Demand for info grows, but what about MR?

Market research agencies are losing out to larger information vendors and their ‘own the client’ strategies, warns Research Ratings founder Stuart Butler-Smith.

The first quarter of the year is typically the lightest for new business and renewals, so Q1 financial results have typically been the weakest set of numbers from which to draw new inferences for how the full year might pan out. And because the chief executive officers of listed companies would already have given us – and more importantly their staff – a view on the next 12 months during the annual reporting season, there really shouldn’t be anything new to comment on.
But this year, Q1 results are more telling – and that’s because they reinforce the pattern shown in both the third and fourth quarters last year.

The pattern is this: the traditional full service market grew at 1.6% in 2012, and we forecast continued low growth of 0-2% for 2013. Media measurement is the bright spot, forecast to lead growth at 4-6%, with ad hoc spending dragging at a forecast that is flat or slightly negative. Anything involving digital media, analytics, emerging markets, or the technology, energy or healthcare verticals, is a good place to be. Look at the results from the companies in the table (below right), and each will confirm this pattern.

Do the larger listed companies represent the fortunes of the whole industry? In a nutshell, yes. They are more diversified geographically and by discipline, and they tend to perform better than the industry as a whole. But what about outside the industry?

Spending indicators have been fairly directionless over the last three months, as they have been for the last six months, following a period of downgrades. Despite a pervasive sense of gloom, advertising, GDP and purchasing (general and vertical-specific) are actually telling us that 2013 should, at least, be no worse than 2012. Stock market indices for the highest-spending market research verticals of fast- moving consumer goods (FMCG), media and healthcare are most definitely on the up, indicating a shareholder mandate to invest.

So what information are they investing in? It may come as a surprise to readers that market research, which accounts for 18% of the $187bn that companies and public sector clients spend on data or content, was one of the slowest-growing information categories in 2012 (compared to the average increase of 4.6%). In other words, the same clients that research agencies sell to actually increased their spending on other data, such as financial, credit, risk, legal, geolocation and HR information, as well as event and conference attendance, and so on.

As we know, information purchasing is increasingly centralised and functional roles are converging. The information-purchasing ecosystem is becoming a boundaryless free-for-all confronting vendors and internal customers. Is this a one-off? We don’t think so. We believe market research spending will continue to lag over the medium term – it’s not just cyclical.

Own the client

So why isn’t someone making the case for market research? A clue to the answer lies in the supply side. A factor characterising many of the largest information vendors is a strategy to ‘own the client’ – something that many market research companies used to talk about four or five years ago. Starting with one product, these vendors have defined their clients’ needs, built platforms to deliver their data and licensed-in information from other vendors. But they have always owned the customer relationship, thus making the mutual dependency and loyalty so much greater. Market research agencies don’t enjoy that same degree of advocacy as they are usually one of a number of firms serving a client’s market research needs.

But there’s a strong financial case to be made for market research agencies to try to own the client. Spending on ‘marketing insight’ information grew to $49.4m in 2012. By 2017 it will have grown to more than $60bn, with non-traditional disciplines accounting for nearly half of it. These disciplines – of which fast-growing digital media measurement, online qualitative and social analytics account for $3.3bn – include elements of services provided by research and advisory companies; credit firms; magazine, conference and event organisations; vendors of solutions for survey software; access panels; neuromarketing; and predictive analytics. They will grow more than eight times faster than the traditional full-service market. If market research firms are to grow, the easiest thing to do is to build, buy or set up a joint venture with a vendor to provide their clients with what they want.

Or they could innovate – but it isn’t obvious that this necessary innovation is in the market research gene. It is the ‘new market research’ companies that are beating the innovation drum. Even though they represent only 12% of the total insight market, they account for 65% of new product launches; 48% of mergers and acquisitions; and 72% of distribution agreements. Of the 1,004 market research firms that we engage with, fewer than 20% launched a new product, service, office or joint venture in the year to May 2013. This is the lowest rate of innovation in the information industry.

Stuart Butler-Smith is the founder and CEO of Research Ratings


Digital Music Sales Grow While Overall Industry Declines

Revenues from digital channels expected to hit $11.6 billion in 2016

There’s no way around it—the music industry faces a serious challenge in maintaining revenues in the digital era. Audiences are consuming music through new channels that are still in the process of being monetized, such as online radio, and piracy remains a steady threat to the bottom lines of music companies across the globe. How about Tinder for 3 minute pop ditties but you

Estimates from research firm IBIS World, as cited by Siemer & Associates, project that worldwide revenues for music will fall from $27.6 billion this year to $26.3 billion by 2017.

