The market research industry, as we have known it for decades, is disappearing. It is being absorbed into a rapidly transforming collection of market intelligence sub-disciplines.
For some of us, this phenomenon represents a threat: a question of whether the traditional insights role within our client organizations will remain; a question whether survey research will have a continued seat at the table; and a concern regarding the future valuation of our research company.
For others, this dynamic represents unprecedented opportunity: the opportunity to deliver a far more comprehensive voice of the market; the opportunity to transform our agency business model and substantially increase its valuation; and a stair-step increase in the decision-making impact of the insights we deliver.
Regardless of whether this point of view elicits a positive or negative sentiment, today’s conference agendas, industry journals, and merger and acquisition activity leave little doubt that a significant industry transformation is underway.
The AMA (formerly Honomichl) Top 50 Gold Report has long been the industry standard for annually documenting patterns in the global business of marketing research, and the major players driving its growth. This will continue. But just as the market is transforming, so too will this report. Yes, we will continue to track and publish annual changes in the traditional survey research market, but beginning this year we will also explore the evolving marketing intelligence space in which we reside, and the expanding field of players in the emerging sub segments defining this morphing space.
Relatively little data to project such movement exists today. So in coordination with CASRO and Michigan State University, AMA introduces a comprehensive look at the evolution of this space within which we contribute and compete.
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The Broad School of Business at Michigan State University is one of several U.S. universities committed to developing the next generation of marketing leadership through internship-based Master of Marketing Research Programs. In May 2014, Michigan State University hosted the Educating the Market Researcher of Tomorrow symposium during which representatives of the industry’s universities, clients, agencies and associations met to begin mapping this evolving space and the corresponding skillsets and traits that will be required of its future leaders. Building upon this, in 2015 Michigan State University created the Research Transformed Collaborative as an academic and industry partnership to begin vetting and quantifying related points of view.
AMA now begins to incorporate these findings, plus the perspectives of other industry sources, into the gradually expanding depiction of the market. The journey begins with this article building upon the annual examination of the survey-research market, with the additional outline of macro dimensions in its evolution. Our July/August global report will follow up with detail on the sub segments and the perspectives of the players in each.
Many business disciplines are similarly examining the development of the broad market-intelligence space. We are, however, approaching it from a “traditional survey research-out” perspective. In other words, how is this space expanding around us?
A Galactic Parallel
The direction of research transformation may not be as much a true evolution as it is a collision—not a collision in the sense of two objects physically hitting each other, but rather analogous to the collision of galaxies in space. When two galaxies collide, due to the vast amounts of interstellar space, they actually get enmeshed into each other. The final shape of the combined galaxy is different from the two original galaxies but takes on attributes of the dominant one. In our situation, the “galaxies” in the process of colliding are numerous and include:
• traditional survey research;
• advanced predictive analytics;
• a plethora of “productized” offerings for technology-enabled data collection and reporting;
• specialized visualization offerings;
• the fundamental handling and management of vast sums of Big Data;
• the shift from social media aggregation to social media integration and analytics;
• the merging of panel management, sample management and online community management practices.
The marketing research industry has seen disruptions before, perhaps the most significant being the move to online surveys (and by extension, mobile). This time, however, the disruption is not emerging only from within. The existence of more and varied data sources, and the sophistication of the technologies used to harness them, is inviting a broader range of disciplines to the development of solutions. This is why the number and breadth of these colliding galaxies is growing. It is not as much the marketing research industry moving toward these other disciplines but rather these other lines of business recognizing the existence and value of survey data and the proven statistical techniques being applied.
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This coming together to address the expanding needs of market intelligence has defined a much broader universe. And this universe has attracted lines of business not previously considered as partners or competitors in the traditional marketing-research space. In recent years the global research market has typically been defined a $35-45 million opportunity. But this expanded viewpoin defines a market approaching $170 million.
The Role of Survey Research Can Thrive
In such a market model the need for traditional marketing research remains. Various combinations will appear from these collisions, each requiring strong research expertise. Each will require either the collection or analysis of survey data. But the traditional marketing research disciplines risk being subsumed or marginalized by higher order offerings. Today’s large custom research companies may face the risk of being reduced to data collection companies unless they are able to provide these value-add capabilities involving data management, predictive analytics or visualization.
