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The Honomichl Top 50, ESOMAR Global 25 & The Need To Re-Define Market Research

I’ll be blunt. I historically have found the various reports produced by industry associations underwhelming. I have no problem with the quality of the data or the report itself; far from it, those aspects are usually stellar. My problem is that they are either too limited in scope and/or just don’t go far enough in looking at implications of their findings. I challenge their vision of the state of the industry for being short sighted. It’s that frustration that has largely driven the GRIT initiative; I wanted answers to the questions that the other reports were not giving me.

Well, I am eating crow now because I have to say that the 2013 ESOMAR Global Market Research  report exceeded every expectation I have for an industry report by a trade organization.

With this report ESOMAR has risen to the level of earning their de facto status as THE global industry trade organization. If they can wrangle the rest of the industry to take the learnings from this report to heart to help navigate all of the market complexities MR is facing then they will absolutely deserve the support of us all.

What has me so excited about this report? It’s pretty simple: ESOMAR has embraced the reality of a changing industry and begun to accept it. Similar to a 12 Step program, they have accepted there is a problem, have sought help from others, and are working to change. Specifically 3 things caught my attention:

1. Following on from the market re-sizing effort the MRS recently conducted, ESOMAR has begun to expand the definition of what constitutes the Market Research industry with the formal inclusion of Advisory Services into the mix (Forrester, Gartner, etc…). Now personally I think this doesn’t go far enough to accurately reflect the industry,but the great thing is that they acknowledge that as well. They go on to outline the sectors that they will be working with industry partners (especially Outsell, whom I have discussed this issue with extensively as well) to investigate as candidates to continue to refine their segmentation.

Here are ESOMAR’s targets for potential inclusion in the MR extended family and the industry sizing for each that Outsell came up with:

(click on any of the graphics to open them up in a larger format)

esomar other categories

 

As a point of comparison, here is my own view on how the marketplace breaks out:

 

Market Research Segmentation Model

 

 

ESOMAR and Outsell actually go farther than I do in defining more granular segments, which I applaud. While arguably there is the potential for some double counting here (sample providers for instance), as the industry fragments further due to new technology entrants and existing companies look to new models to grow, my belief is that we’ll see a leveling out process where more and more companies will enter the marketplace and clearly fit into clean categories. This will be especially true for the big sample companies like Research Now, SSI, Toluna, and uSamp  who will likely emerge from the shifts occurring now as either tech players or  something akin to online analytics or digital information aggregators.

2. The report also goes through an extensive market sizing exercise by country and region. Here is a snapshot of the overall findings:

Global market research turnover increases to US $39,084 million, representing a year-to-year increase of 3.2% and 0.7% after inflation. Fast-growing emerging markets buoyed the global market research industry and countered losses and sluggish performances elsewhere in 2012.

• Inclusion of Advisory Services adds a minimum of US $5 billion to global market value.  • In Latin America growth surges 5.6%, making it the best performing region for the research industry in 2012. 
• Market research turnover increases in 46 countries or sub-regions in 2012, and declines in 39.  • Asia Pacific records another year of solid growth, thanks largely to a return to growth in Japan. 
• For the first time, Africa and the Middle East are reported as distinct regions.  • Research revenues for Africa grow to uS $399 million, fuelled by a further increase in foreign investments. 
• North America’s recovery continues, whilst Europe suffers another year of overall decline, with most of the Eu 15 markets posting losses.  • The Middle East sees turnover decline by 4.3%, reflecting continued unrest and international sanctions. 

 

While I applaud the inclusion of Advisory services and the retro activation of that for 2011, there is a downside to this change. On the surface ESOMAR shows decent growth of MR due to the inclusion of Advisory Services, but if we back out the additional $5B added, that means traditional MR is at $34B, a very troubling $.2B “growth” from last year.

