AMA members can read the full report here.

GreenBook has some good topline coverage here.

Key points:

1. 2009 US revenue for the top 50 fell 3.5%, with Harris Interactive dropping 24% and Gfk (-11.7%), Synovate (-12.4%) and Ipsos (-7.3%) all struggling through this recession. The larger firms had problems, but from what I hear this recession drove many of the smaller firms to the brink. A CASRO survey of smaller firms (avg. of $5 million in reveue) found that their revenue was down 8.5%.

2. But, the outliers are interesting. Nielsen and Arbitron came in with growth of 3% and 4% respectively. Their consumers could not and did not substitute down. Westat, headquartered not too far from my offices in Washington, DC, did very well. Their work is largely for federal agencies and this has made them relatively recession-proof thus far. Public Opinion Strategies, a great company and a former employer, was down 57% from 2008, but that is ONLY because they are a political polling firm and there were no federal elections in 2009. That they made the list at all for 2009 is extremely impressive and suggests that they are finding ways to stabilize their heavily cyclical business.

3. But, the BIG outlier, the one that leaps off the page, is Communispace. The 800 pound MROC gorilla (245 employees) found 18% growth in 2009, in a downturn. This is prime evidence to me that the newer, non-traditional research methods are where the growth will be. Communispace is an almost perfect test case of this since they are solely focused on MROCs. In essence, they are a “tracking stock” for MROCs.

4. Globalization. The Honomichl report lists the percentage of each company’s business that is ex-US. Aside from government contracting it appears that one can’t get big unless one gets global.

5. New Entrants. StrategyOne, my employer, made the list for the first time.

By this I mean the application of memetics to marketing campaigns utilizing research and testing techniques.

Memetics is the application of the viral analogy to the world of ideas. The idea is the virus and the brain is the host.

Consider that the world of communications is transitioning from a vertical communications environment (top down, advertising, telling-yelling) to a horizontal - peer-to-peer model. This transition from mass advertising, mass market to niche marketing, the long tail and peer-to-peer will have major impacts on the market research industry in the future.

And this begs the question of what model we use in this new communications era. The vertical communications era created a stimulus-response research design. The horizontal communications era may require a different set of tools.

One approach is to apply the ideas in memetics and epidemiology to message testing.

What would this look like?

First, it would require multiple monadic cells with each cell being a slightly different meme. Each meme would be tested for stickiness, repeatability and selfishness.

Another approach might be running a number of parallel viral experiments among multiple monadic cells and measuring the spread of the meme over time. This would be a purer test, but difficult to measure. One measurement alternative would be listening to participants across their social media “lifestreams” and charting the spread of a meme via repetition of key phrases. This would require, among other things, very strong text analytics. The first market researchers to do this will be considered applied memetic engineers.

But, there are plenty of challenges. One challenge is evolution. One would expect these experiemental test memes to evolve over time, with word and meaning changes along the way. Tracking these would require the creation of a solid analytical framework and powerful text analytics.

Will this happen?

I think so. We already are seeing numerous experiments tracking Twitter traffic to box office sales and Presidential approval scores. This kind of work should lead naturally into the work I described above.

This is why I was pleased to see Nigel Hollis at the Millward Brown blog write on the topic of “yelling, story telling, and selling”. Here he writes about Seth Godin speaking at Foro Mundial. It’s worth a read, and it highlights how others are thinking of a meme-driven communication mix in a horizontal, peer-to-peer world.

For a complementary perspective, I recommend watching the following interview with Simon Chadwick:

http://www.youtube.com/watch?v=6clSVeVhU_c

Our views are very similar.

While much of the industry as it is currently defined is still in the “Asking Epoch” defined by the survey, we are entering the “Listening Epoch” defined by observational analytics (social media “lifestreaming”, MROCs, co-creation, etc.)

And, beyond this new research epoch is the “Simulation Epoch” defined by mass simulation gaming, prediction markets, MROC Delphin panels and strategic foresight.

Simon outlines the transition from the Asking Epoch to the Listening Epoch nicely.

With many points of view being promoted and it’s worth a quick read.

For the record, here are my posts:

Post 1:

Today there is no one single future for market research, but alternative futures.