There are signs of this “coming together” all around us. It may be in the form of large players from within our traditional market, such as Nielsen’s recent acquisitions of Pointlogic (analytics), Informate (mobile intelligence) and Innerscope (neuroscience). Or it might be in the form of large players from beyond our traditional space such as IBM’s recent acquisitions of Truven (analytics), Resource/Ammirati (analytics) and Explorys (analytics). Or it might be in the form of nascent combinations forming in our backyard, such as MARU’s recent acquisitions of eDigitalResearch and Vision Critical Research & Consulting.
As we individually explore the possibilities of coming together to thrive in this expanding market intelligence space, we look for an understanding of what the new players are thinking; the perspectives of the leaders defining the emerging sub-segments of this morphing space. Do they share this perspective of coming together? Do they see themselves as part of an expanding marketing intelligence space, or as a new order of marketing researchers? Our July/August global report will begin to address these questions in detail.
This figure is based on the revenue of the Top 50 companies along with 135 other member companies of CASRO, the U.S. national association of research organizations. These companies are all for-profit, full-service research firms who are either U.S. companies or have a U.S. headquarters and operations.
Early this year, CASRO reached out to more than 75 companies to invite their participation in the annual top 50 ranking of U.S. research companies. These companies were asked to submit 2015 U.S. and non-U.S. research revenues, as well as the comparable data for 2014, in order to determine the annual rate of revenue growth or decline. If a company made an acquisition or divestiture in 2015, that information was disclosed and appropriate adjustments were made to ensure an apples-to-apples comparison.
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The U.S. research revenue for the Top 50 companies in 2015 is $10,464.2 million, or 48% of the worldwide total revenue for the Top 50 of $21,782.2 million. Non-U.S. 2015 revenue for the Top 50 companies is $11,318 million, which is 52% of worldwide revenue.
The Top 50 companies provide profiles of their companies, describing their services and specializations, major accomplishments in 2015, significant developments and key initiatives in 2016.
The additional 135 CASRO members in the AMA Top 50 Report accounted for $712.5 million in U.S. Revenue: in 2015—an average of about $5.3 million per company. The non-U.S. 2015 revenue for these 135 companies is estimated at $239.5 million, which represents about 25% of the total worldwide revenue of $952 million for these 135 companies.
The total 2015 revenue for the 185 companies included in this annual report is $11,176.7 million for the U.S. and $11,557.5 million in non-U.S. Revenue: for total 2015 worldwide revenue of $22,734.2 million.
2015 in Detail
This time last year, I wrote that 2014 had not been a “breakout year” for the U.S. research industry. While economists and other pundits had trumpeted 2014 as a year of economic recovery from the Great Recession, our industry did not join the recovery bandwagon. Instead, the 2014 growth rate of 3.2% was even lower (albeit modestly) than the growth rate in 2013.
I pointed out that, historically, the U.S. research industry has lagged behind in being impacted by and recovering from economic downturns. Notably, in the recent “Great Recession,” which began in late 2007 and continued to mid-2009, the U.S. research industry continued to grow throughout 2007, increasing its growth by 6.0%, and the industry did not begin its decline until mid-2008.
The growth rate in 2015 has increased significantly when compared to the previous three years, not only in terms of growth in revenue, but particularly in “real growth,” after adjustment for inflation.
U.S. Revenue: for the 185 reporting companies in the U.S. was $11,167.7 million in 2015—a growth rate of 4.9%. The real-growth rate for 2015 changes only slightly to 4.8% when adjusted for inflation, since the Consumer Price Index (CPI) for 2015 is 0.1%.
In fact, the real-growth rate of 4.8% in 2015 for all of the companies included in the Top 50 Report is the highest in more than 10 years.
2015’s low inflation rate supports the U.S. research industry’s real growth and, indeed, may forecast the turnaround for the U.S. research industry. Could the breakout years be 2015, 2016 and moving forward?
Another benchmark against which to gauge the research industry’s growth is the U.S. gross domestic product (GDP). The U.S. GDP shows the yearly growth of the estimated value of all the country’s goods produced and services provided.
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Looking at the research industry’s history as compared to the GDP, the research industry has generally tracked ahead of the GDP, except for 2009, when the research industry dramatically fell behind GDP in the Great Recession. The research industry’s recovery from the recession tracked ahead of GDP in 2010 and 2011. From 2012 through 2014, however, the U.S. research industry trailed the GDP.
In 2015 the situation has improved remarkably: the U.S. research industry growth rate exceeded the annual GDP by 1.6%. This is the highest rate since 2008, which is just before the Great Recession. Could 2015 forecast a steady growth trend for the U.S. research industry?