It is that sluggishness in research growth that is the reason the industry clearly needs to be redefined. Based on looking at the growth of sectors such as Big Data, Social Media Analytics, Enterprise Software and other related areas my belief is that the flat growth of MR isn’t due to client budgets not growing; in fact much is being spent elsewhere with companies outside our traditional definitions of “insight-enabling” approaches. It’s because we’re not delivering the same speed, cost effectiveness, and impact that others are. Closely related sectors that increasingly competitive to MR are growing and we are struggling to maintain an upward trajectory: the implications are clear.

Looking at the related category market sizing estimates above that is borne out. Every category other than sample providers experienced growth, with Communities, Syndicated Research and Survey Software experiencing double-digit growth. Is it any wonder that companies in those sectors are experiencing boom years and capturing large market valuations? I would bet you just about anything that the growth in the Survey Software business is almost entirely driven by DIY.

esomar global growth

The report also goes into deep levels of detail on market performance per country and by region, with the key findings being that even with the re-sizing of the market, Europe and North America overall turn over is either in decline or anemic, with emerging growth markets driving the organic increases. This also supports the theory that spend is flowing elsewhere in well established markets while traditional research is aggressively staking claims on emerging markets where other alternatives to traditional research may not have an established market presence yet.

Finally,  It’s interesting to look at the Honomichl Top 50 and ESOMAR 25 rankings and think about what the inclusion of companies like McKinsey, Bain, Google, Axciom, Experian, IBM, Adobe, e-Rewards, Qualtrics, Survey Monkey, Twitter, MuSigma and a host of others would do to these rankings. While I don’t have all of their revenue numbers at hand, It’s a pretty safe bet  that their inclusion would radically alter the rankings and would likely generate a whole new Top 10, and quite possibly an entirely new list.

It’s also instructional to look at the differences between the 2 rankings. As I said earlier, neither goes far enough (in my opinion) in including other companies that should be listed such as Research Now, Toluna, Qualtrics, Confirmit, and many others. Without those companies that are explicitly part of the traditional research ecosystem this exercise is incomplete at best, and perhaps even downright wrong. My arguments above, as well as the data on the market sizing for these related segments, should underline the fact that our estimation on the size of our industry is flawed. There is also one stark difference between the 2 lists that is not simply due to geographic focus (H50 is US only, whereas ESOMAR is global). ESOMAR leaves off Dunnhumby. Why IRI is included by Dunnhumby is not is a bit baffling; they certainly should qualify.

Here are the Honomichl 50 and ESOMAR 25 rankings. Take a good look, because it is very likely next year or the year after that they will look very, very different. It’s also informative to look at who is growing and who is shrinking (and the relationship between growth/retraction and home markets).

H50131

H50132

esomar top 25 global research companies

 

And just for grins, I have integrated the 2 lists here:

 

 

