CLOSE-UP: LIVE ISSUE - MARKET RESEARCH. The industry has to focus on some tough questions, Kantar's Eric Salama says

There is a contradiction at the heart of the market research industry today.

Never have clients been so aware of the need to get closer to their customers, of innovating and growing revenues, of optimising their budgets. Most chief executives talk passionately, and genuinely, about these things.

Never has the demand for research and insight been greater - a fact that has led the industry to grow consistently faster than any other marketing services discipline over the past decade.

And yet ... you don't see market researchers dancing in the streets; ad agencies still hold more allure for an aspiring graduate than does a market research agency; and too many people in the business complain about their inability to influence a client's business.

Why is that? Two reasons: clients and talent.

Thirty years ago (March 1974 to be precise), Stewart Smith wrote in the Harvard Business Review of "pseudo-research". Smith wrote about the tendency for research to be commissioned and carried out for the wrong reasons - "to enhance their self-esteem, assuage anxieties (of clients) and provide an outlet for exercising skills (of researchers)". Today, pseudo-research is out and usability is in.

What is the research for? How will it be used? Who will use it? What decisions would be taken differently if the research points to X rather than Y? And if we can get 90 per cent of the answers for £100 next week, isn't that better than getting 100 per cent of the answers for £150 in three months' time? These questions should be asked every time a project is considered but unfortunately they are not.

What's more, research agencies usually talk to research or insight directors.

Some of those directors are attuned to the needs of their organisations, anticipate issues, and are partners to their colleagues in marketing, communication, HR and product development. But too many are not ... and too many of them do not understand how different the needs of the chief executive, chief finance officer, procurement and other senior management really are. How much should I spend on marketing? How should I allocate that spend across disciplines, media, countries? How can I cut spending by 10 per cent while minimising the impact on my brands? These are not unreasonable questions - but they are not questions the industry has addressed adequately.

It is the drive for usability and cost effectiveness that is responsible for much of what we see in the industry today - from the trend towards outsourcing and closer client relationships (TNS with IBM, Nielsen with Kraft, Kantar companies with various), to the move towards internet-based fieldwork (which may account for as much as 25 per cent of all data collection in the US this year), to the growth of innovation-oriented research and the explosion in copy testing.

And the second major issue is talent. The industry defines itself in a particular and technique-driven way. But clients do not. They recognise that insights can come from a variety of sources - from planners in ad agencies, from direct marketing people mining their databases, from less scientific observational techniques. Too many of the people who can provide the insights do not sit within market research companies - but the industry has never made a concerted attempt to recruit them or work with them.

The consolidation of the industry - with the acquisition of NFO by TNS being the latest example - will continue. A big gap has opened up between the top tier companies - VNU, TNS, Kantar - and the next tier down - GFK, Ipsos, NPD, NOP, Synnovate. We will continue to see more start-ups in those areas where barriers to entry are low and more consolidation among the middle-tier companies. But this cannot, by itself, solve the bigger issues that the industry must address if it is to regain its self-confidence and sense of purpose.