Physical media sales continue to make up the largest chunk of revenues across the board in the countries monitored by IBIS World. However, IBIS expects digital sales to surpass those of physical media by 2017 due in part to increased internet access on mobile devices in emerging markets, along with technological gains in mature, developed markets.

IBIS also reports that worldwide, music revenues from digital media totaled $7.3 billion in 2012, and that the category would see a compound annual growth rate (CAGR) of 12.1% between then and 2016. By that year, digital revenues will total $11.6 billion. Despite this gain, digital revenues will not be able to offset the overall loss of revenues in the music industry.

Digital music revenues, however, will continue to account for a growing piece of the market share worldwide. While digital music accounted for 21% of revenues in 2008, it grew to represent 39% of the market by 2012. IBIS projects that trend will continue sharply, with digital revenues representing 80% of music revenues worldwide by 2015.

Today’s post, borrowing with pride from eMarketer…

Mobile Pushes US Digital Ad Market Higher

Digital ad spend up 14.9% this year, vs. mobile’s 95.0% growth rate

US digital ad spending will hit $42.26 billion this year, up from $36.80 billion in 2012, to account for 24.7% of total media ad spending this year, eMarketer estimates.

eMarketer’s latest forecast for digital ad spending anticipates 14.9% growth for the year, just shy of 2012’s 15% growth rate, and set to continue falling through 2017, when spending will rise 7.1% to reach $61.35 billion.

These figures represent a slight upward revision to eMarketer’s June 2013 forecast of digital ad spending, which estimated marketers would spend $41.94 billion this year on advertising appearing on desktop and laptop computers as well as mobile phones, tablets and other connected devices. The upward revision to the digital forecast is primarily due to an upward revision to estimates of mobile spending, which is now expected to reach $8.51 billion this year. In June, eMarketer estimated mobile spending would come in at $7.65 billion for 2013.

Now, mobile spending is expected to rise 95.0% this year to account for 20.1% of all digital ad spending, and 5.0% of total media ad spending.

eMarketer bases its estimates of US ad spending on the analysis of reported revenues from major ad-selling companies; data from benchmark sources the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC); estimates from other research firms; consumer internet usage trends; and eMarketer interviews with executives at ad agencies, brands, online ad publishers and other industry leader.

TGIF – Integrating CRM, Marketing and Sales Platforms – Doable?

A little longer post today…

Borrowing with pride from some recent comments from Kevin Quiring, Managing Director of sales and customer service in North America for Accenture, blended with some of my own rambling thoughts, here are some further perspectives about aligning B2B CRM tools, marketing automation and sales management tool platforms and the inevitable integration of the three.

So what are the trends in B2B lead management today?

Lead management is a hot topic today (truth be old, it always has been.) Businesses are placing renewed emphasis on generating new business—something that started with the 2008 recession—either through acquiring new customers or growing existing customers.

They’re introducing new products and they’re trying to do acquisitions—not nearly as many as they had done prior to the recession—and expand into new markets. To do this, they’re taking a closer look at their lead management programs, which in good times are fairly ignored at major organizations. So, they’ve really started to drill down on that.

But when you focus specifically on lead nurture, particularly with some of our largest clients, the left hand doesn’t know what the right hand is doing. There are four main challenges for B2Bs looking to manage their leads.

  • First, is a gap between marketing and sales. The two aren’t working together.
  • Second, there’s certainly a lack of technology around automating lead management. That’s not to say there aren’t great marketing and sales automation tools out there, but they’re not integrated.
  • Third, there is a lack of organizational accountability for performance management around the success of lead generation and nurture. You have separate groups being benchmarked against lead generation and lead nurture. Companies should be measuring the end-to-end return on investment (ROI) of both programs.
  • Fourth, there’s a failure to apply customer data into analytics and insights that can enable marketers to better qualify and distribute leads.

So, how are companies addressing the lack of technology around automated lead management?

Many brands in the electronics, high-tech and insurance industries investing heavily in creating an end-to-end solution for lead generation, nurture and overall lead management—and looking to measure these tactics in various stages and holding people accountable for those outcomes.

They’re not waiting for the perfect technology solutions to emerge. They’re taking the CRM and marketing automation platforms like and Eloqua or Aprimo and Oracle to create a workable solution. There’s a lot of customization and integration that goes into doing this. And then there’s the analytics component that is being integrated. Companies are using analytics to start to apply the historical data they have on sales opportunities and conversions to look at all of the key characteristics in the average length of buy cycle, conversion rates and deal size so they score leads appropriately.

