Thoughts on the 2012 Honomichl Report of Top 50 Market Research Companies

The esteemable Larry Gold and Jack Honomichl of Inside Research just published the 2012 Honomichl Top 50 Report (the 39th edition!), which is the perennial benchmark that the research industry uses to measure financial success. More than simply a snapshot of financial performance, Larry and Jack also go to great lengths to include an analysis of the state of the industry and uncover some of the macro forces impacting it. My hat is off to them, as always: what they do is hard work and is an invaluable service to the industry.

Before we dive into my take, congratulations are in order for every company that is on the list; bravo for their hard work and leadership! A special shout-out should go to the companies that made it onto the list this year: YouGov, StrategyOne, Chadwick Martin Bailey, and The LINK Group (go Atlanta!).

Now, what is the upshot of the report?

First, for those who might not be familiar with the Honomichl Report, it’s important to mention how the list is compiled. Here is the explanation from the report introduction:

The base for this 2011 analysis is revenue reported by 204 research companies for U.S. operations only (as much as possible, the nonresearch revenues of some of these companies have been edited out). The largest 50 firms get line-item identity; the balance is based on input from the Council of American Survey Research Organizations (CASRO) member firms that had, on average, revenues of $5.3 million in 2011. (Larger CASRO member firms are on the Top 50 list.)

That is important to keep in mind, because there are numerous reasons why many firms are not listed here: if a company isn’t a member of CASRO OR didn’t volunteer their information OR is not a “full service research provider” OR if their U.S. revenue is under about $15M  then they would not be listed here. So, I wouldn’t consider  the report to be a census or even a representative sample: it is a targeted convenience sample of one sector of the industry, although certainly the biggest segment of it. That being the case, it is an excellent barometer of the overall financial productivity of the industry.

Now, let’s dive into the meat of it a bit more. Here are the two things that jumped out at me the most:

1. The Full Service component of the U.S. industry grew by  5.1% to $9.2B.
2. Newer, innovative firms are growing rapidly. The Top 10, well… not so much:

• Most Growth:
  • ABT SRBI                    +46.8%
  • COMSCORE                 +45.1%
  • AFFINNOVA              +44.7%
  • STRATEGYONE         +39.5%
  • COMMUNISPACE:    +27.3%
• Largest Declines
  • KANTAR:                          – 0.5%
  • IPSOS/SYNOVATE        -O.6%
  • GFK USA                            -5.4%

That’s not to say that other firms are not experiencing growth: in the full ranking you can see that many firms had a good year in 2011, although the rate of growth was less than some of the newer firms.  It is also interesting to note the correlation between the GRIT 50 Innovation list and the Honomichl 50. While only 10 companies are on both lists, I would certainly think it’s safe to assume that innovation, when coupled with solid implementation and a great value proposition, does contribute to growth. In the chart below I’ve added in the GRIT  vote totals next to the H50 rankings.

I also think it’s interesting to look at the types of organizations represented here. While I am not familiar with all of them, a quick perusal of the profiles in the H50 report paints a picture that in most cases (but not all) each of these firms posses some combination of:

• Extensive vertical expertize and focus
• Proprietary syndicated/subscription based products
• Leader status in a specific technique  or approach
• Proprietary technology that drives their primary offering
• A strong culture of strategic consulting

That is a pretty good “recipe” for creating value within the research space today, although  other than vertical expertize and strategic consulting, each of the the ingredients are increasingly at risk of disintermediation due to technology offerings  that can meet the “cheaper, faster, better” acid test need of clients. For me that underlines the point that the ultimate evolution of what we think of as “full service” market research is heading towards an era where the human capital of MR will be the value driver, not the “how” of data collection and analysis.

I’d also be remiss if I didn’t underline the point that although the H50 is a fantastic report chock full of “need to know” content, it must be taken in it’s own context and not construed as a complete review of the industry: sample providers, technology companies, self-service solution providers, analytical firms, plus the emerging players in Mobile, Social Media, neuromarketing, big data analytics, etc are not part of the universe of the H50, although if those firms are part of CASRO their revenue may be included in the overall market sizing projections. My position is that those booming fields will continue to impact the industry in a variety of ways for many years to come, but we need to recognize them and prepare for their ongoing impact now, and that should probably start by making them feel like “part of the family”.  Many of the type of companies I have mentioned  could be the H50 firms of  the future, but we’ll need to expand the definition of what constitutes a “market research supplier” in order to get there. It’s time for our industry to broaden our horizons so we can truly get an accurate picture of the dynamics impacting us.