Company List Source  List Rank Global Revenue (US M) % Change From 2011
nielsen Holdings n.V.  Both 1 $5,429.0 4.0
kantar*  Both 2 $3,338.6 .8
Ipsos SA Both 3 $2,301.1 (1.0)
GfK SE  Both 4 $1,947.8 3.1
IMS Health Inc.  Both 8 $775.0 NC
Information Resources Inc. (IRI)  Both 5 $763.8 2.4
INTAGE  ESOMAR 7 $500.3 8.7
Westat Inc.  Both 4 $495.9 (2.2)
Arbitron Inc.  Both 6 $449.9 1.7
dunnhumbyUsA LLC  Honomichl 16 $420.0 5.1
The NPD Group Inc.  Both 10 $272.0 2.5
comscore Inc.  Both 11 $255.2 8.9
Video Research Ltd. ESOMAR 12 $250.2 4.0
IBOPE Group  ESOMAR 13 $246.8 19.4
ICF International Inc.  Both 14 $239.7 9.5
 J.D. Power and Associates Both 15 $234.4 8.5
Macromill Inc.  ESOMAR 16 $197.8 15.5
Maritz Research  Both 17 $188.4 1.5
Abt SRBI Inc.  Both 18 $175.6 (4.7)
symphony Health solutions Both 15 $153.5 2.7
Harris Interactive Inc.  Both 17 $140.7 (9.8)
Lieberman Research Worldwide  Both 18 $101.8 12.9
Mediametrie  ESOMAR 22 $100.4 (3.0)
Nikkei Research Inc.  ESOMAR 23 $97.5 43.7
ORC International  Both 24 $95.9 (5.6)
YouGov Plc.  Both 25 $91.9 2.0
Vision Critical Communications Inc.  Honomichl 23 $78.4 6.3
National Research Corp.  Honomichl 19 $74.2 14.0
Market force Information Inc.  Honomichl 24 $65.9 (2.5)
Communispace Corp.  Honomichl 21 $64.8 6.9
Market strategies International  Honomichl 20 $64.0 (12.8)
Perception Research Services  Honomichl 30 $61.9 4.0
Burke Inc.  Honomichl 25 $54.4 (4.9)
Rentrak Corp.  Honomichl 29 $51.2 0.4
Morpace Inc.  Honomichl 26 $49.5 11.6
Market Probe Inc.  Honomichl 40 $47.9 1.4
Public opinion strategies LLC  Honomichl 26 $46.0 194.2
Affinnova Inc.  Honomichl 31 $39.4 30.9
directions Research Inc.  Honomichl 28 $38.0 (8.7)
Phoenix Marketing International  Honomichl 32 $37.4 (2.7)
International Communications Research Honomichl 34 $31.3 (6.7)
Radius Global Market Research  Honomichl 36 $30.2 (8.6)
Service Management Group Inc.  Honomichl 37 $29.4 1.1
Informa Research Services Inc.  Honomichl 35 $29.2 8.6
KS&R Inc.  Honomichl 41 $26.7 4.0
MarketVision Research Inc.  Honomichl 38 $26.0 13.0
National Analysts Worldwide  Honomichl 39 $23.2 (8.7)
The Pert Group  Honomichl 42 $22.2 4.5
Gongos Research Inc.  Honomichl 44 $20.2 (10.8)
LRA Worldwide Inc. Honomichl 49 $19.6 40.6
RDA Group Inc. Honomichl 43 $19.1 8.5
The Link Group  Honomichl 46 $17.4 (3.1)
Leo J. Shapiro & Associates LLC Honomichl 45 $15.6 10.6
Chadwick Martin Bailey Inc.  Honomichl 47 $14.7 (12.5)
Kelton Honomichl 50 $14.1 4.0
RTi Market Research & Brand Strategy  Honomichl 48 $13.9 (16.3)

 

If I had more time I’d take a stab at actually including some of the companies I mentioned above to see how a list that included other segments would look, but alas I don’t have that bandwidth right now. Maybe some enterprising reader will take a stab at that!

As always, it will be interesting to see the correlation between how these companies show up in the GRIT 50 Innovation Ranking and to see the changes next year as (hopefully) both ESOMAR and Honomichl continue to expand their definitions to encompass more companies that should be included.

3. The final piece that impressed me is that ESOMAR opened the door to expert commentary (they must have been desperate for “experts” though since even I am included!) to add depth and context to the report, and that made a world of difference in the impact of it. The folks included in the commentary sections are:

John Forsyth     McKinsey & Company
Reineke Reitsma     Forrester Research
Silke Muenster     Philip Morris International Management
Colin Strong     GfK
Gregory Mishkin     Market Strategies International
George Terhanian     Toluna
Stephen Needel     Advanced Simulations
Kyle Nel     Lowe’s Home Improvement
Caio Casseb     Scoop & Co
Anna Peters     Bright young Minds
Alistair Hill     On Device Research
Sally Joubert     Luma Research
Martin Filz     GMI
Selin Cetinelli     Unilever
Annie Pettit     Research now
Andrew Grenville     Vision Critical
Philip Garland     SurveyMonkey
Ben Page     Ipsos MORI
Christian Kugel     AOL
Victoria Zagorsky     Citibank
That Guy From GreenBook

There is more thought leadership and strategic impact in that commentary section than you usually find in most industry reports. This commentary isn’t there to support the report findings either; in most cases it takes the findings further and discusses the implications of the findings. In others, it even challenges the data.

