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difficult for fieldwork teams, call centres, DP departments, and those researchers whose core skills relate to outdated modes of business.
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