I’ve written quite a bit about this at the Future of Insight project and in my white paper on the topic.

The industry as currently configured has significant challenges, and there are many plausible futures.

At a macro level, I believe market research can be divided into five (5) developmental eras that can be classified into epochs:

“The Asking Epoch”:
1. Face-to-Face Era
2. Telephone Era
3. Online Era

“The Listening Epoch”
4. Observational Analytics: SM “lifestreaming”, MROCs, fMRI, eyetracking

“The Simulation Epoch”
5. Anticipatory Era: Mass simulation gaming, prediction markets, MROC Delphi panels, strategic foresight

I recently wrote about some possible futures flowing from this evolution. They are:

1. Army of Davids: The large players are overwhelmed by new entrants and technologies
2. Free Agency: MR goes “mechanical turk”.
3. Convergence: A new, much larger and more holistic, industry emerges.
4. Incredible Shrinking MR: MR fails to innovate and watches the future pass it by.
5. DIY: Google, Facebook and other future social media platforms enter the MR space and become desktop or portal based applications.

There are many more and they will be in my upcoming book, but we should begin strategizing based on these potential futures.

Post 2:

One of the things I find interesting about many of the responses here is that they assume the answer is in making the survey research process more efficient. I think it is a given that the survey research process will be optimized (in a much shorter, more mobile, format).

But, this assumes that the survey instrument will continue to be the core of what we do and that people will still want to answer our surveys.

I’m skeptical.

This is akin to listening to the canal owners of early 1800s America talk about making the canals wider and with smoother oxen trails while the railroad was in its infancy.

Almost everyone in this discussion was socialized during what I call the “Asking Epoch”, the time when the survey was the core engine of research.

But, observational research (fMRI, MROCs, social media lifestreaming) is in take-off mode, and it isn’t survey driven. Imagine today’s project directors morphing into tomorrow’s “community managers.”

Moreover, with massive multiplayer gaming and prediction markets, the era of anticipatory research may be just around the bend. Imagine the survey going away and being replaced by simulation gaming. Given the youth gaming culture that extends to GenX, this seems more natural than a survey experience.

Rubinson takes a look at the evolution of the ad agency and applies this evolutionary footpath to MR with media buying the analog to the data collection side of the business and creative the analog to the full service, analytics side of the business. It’s worth a read.

In my thinking about the future of the MR agency, I have developed at least five (5) plausible futures (not mutually exclusive):

1. Army of Davids: In this scenario, the larger firms keep consolidating and attempting to buy their future by acquiring hot new companies, but the systemic change and “free agent nation” overwhelms them. The goliaths are killed off by the Davids. The carriagemakers can’t adjust to the age of the automobile, and they are overhwelmed by new entrants, new technologies, new approaches (social media listening, etc.) and agile specialty firms.

2. Whuffie-Driven Free Agency: A second and more extreme “Army of Davids” scenario, Whuffie-driven free agency develops when individual researchers band together under a kind of digital guild in which each is rated by his-her clients. The resulting client score, their Whuffie (hat tip to Cory Doctorow’s “Down and Out in the MagicKingdom”) roughly determines an individual researcher’s compensation if and when they are chosen to do the work. Sound fantastical? Hardly. Consider: (a) eBay feedback profiles and (b) the mechanical turk. Now assume that a community of credentialed researchers (think PRC or similar) build an elance site on these principles. Insights rockstars, as opposed to large companies or even specialty firms, dominate the scene.

3. Convergence: Under the convergence scenario the MR industry is renamed, rebranded and redefined by a much larger collection of data-driven strategic consultants, including: management consulting, social media listening and analytics firms, predictive markets, game modelled consumer behavior research, foresight practices and IBM. Under this scenario, the first to combine all fields in an integrated way gains a significant advantage. The deepest pockets are the most favored here.

4. Incredible Shrinking MR: In this scenario the market research industry retains its current, distinctive, identity. It is not reinvented or transformed. Plenty of new innovations come along, but they’re not part of MR. MR labors on, like the dinosaurs after the first asteroid strike, oblivious of their doomed future.

