By Moinak Mitra
The late Steve Jobs famously eschewed market research arguing that customers don’t know what they want. It’s a viewpoint many chief executives may not see merit in but the jury is out on this question: Is Big Data killing market research? After all, why should companies spend time and money on market research to understand how customers feel about a product when they are out there on Twitter and Facebook, speaking their minds for free?
We put that question to Richard Ingleton, CEO of TNS, a wholly owned subsidiary of Martin Sorrell’s WPP Group and one of the largest market research firms in the world. A former consultant with EY & Accenture, Ingleton believes that though its contours are being changed, market research still has a place in the world of business. Edited excerpts.
How is market research changing as things go digital?
The research industry is here to help people make decisions. So traditionally, we’ve asked people to punch in data by asking questions— what’s my brand equity, should I launch this product, are my products doing well? The way of answering is slightly different now. I can get data through a survey but I can also get it through search and social media.
Market research is becoming much more real-time. There are two things that are driving that— social media and mobile. With social data, the ability to ask questions in the moment means we can give our clients a much more accurate answer than any of the traditional techniques. They’re still asking the same questions, we’re just answering them better—more quickly, more accurately and more relevantly.
What about visualisation tools and apps available today at a fraction of the cost?
You can argue that market research was the original big data business. We’re paid for finding insights. And if it can be automated and you don’t need a human being, we’re fine with that. When it comes to understanding why my brand’s moving or product innovation, you still need people to interpret that.
And you also have to understand that there is a big part of our industry which we call qualitative research — which uses tools that computers can’t—to get into the human psychology. If the gathering of data becomes cheaper, that might affect our revenues, but not our profits. We used to have thousands of people in the field. That moved to call centres calling people up, then online and now to mobile. So the amount of money we’ve made from gathering data has gone down.
Big data is helping us to bring it down further. It just makes it cheaper for clients, which means where we really make our money is in the research expertise, asking the right questions, the storytelling. I’m less concerned with revenue, more concerned with the margin. If you are a consultancy and if you have a business like ours, which is half the price of a consultancy on a daily rate basis answering these questions, maybe we’re a threat to the consultants. Big Data is helping and threatening us.
How are clients viewing this shift?
Our clients too have researchers and they’re much like us. So this understanding of how research is going to be done in the future with the two coming together helps. But we’re a little bit ahead of the clients because we’re doing it in 80 countries for 26,000 clients, while they’re doing it in their country for themselves. So hopefully we’re there before them on average, if not in one particular case. So we’ve got an education job helping our clients understand there are faster, better, cheaper ways of doing what we’ve always done.
It also depends upon the study. For example, big data just won’t help if you want to understand some complex social issues, like how do I get people to use toilets, how do I get kids to go to school, how do I get adults to use contraception? For governments, there are important questions that are never going to get answered from social media.
Where does TNS figure in the new scheme of things?
We’re using social media and search data to help in our research. We’re using mobile as well as online communities. The combination works for us.
With all this digitization, isn’t there a tipping point in the horizon?
There’s Ray Kurzweil, who was professor at MIT’s Media Lab and invented the Kurzweil synthesizer. He’s written a book called Singularity. He says computer intelligence is scaling so quickly, there will come a point where computers will be as intelligent as humans. He estimates that point to be 2040-42.
That point is called singularity, beyond which we don’t know what will happen. But two years later than that point, those computers will be twice as intelligent as humans, and it will grow accordingly. So when you talk about humanoids or computer intelligence or one-man businesses, you never know what will happen.
Can computers understand us better than we can?
Computers will be able to understand what people think about a brand by observing them through their online behavior, which means we won’t need people to go to the market and ask questions. At the other end of the spectrum, complicated math like discreet choice modeling (which needs very good statisticians) can be done at the press of a button.
So at one end of the scale we’ve got low value activities being undertaken and at the other end of the scale, we’ve got complex math and difficult statistics. Computers can do them too. Humans become designers and managers of the process. In 20 years, I’m sure it will get to genuine artificial intelligence in which it will be able to interact in a way which is completely indistinguishable from a human being.
What do clients want more of?
They have all of this social data, internal data, survey data and they have to put it together to get some kind of insight. So we have data integrators, which collect data from all sources and put them together to ask appropriate questions.
For example, we have done some work for Holiday Inn. We’ve surveyed 5,000 people who travel through Holiday Inn: what they wear, what they drink, age, mode of transport. We’ve built a very detailed profile of them. Then you use that profile against a data set of 50 million people.
Why such a large universe?
Because it is a large hotel chain across so many continents. If I get a database of 50 million people, I will get at least 15 million people who are more likely to go to that hotel brand with targeted advertising. So you go from a survey to build a profile. You apply that profile against a massive database. Then you do targeted advertising against that super-set of people
And what was the outcome?
There was a 34 per cent increase in consideration, which is a massive increase in people who are likely to stay at Holiday Inn.
So let’s say the hotel is automated and all data is being captured on an integrated dashboard, where my software tells me exactly what I need to do. Do I reward the market researcher or the IT guy?
The difference between market research and IT is getting smaller and smaller. We’re using IT to do research. So I think you reward both. In what you defined as your smart hotel, somebody designed the questions to ask your customers, somebody designed the profile of your customers for you to target, somebody designed the pricing and promotional models that you used. So you put all of that research into your process, and you merged your business.
The IT guy doesn’t know anything about how to ask a question. Behavioral economics, which is a big part of what we’re about, is about skillful question asking. This is the thing we’re selling and computers can’t do yet.
Is the talent required in market research different from the past?
Not massively different. I think we’re looking for people who’re curious about the human condition—psychologists, philosophers, statisticians. To understand regression and other drivers, we need analytical people too.
Daniel Kahneman, a psychologist who won the Nobel for Economics, has identified what he calls ‘thinking fast, thinking slow’. He is actually saying the brain is not rational. The math guy is very logical, very rational. But human beings are not logical. So, on average, what you say is true, but in particular, it’ll be wrong. This is where behavioral economics comes into play.
That is why 60 per cent of our business is creative and analytical together, the things computers can’t do now. It’s quite hard to identify the irrational motivations of behavior and to ask questions in a way people understand. That is why I don’t feel our industry is under threat.
So how much would you say is that mental part to your business in per centage terms?
The money we make from that thinking part is about 60 per cent of our business. The rest is gathering data in all sorts of different ways. The big data guys have a point but it’s still about the quality of data and about the truth.
You’re a philosophy student. Draw a parallel between philosophy and market research?
Philosophy is about understanding big subjects, great unknown questions. And that’s what market research does. And the philosopher who demonstrates that best is Socrates, the grandfather of great questioners. If market research were a philosopher, it’s got to be Socrates because he was the greatest questioner.
Where is big data being used today?
Accenture’s ‘Big Success with Big Data’ report focuses on companies that have implemented one or more big data projects. For the study, Accenture Analytics interviewed more than 1,000 experienced users of big data from 19 countries and seven industries, including Banking, Communications, Consumer Goods & Services, Energy, Healthcare Providers & Payers, Insurance, Retail.
In India, 65 per cent of the companies sampled are using big data to analyse customer behaviour while 59 per cent rely on big data to improve customer personalisation. Only 14 per cent use big data as a tool to get a grip on cost. Incidentally, most of these areas are core areas of enquiry for market research firms.
Source:The Economic Times
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