Market research proved to be particularly vulnerable during the recession ten years ago. It was viewed as a discretionary spend by clients who were quick to cut budgets at the first sign of trouble. Market research companies emerged from the downturn in the early 90s with revenues in tatters, acutely aware of how little clients valued them.
The situation today couldn't be more different. The research budget is one of the last to be cut, not the first. Advertisers jostling for market share in an increasingly competitive and complex business environment now place a premium on knowledge that could give them an edge.
The market research companies were not idle. They embarked on ambitious acquisition programmes to boost their range of services and geographical reach. Within a decade, the industry has transformed itself into a multibillion-dollar global concern.
The French group Ipsos has just bought two companies in Japan and China.
"Increasingly we have to present ourselves as global," Richard Silman, the chief executive of Ipsos UK, comments. "It may not distinguish us from Research International, but it does distinguish us from a whole host of other research agencies. It is becoming increasingly important to a number of our international clients, who are looking for consistent quality of service all over the world."
Having accumulated an array of new capabilities, the large research groups have started thinking about how they can make money from them. This is taking two forms: internal restructuring to get constituent parts to work together; and a marketing push to promote this seamless problem-solving machine to clients.
Consequently, Ipsos UK, due to launch a common identity for its various brands at the end of this month, is rolling out a system of key account managers for its biggest customers. "It has been an investment of people and time - these people have to be of a certain seniority - but this has been particularly successful for us in getting substantially more business," Silman says.
Ipsos UK now fields account managers at UK, European and worldwide levels for its ten biggest clients, and hopes this figure will soon rise to 20.
Research International has also stepped up its client service. Six years ago the company ran fewer than ten global account directors, now it runs 40. The agency underwent what it described as a "fundamental re-engineering" last year after 24 months finding out what clients wanted from research.
"There was a strong sense that what the research industry was good at was answering specific questions," Colin Buckingham, Research International's UK chief executive and chairman, says. "It was less good at pulling together a strategic picture of consumer understanding."
Research International has regrouped into business practices such as channel management, customer relationships and branding, drawing together the different techniques the company has to offer. The emphasis is less market research methodology and more geared toward solving client problems.
Market researchers are discovering that one way to improve their standing with clients is to stop talking about market research. "It's not so much what you say as how you say it," Peter Laybourne, the chief executive of Fathom, which was once a qualitative research agency, explains. "We decided we were going to project ourselves as a communications and brand planning agency, using the language of those specific crafts rather than research-speak. People stood up and took notice. It was the language - not talk of semiotics or paradigms or anything like that, but of commercial decision-making and brand development in its real sense."
Laybourne re-engineered his agency after picking up hints of a harsher economic climate from the US, introducing a marketing and communications strategy for the first time. Marketing plans are a relative novelty for market researchers, who didn't really worry about where the next job was coming from when business was booming in the mid to late 90s.
Now agencies take marketing more seriously. NOP recently held a consumer insights conference for more than 200 clients, showcasing an international consumer trends study run by Roper Starch, a US agency that NOP acquired last year. Speakers told attendees how Roper data helped them shape brand strategy.
More than 100 clients have accepted invitations to a similar event highlighting NOP's qualitative division. "The concept of these client events is to both educate and entertain," Phyllis Macfarlane, the chief executive of NOP Research Group Europe, says. "Clients want relevance to their situation and outside stimulation."
Agencies are hoping more familiar client relationships will free them from the confines of the traditional research project into more lucrative areas. Research International now offers concept development, idea generation and super groups - focus groups slanted towards creative and original thinking. The ad research specialist TRBI (also about to introduce key account management for its clients) is launching workshop-based presentations to prolong the client relationship. "It is important they have information they can do something with," TRIB's head of research, Neil Swan, says. "We want to focus on what happens next. Research companies spend too much time thinking about process, how data is handled and manipulated, to the detriment of what you can do with it."
However, despite the changing ways research agencies are treating their clients, around half of their work still comes from unsolicited briefs.
Many clients are still weighing up the pros and cons, and agencies continue to offer their old ways of working alongside the new initiatives.
Research is not recession-resistant. WPP's latest financial results revealed that the downturn has squeezed operating margins in its information and consultancy division, home to major agencies such as Millward Brown and Research International. Budgets are not immune, but as much of the revenue for large agencies stems from long-term contracts, the effects of these cuts are just beginning to be felt. The future prosperity of research agencies may well rely on whether they can persuade clients to accept a different working relationship.
Britain's biggest advertisers should prepare themselves for more attention from their roster of research agencies.
MARKET RESEARCH AGENCIES: vital statistics of the key players
Specialisms: Consumer understanding, branding and communication,
innovation, customer relationships, channel management
Staff: 3,000-plus people worldwide
Owner: Ipsos SA
Specialisms: Media research, marketing research, omnibus and access
panels advertising research, CRM/customer satisfaction measurement,
social and public sector
Staff: 360 (UK); 4,000 (global)
Key clients: Media, agencies, FMCG, retailers, financial and
Specialisms: Youth, drinks, FMCG and technology brands
Approaches qualitative, ethnography, semiotics, brand clinics and
Staff: 26 in London, five in San Francisco office
Offices: London, San Francisco, Singapore in 2003
Key clients: Guinness, IPC Media, Johnnie Walker, Levi's, Lynx, Nike,
Pepsi, Philips, PlayStation, ad agencies
Owner: United Business Media
Specialisms: Cars, business, consumer, family, financial, healthcare,
media, social and political, technology
Staff: 600-plus in the UK, 1,800 worldwide
Offices: UK, France, Germany, US (NY, Washington, Detroit, Irvine,
Key clients: BT, Ford, Volvo, Royal Mail, Hoffman La Roche, RBS, HBOS,
Specialisms: Understanding client issues in the context of brands and
Staff: 80-plus researchers
Offices: UK and the US
Key clients: telecommunications, oil, media, drinks, retail and banking
Specialisms: New and old product development, packaging, idea generation
Staff: six executive and four support
Countries: UK based with affiliates in 46 countries
Key clients: Diageo, Freeserve, Kraft, Kellogg, Disney, William Grant &
Sons, ad agencies, easyJet, Allied Domecq