5. DIY: Google, Facebook and future social media platforms enter the consumer research business by offering unimaginably massive panels of their users-members. With MR now a simple page on these social media sites, the era of DIY research is fully unleashed. Need a quick, global survey of fashion conscious, well-educated women? No problem. GoogleSurvey will collect data for you in 30 minutes after you have posted your (mandated) 5 questions or less survey. Need some collage-based qual done in 20 countries on a new tourist destination? No problem. 3 hours. Survey quality suffers, but the data is abundant. Insights? Well, those are a bit tougher to come by.

The future of market research is… Street interviewers with jet packs. Either that or a closer alignment to (and integration with) increasingly sophisticated and knowledge-rich customer databases.

Although street interviewers with jet packs is a fantastic “atomic ranch” image, my bet is on customer database integration.

Here Rubinson details the “ARF’s first Research Transformation super-council meeting.”

MR has a long road ahead of it in order to transform. As I’ve noted before, the BCG research on this paints a stark picture.

Like Kim Dedeker, I do believe that the industry will undergo quite a bit of creative destruction, with some of the larger firms going the way of the dinosaurs and newer entrants redefining the business.

In my view, we are seeing a confluence of trends that will make the industry virtually unrecognizable in the coming years. In fact, I’m not sure that something called “the market research industry” will exist in ten years. And, as my white paper has pointed out, I think we need to consider rebranding “market research” under a better, more descriptive and more compelling name.

What appears to be emerging is a new industry based on three skills (traditional MR, listening and foresight) and held together by one character trait (curiosity) and one clear focus (strategy).

The firms that harness these three skills with curiosity and strategy have nothing to fear.

I have recently been asked this question with some frequency. This, in itself, represents the level of interest in MROCs and also a certain level of bias from survey-based quantitative researchers.

One avenue of approach on this topic is Dunbar’s number. Dunbar’s number is based on Robin Dunbar’s primate research. The number itself is a mean group size of 148, but with a range of 100 to 230. This represents the “cognitive limit to the number of individuals with whom any one person can maintain stable relationships.”

What does this mean for the “optimal” MROC size?

Dunbar’s number suggests that MROCs in the 150-230 range are optimal and that larger population MROCs may be difficult for participants to develop much of a sense of group identity with.

But, there is a diversity of opinion on this topic. Some, like Jacob Morgan argue that applying Dunbar’s number to MROCs is inappropriate since we’re not trying to build a tribe or fighting unit and are only attempting to get a critical mass for consumer co-creation. The argument here is essentially one asking why we should limit the power of networks.

Some clients and prospective clients feel that limiting communities to a range around Dunbar’s number is too small and that the size of the community should more closely resemble the sample size of traditional national surveys – 800 or 1000 (or more). In this instance, this may be an example of researchers taking one model (projectable surveys) and applying them to a very different tool (directional, qualitative community insights). But, I must admit that community sizes larger than Dunbar’s number are comforting to me as a researcher.

For a deeper dive into this topic, I recommend Matt Foley’s blog on the topic.

Jeff Henning’s blog on this top is also worth a read, as is Jacob Morgan’s.

To me a trade off seems to exist. If it is very important to the research that a tight knit community develop, then Dunbar’s number seems to be a guide. But, if a digital tribe is not critically important, there seems to be a case for a larger network.

I suspect that quant researchers will want a larger community and qual researchers will want a smaller community.

This is why I was delighted to read Quentin Hardy’s piece on Norman Nie titled “Power in the Numbers.”

Nie co-invented SPSS (sold to IBM for $1.2 Billion last summer) and is now running the startup Revolution Analytics. He says his new product will undercut SPSS and SAS by 80%.

His new product will be based on R, an open source statistical programming language.

Simpler, cheaper analytics and the open source software movement collide…

This is a trend worth watching.

Research World (May issue) notes that:

1. Synovate and Kantar revenue fell approx. 8% in Q4 of last year (relative to prior Q4)
2. Gfk was down 6%
3. Ipsos was down 4%

These are some of the largest players.

With declines like this it may not be as easy for these firms to buy their growth via acquisition. If they can’t, then these new entrants may overwhelm them.