They’re finding the salesperson’s intuition and the marketer’s opinion on what lead will be good or bad is interesting—but not predictive. When they start to apply that data and organize it in a way where they can statistically analyze and score leads up front, they get a more accurate picture of actual opportunity. Web-based scoring is the easiest, but to be able to integrate that into your company’s CRM system and tap that historical data is really key.

So now we need to determine what type of technology or solution would be needed for the analytics component? Would a marketing automation platform or a CRM system be enough to do this type of analysis?

According to Accenture, in most instances, companies are using a statistical analysis tool like something from SAS. The SAS models are built and then programmed onto the database to provide updated scoring of new opportunities and existing opportunities on a continuous basis. The marketing automation system still does the lead capture and consolidation, but the calculations are done via SAS.

For example, there is a B2B telecommunications client that offers its clients everything from voice to wireless to unified communications to IT consulting services. From a sales standpoint, trying to close a deal when prospects have the potential to be interested in so many diverse products requires multiple sets of activity.

Sales reps typically sell only one of those products. So if an historical relationship with a client is on providing voice and IP bandwidth for the company’s phone system, the sales rep might not know that prospect is also interested in machine-to-machine services (IoT?)

But if the prospect is on the site one day reading about machine-to-machine services and that lead comes in, marketing needs to know enough about that company and that individual—rather, the marketing system needs to know enough about those details and the profitability this potential lead could provide—to be able to score the lead.

The B2B telecommunications client is able to do that. Its system takes into account things such as monthly billing revenues and can even smooth that out for one-time purchases of hardware. So rather than just looking at the brand the inquiry came from and the channel it came from, it’s using both the marketing automation platform and the CRM tool to look at the prospect’s historical relationship with the organization.

Once it has qualified the lead, it then uses an analytics solution to determine how to best distribute that lead. For example, it wouldn’t just want to send that lead to the machine-to-machine division—it would also need to alert the current sales rep and maybe the sales vice president.
Analytics can also tell how much effort it should invest in closing the lead. The scoring system will look at all of the past deals of every product and service [the B2B telecommunications client] has ever sold to the company and how much time those deals spent in the pipeline. By looking at the time spent in the pipeline and the customer’s historical procurement process, it can estimate the total time to close.

Now it can weigh the amount of effort required on the part of the sales and marketing departments to determine how to best handle the lead. The scoring takes into account the overall ROI on that sales process to determine whether or not to hand the lead to a sales team or let the prospect drive the process on its own.

eMarketer 8/8/2013

Social’s Value Measured in Engagement Over Sales
Aug 8, 2013

Engagement, Brand Lift Are Leading Social Goals

Marketers struggle to get the most out of their presence on social sites, and with brands’ continued tenure on the networks, their goals and the metrics they use to measure their performance have changed. According to a 2013 survey of US marketing professionals by Pivot Conference, which hosts leading social business events, consumer engagement and brand lift were the No. 1 goals of social media marketing, each cited by 67% of respondents. This was up significantly from 2011, when those goals were cited by about 50% each.

Last year, using social media marketing to garner positive sentiment was the leading goal, whereas this year it dropped to No. 4. Marketers may be finding that it is less important that their posts get a warm reception from social users and more important that they keep consumers posting, “liking” and sharing social content.

Among the biggest changes overall was the decrease in the importance of sales vs. two years prior. In 2011, increasing sales was the No. 1 goal of social media marketing, embraced by 100% of respondents. In 2012, it dropped below 50%, as marketers reassessed their priorities. This year, they seem to be reaching equilibrium, as increasing sales was cited as a leading goal by 58%.

And similarly, when marketers want to evaluate the performance of their social marketing, engagement is the primary metric, used by 23.3% of respondents. However, measuring increased sales was still high on the list, pointing to the fact that some marketers still expect to get a dollar conversion out of their social efforts.

Most marketers seem to be getting a better handle on social. The percentage that said lack of a social strategy had prevented them from moving beyond experimentation went down between 2011 and 2012, from 41.6% to 32.5%. Meanwhile, budget became the biggest hindrance to forward action on social, cited by 62.5% in 2012, up from 47.2% the previous year.

More than 60% of brands from the marquee retail and travel sectors worldwide participated in seven social sites or more, according to July 2013 data from L2 Think Tank, while just 5% confined themselves to three or fewer sites.

This indicates that marketers are seeing enough return on investment from across their social outreach to keep extending their efforts—or, it could mean, they are spreading themselves somewhat thin and waiting to see what sticks.