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Industry Report: Market Research Industry Embraces Online Outsourcing

Recent report finds far fewer companies investing in proprietary panels or platforms than last year

Seattle, July 11, 2006 – As online research continues to grow, more companies are outsourcing to providers specializing in panel management and software platforms, according to the results of the second annual Online Research Industry Practices and Trends Report produced by management consulting firm Cambiar LLC on behalf of GMI (Global Market Insite, Inc.), a provider of global market intelligence solutions.

The report, which polled 247 market research firms worldwide totaling $3.1 billion in survey research revenues, finds that while 20–25 percent of all research is now carried out online, both small and large organizations are much more likely than last year to depend on a market research software platform that is external to the organization. Today, 81 percent of organizations are utilizing externally-sourced software platforms while in 2005, 67 percent of companies surveyed were using an external platform. In fact, only 13 percent of companies today use their own platform exclusively, down from 24 percent last year. Additionally, when it comes to investing in platform development, only 44 percent plan to do so this year while last year, 79 percent indicated they would do so.

“Collectively, the market research industry has decided that it is uneconomic to continue investing in proprietary panels and software as panel specialists and off-the-shelf solutions become more readily available,” said Simon Chadwick, partner of Cambiar and former group chief executive of NOP World. “Instead, companies are more likely to invest in their analytic and client service capabilities rather than in the tactical implementation of the online survey process itself.”

Similarly, nearly one-third fewer surveyed are using in-house panels this year as compared with 2005 results, with only 44 percent using them over last year’s total of 63 percent. This trend looks set to continue with half as many panel owners in the 2006 study intending to invest in panel expansion and a scant 8 percent intending to invest in new panels in 2006 compared with 55 percent in 2005. Combining proprietary panels with outsourced panels is still an option, however, with nearly half of respondents indicating they will “mix and match” in 2006.

As outsourcing proves more cost-effective, however (the median proportion of global revenue derived from online rose from one-fifth in 2005 to one-quarter in 2006 with the U.S. leading the field with online registering 38.9 percent of revenues for 2006, up from 24.7 percent in 2005), there is heightened concern surrounding how online research is conducted. Market research firms are more worried about panel quality and response rates today than a year ago. Panel quality in particular appears to be a cause for concern, with 68% of respondents rating this a worry and 33% saying this was their number one concern.

The report also shows that other key factors most impacting a market research firm’s choice of panel supplier are “hygiene”-related. That is, companies are most concerned about:

• Is the panel cleaned regularly?
• Is it well managed?
• Is it representative of the populations it claims to represent?
• Is it a true panel, not just an email list?

“As the market matures, it is safe to predict that the winning providers of software and panels services will be those who pay particular attention to product quality and customer service, proving that online research is in reality no different to any other research market,” explains Chadwick.

About Cambiar

Cambiar is a management consulting firm specializing in the management of change. The company, which was founded in 2004 by two experienced market research executives, Simon Chadwick and William “Jay” Wilson, focuses on the market research industry and its ancillary supply industries. Until May 2004, Simon was Group Chief Executive of NOP World, one of the ten largest market research companies in the world. Simon sits on the board of a number of industry and academic institutions, including the Council for American Survey Research Organizations (CASRO) of which he was Chair in 2004. For more information on Cambiar, please visit www.consultcambiar.com.

About GMI

GMI (Global Market Insite, Inc.) is the only company that provides comprehensive integrated solutions for global market intelligence for both market research firms and corporate market research departments at Global 2000 companies.  Solutions include Net-MR, a suite of software tools to manage and automate research throughout the project lifecycle, desktop analysis tools, 24x7x365 service bureau capabilities, and one of the world’s largest, highly profiled, double opt-in managed panels, spanning across 200 countries.  In addition, GMI offers high-value, real-time enterprise feedback solutions for customer, partner and employee programs. Founded in 1999 with world headquartersin Seattle, Wash., GMI has operations on five continents. More information is available at www.gmi-mr.com.