Disruption is Coming to Marketing Research

The traditional marketing research is firmly entrenched, but the explosion of digital and mobile will soon disrupt the status quo. Observed behavior provides an accurate, less-biased understanding of consumers. Here are the opportunities and challenges facing traditional marketing research, says, Michael Beebe, CEO, Dstillery

Traditional marketing research companies occupy an enviable economic position, firmly entrenched with their clients and highly profitable.  But as with many legacy (mature?) businesses, the digital ecosystem represents an opportunity for those marketing research companies that embrace it, and a threat to those that do not. 

In 2018, many research companies still send out paper surveys via the US Postal Service, in which they ask consumers to self-report household media consumption at a very high level. Others rely on panels who fill out diaries, in which they report on everything from what they bought to what radio stations they listened to yesterday. These methods are rooted in the age of Mad Men, over 50 years ago. You don’t need a doctorate in data science to know that these approaches lead to unreliable data, and yet many brands continue to employ them to inform the deployment of massive marketing investments.

It should be intuitively obvious to all that the explosion of digital and mobile consumer engagement will disrupt this very cozy status quo. Marketers can now develop a more accurate, less biased, more complete understanding of their customers, in a fraction of the time, and at a fraction of the cost of the traditional approach. Insights-driven brands and marketers who understand and embrace this opportunity will have a competitive advantage over those who continue to make decisions based on the traditional model.

So, what are the opportunities and challenges facing traditional marketing research?

Aspirational behavior reporting

Human beings are fundamentally unreliable. Some have bad memories. Others have big egos. Still others simply aspire to be something other than what they are.  All of these realities undermine the very purpose of survey-based behavioral and marketing research. I may have skipped my workout, binged on YouTube videos during my commute, and had a big greasy burger for lunch. But ask me about my lifestyle in a survey, and I will self-report that I am a regular gym visitor, a voracious reader of mind-expanding literature, and a health-conscious eater. Many of us tell the survey not who we are, but who we want to be.

In today’s world of always-on, always-connected consumers, there is a better way to measure behaviors, one not subject to the challenge of biased self-reporting. A mix of connected devices, including desktops, tablets and smartphones can reliably observe, measure and reveal our behaviors, and tell marketers who we really are.

Small samples

Most panel and survey-based research suffers from small sample sizes. It is difficult and expensive to identify, recruit and maintain a group of people who are willing to allow marketers to peek into their private behaviors. This reality means that traditional samples are small. Of course, they are grounded in statistical standards, and aim for both diversity in composition and significance in size. 

Beyond just reliability and size issues, there is also a clear bias embedded in these small samples. Surveys are often taken by people who like to take surveys, and panels include people who volunteer for panels. These biases represent real challenges for traditional marketing researchers. 

Once again, the digital ecosystem provides an opportunity to address these challenges. Observing the behavior of millions (or hundreds of millions) will always be better than asking the behavior of thousands (or hundreds).

Lag and latency

The world is changing fast. Consumers’ tastes shift with the latest Instagram post from their favorite influencer or headline about their favorite celebrity. Surveys and panels have inherent latency and can take three months or more between design, execution, processing, and delivery to marketers. By the time brands get the results, consumers may have already moved on. With a larger scale, less biased, more reliable observed digital and mobile behaviors available in near real time, why wait?

Insights without action

Traditional marketing research may suggest a course of action, but more often than not, it cannot be activated directly. In this way, it is often a dead end. A report that winds up in a library of reports is not an actionable insight. Turning over a segmentation study to the agency of record to incorporate into marketing strategy, planning and execution is not an activation — it is the start of another expensive, slow, biased legacy workflow.  Traditional marketing research does not connect directly to activation.

It is surprising that any brand manager in 2018 would knowingly base any decision — be it strategic, creative, tactical or media related — on research with all of these obvious defects. The trouble is that marketing research, like many other industries, is bound by inertia. Managers of established brands have libraries of consumer segmentation and market research going back 30 years or more. They have been paying hundreds of thousands of dollars for these reports quarterly or annually, and have a comfortable baseline for comparing one period to the next. Even brand managers who understand the challenges have no incentive to change and acknowledge that their library, baseline, and historical decision making have all been flawed.

Despite this inertia, or maybe due to it, there will be rewards for the brands who do embrace marketing research enhanced with digitally native behavioral data. There is a fundamental opportunity for research firms to enhance and update their methodologies, and thereby to provide brands with a better view of who their customers are, and how best to reach and appeal to them. Technology has opened the door to observed behavior, not reported, at scale (as opposed to small samples), free of bias and available in near real-time. The insights generated by these new tools and methods can be activated immediately, often with the click of a mouse. And best of all, all of these improvements can be had at a fraction of the historical cost. “Better, faster and cheaper” means that disruption is coming to the marketing research industry. 

Brands are in the driver’s seat for making this transition. Smart research companies will package and sell what the market demands and the market should be demanding better, faster, cheaper consumer insights. Enhancing marketing research with digitally native behavioral data allows brands to start anew, unlocking new, powerful insights and audiences, and activating them, in real time, to find the growth opportunities that have been hidden in the blind spots of traditional marketing research for far too long.