Including this disparate group of folks to share their thinking on a variety of topics related to the health and growth of the industry was a bold move by ESOMAR. I can’t say enough good things about this section; it makes the report well worth the price alone. Couple that with other data points such as research spend by business issue, method, and   further breakdowns by country and the report becomes required reading for anyone who wants to understand the financial metrics of the MR industry.

Here are a few highlights from the data; you’ll have to get the report to read the really good stuff in the Commentary.

esomar spend by method

Spend By Research Focus 2012

esomar spend by research type esomar spend by sector

So hats off to ESOMAR for a great report that moves the industry dialogue forward and arms us all with good data to inform our thinking for the next year. My deep appreciation to them for allowing me to cite so much material from their report; it’s just a small part of the great information to be found there.

We’re launching GRIT next week and will be adding to the body knowledge on many of these topics ourselves with the help of the entire industry and I can’t wait to see the results and share them with you. Come back to the blog or watch your email for more details on GRIT.

 

*All graphics reprinted with permission from Inside Research and ESOMAR. Thanks for working with us!

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7 responses to “The Honomichl Top 50, ESOMAR Global 25 & The Need To Re-Define Market Research

  1. Lenny – remind us again – what possible rationale does any ranking authority have that leads to the exclusion of Research Now, Toluna, Survey Monkey, and Confirmit? I can understand not including businesses like IBM and Google if they don’t break out their research revenues – don’t like it but I get it. But the software and panel folk?

    1. The Honomichl definition is historically based on “full service research”, and it seems that others have followed suite. Of course if we were really following through on that we’d need to remove (I think) scanning data, syndicated, secondary, media measurement, etc.. since I don’t think that really qualifies as “full service”. Unfortunately others don’t agree with me.

      Also, for panel companies and software they say it could be double counting, which I kinda get, but that is assuming all their business comes from other research companies, and specifically CASRO and other trade orgs members, and that is most certainly not the case.

      It is flawed, but as long as we recognize the flaws it’s useful. It’s a problem when we start saying this represents the entire industry when in fact it is just a portion of it.

  2. Thank you for the extensive analysis Lenny. I agree with most of your conclusions. I think ESOMAR fails yet again to grasp the paradignm shift that is going on in our industry. There are over 300 companies in the social media listeing space alone and some have been around since 2006. I have a few other comments that I want to share: I would not call the community business Social Media Communities like (I think) Outsell does. I also do not love the name MROCs. The DigitalMR preference is to call them Private Online Communities. They can be used for insights, for co-creation and for customer advocacy. Last year we made an estimate of the total NEW MR Market at 50 B US$ so 55 B US is much more believable than 33.5B or 39B. I see Forrester, Gartner and Ovum (not mentioned here) more of technology analysts than market research companies. But if we include them then we have to include any research based analyst on the planet: there are thousands fo them in the financial services sector. I wonder what do you and other colleagues think about the financial analysts in this case? In closing I will be ecstatic for DigitalMR to become top of mind for you when you discuss social media listening and private online communities. I know we may be smaller compared to some others but we are the only company I know (and maybe that of my long distance pal Tom Anderson) focussing the social media listening solution on the Consumer Insights Manager with a global multilingual service for automated sentiment analysis as opposed to the PR and Customer Service Managers of organisations. You and some others may consider this blatant self promotion but the way I see it is : this is an example on how sometimes the elephant in the room is totally ignored by the powerful pundits….i.e. social media listening as a discipline that puts the consumer insights manager in the centre of its attention.

  3. This analysis was most informative, thanks! Just an observation though: on the Spend By Research Method graph, the bars for Online through Postal should actually be light blue and the bars for Group discussions through Online qualitative research should be royal blue, right?

  4. Thank you for your insights.

    There’s still one thing that bugs me:
    Now that the internet has enabled small businesses to do market research too. How big of a player are they in the market compared to the long time clients that are big firms.

    In other words, how much of the 32billion dollars comes from smaller companies?

    If someone has an estimate, please let me know

    Cheers

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