usability exercises, and ethnography. Companies such as FocusVision are finding there is a growing market for their remote viewing of focus groups service, where the video can be piped to 100s or even 1000s of observer, spread around the world.

The next step in the utilisation of video is tagging and searching. For example, when P&G capture a focus group using FocusVision it goes into their database and can be viewed by people all over the world, at different times and places. These viewers will add their tags to the video allowing future viewers or researchers to use these tags to acess the key insights.

Tagging is already showing itself as a key part of the new Internet. This use will grow and tagging will become more important, as will the power to search video on an image basis.

Quantitative research risks becoming increasingly boring by comparison with qualitiative research, despite its ability to be more representative. Initiatives are being taken to try and add the power of video to quantitative research. One move is to try and use respondents’ web cams to record video comments during interviews, another is to get respondents to use their cameras to upload images or video clips – for example ‘show me an example of the sort of person you think would use this brand’.

Free CGM monitoring report from Forrester

Thanks Max, for pointing us towards the Forrester Consumer Generated Media report, published thanks to Nielsen BuzzMetrix. The report is an invaluable read, and free thanks to BuzzMetrix, I guess part of the reason for BuzzMetrix putting it in the public domain is the positive write-up they get in the report, along with competitor Cymfony.

The body of the report is just 9 pages, which makes it an easy read. The report points out that that whilst products such as Google’s Blog Search, Alerts, and Trends are free, they are too limited and too time consuming to be used as a method of monitoring a brand’s WOM on the net.

One interesting feature of Forrester’s evaluation is they did not include companies which focused on a single medium, such as press clippings services or companies only monitoring blogs. Forrester clearly recognise that WOM is wider than any one manifestation of discourse.

The report found Cymfony and BuzzMetrix to be the strongest players in this international market, the main criticism of BuzzMetrix was that it did not mine mainstream media channels. MotivQuest and Biz360 were listed as the closest rivals. Factiva, Umbria, and Brandimensions did not fare so well, being relegated to the category “considered for specific use”.

RFIDs, EU looks set to legislate

The BBC have reported that the EU (European Union) has finished its investigation into the public's reaction to RFIDs (Radio Frequency Identifiers). In reporting the research the EU Commissioner, Viviane Reding, said that citizens would need reassuring that RFIDs were not going to be used by governments and organisations to mount large scale surveillance.

The EU said a record number of people had contributed to the consultation, this included a survey of 2,190 people and organisations, spread across 25 countries. 55% of the people surveyed thought that new laws should be passed to regulate the use of RFIDs. The EU has said that if new laws are needed they will be drafted in 2007.

Whilst it is nice to see our legislators interested in privacy, I do wonder how well they understand the issues, and whether they will fit it into the context of mobile connectivity and the lack of shyness of the MySpace generation?

Other trends in the use of RFIDs are moving forward at speed with several reports from Hungary of a plan to put a tag on all passengers travelling through Debrecen airport. The idea of the tags is to increase efficiency and security. Presumably terrorists who are happy to bomb innocent civilians are not anti-social enough to avoid the proper use of RFIDs by switching clothing!

Market researchers are interested in RFIDs both for small scale projects such as the fitting of shopping trolleys with tags to enable shopping routes to be tracked, through to the large scale tracking of electronic wave data over time. But RFIDs raise major concerns about informed consent. With devices that are often invisible (due to their size and positoning) the issue of informed consent, and ongoing informed consent can be tricky.

More information about the consultation is available here.