2015 Revenue Increases and Decreases
There are 15 Top 50 companies in 2015 that experienced double-digit increases in revenue; 19 companies with single-digit increases; and 16 companies that are flat (did not exceed the rate of inflation) or had a decline in revenue compared to 2014.
Of the double-digit increase companies, Acturus (Farmington, Connecticut) realized the strongest increase in revenue at 43.8%. Acturus was established in July 2015 through a merger of two marketing research consultancies, The Pert Group and MSS.
Three companies exceeded a 30% growth rate:
Rentrak (Portland, Oegon), providing measurement services for movies, TV and home entertainment, had a 32.3% growth rate;
Cello Health (New York), a global healthcare strategic marketing research firm, had a 31.7% growth rate;
Hanover Research (Arlington, Virginia), which has a focus on education and health-care research, realized a growth rate of 31.2%.
Companies that exceeded 20% in growth in 2015 include:
Kelton (Culver City, California), a strategic research consultancy firm, had a growth rate of 23.2%;
Fors Marsh (Arlington, Virginia), which specializes in measuring, understanding and influencing the decision-making process, had 23.2% growth;
Burke (Cincinnati, Ohio), which focuses on brand strategy and innovation in its research services, had a 22.8% growth;
MarketCast (Los Angeles, California), which provides research services for the global entertainment industry, had a 20.6% growth rate.
Changes in Top 50 List
AlphaImpactRx (#22 on last year’s Top 50) was acquired by IMS Health in February 2016.
Vision Critical (#23 on last year’s Top 50) spun off its research and consulting division in February 2016 and sold it to Maru Group. The new entity is named Maru/VCR&R.
- RDA Group (#40 on last year’s Top 50) was acquired in July 2015 by Ipsos.
Convergys (Cincinnati, OH), a customer experience and management company providing analytics and research solutions, joins the Top 50 at #24.
Wood MacKenzie (New York), a research and analysis company for the energy, metals, and mining industries, is #17 on this year’s Top 50.
Cello Health joins the list at #38.
Acturus is #45 on this year’s Top 50.
Moving Up the Top 50
Seven companies moved up three or more positions on the Top 50. Mentioned earlier in this article are Kelton (from #47 to #39); Fors Marsh Group (from #50 to #44); Hanover Research (from #36 to #31); and MarketCast (from #35 to #32). Also moving up three positions on the list are: Decision Resources Group (from #15 to #12), providing information, insights, and analysis for the global health-care industry; Gongos (from #45 to #42), a decision intelligence company partnering with Global 1000 corporations; and The Link Group (from #46 to #43) offers a platform of services emphasizing both qualitative and quantitative research.
The Top 10
Nielsen, IMS Health, Kantar, IRI, Ipsos, Westat, GfK, comScore, the NPD Group and J.D. Power represent 75% of the total U.S. revenue for 2015, accounting for $8,380.7 million of the total $11,176.7 million.
In terms of non-U.S. revenue, these Top 10 companies are even more dominating. The combined revenues of the Top 10 represent 88% of the non-U.S. revenue and 81.4% of the worldwide revenue for the 185 companies included in this report. Nielsen alone accounts for 1/3 of the total U.S. revenue for the 185 companies—22.2% of the non-U.S. revenue and 27.1% of worldwide revenue.
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Interestingly, the Top 10 companies saw a 2.7% decline in 2015 worldwide revenue year over year, while the remaining 175 reporting companies (the bottom 40 companies in the Top 50 along with the 135 other CASRO members) experienced a modest increase in worldwide revenue year over year.
In contrast to the previous three years, 2015 presents the most positive outlook for continued recovery. A breakout from the recession is much more likely now because of how the industry is evolving and expanding. The growth of our industry is changing dynamically. There is much more focus on bringing in new capabilities and services and incorporating new technology and new approaches, including the market sectors that we are currently investigating and assessing (see Michael Brereton’s preface). There is less interest in mergers and acquisitions among companies within the industry. Indeed, as our industry expands and innovates, we may need to re-evaluate the definition of what is inherent to and organically a part of the research, insights and analytics industry. These considerations will change what we include in the scope of our industry and how we measure it, both for financial and business benchmarking purposes.
Whether or not you agree with this outlook or support the changes that are occurring in the industry, please share your perspective and opinion on how our industry and our businesses are changing. Though the AMA, CASRO and Michigan State University have different mandates, each has a commitment to serve, improve and represent the best interests and best practices of our industry. Your comments and suggestions are welcome.
– See more at: https://www.ama.org/publications/marketingnews/pages/2016-ama-gold-top-50-report.aspx#sthash.V90Yy40v.dpuf
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