Our Take: What e-Reward’s Acquisition Of Conversition Means For The Market Research Industry

Late last night the market research vendor landscape became a little more consolidated with the announcement that e-Rewards reached an agreement to acquire Conversition Strategies. This is not the first, nor probably the last, move that e-Rewards will take in growing a versatile offering in the market research industry. In 2009, e-Rewards, acquired UK-based online panel provider Research Now, which allowed it to become an online panel provider with global reach. And in 2010 e-Rewards acquired Peanut Labs, which enhanced its panel by offering a social media specialty sample that is recruited and surveyed through social and gaming networks. The acquisition of the Conversition platform EvoListen will allow e-Rewards’ clients to listen and analyze, in a market researcher’s terms, what consumers are saying on social media.

 This announcement is significant for the market research industry because it:

  • Reaffirms that social media is a source for consumer insights. Forrester’s Technographics® data shows that more than 80% of online US consumers regularly use social media. And this high level of engagement is not exclusive to developed markets. Even emerging markets like Brazil and China are voracious consumers of social media. In market research, we need to be where our consumers are, and now more than ever, social media is that channel. What sounds better, access to 6 to 8 million actively engaged online people globally, which is typically what you find with global online panel providers, or access to more than 600 million active online people? With that wide scope of access, it should be a no-brainer that social media is an important channel that we should be using to gather consumer insights.
  • Speaks to the importance of “listening” to consumers.There is significant value in being a “fly on the wall” during consumers’ conversations with their peers about their experiences and their feelings regarding products, brands, and services. Listening to consumers and analyzing their conversations can help market insights professionals build more holistic profiles of their audience segment, understand their positioning relative to competitor brands, track product or campaign performance, and generate new hypotheses that can be tested in other research. Many other departments are already quite engaged in social intelligence activities, and this acquisition bolsters the idea that listening also has a place within market research.
  • Speaks to the major concerns of Market Insights with social research. In our research around social market research at Forrester we identified three major areas of using social media for market research purposes: accessing, listening, and embracing. (For clients that want details on these three areas, see this report.) In our conversations with market insights professionals they regularly expressed their concern around representativeness of social media research and understanding how to convert it into more quantifiable terms. e-Rewards has addressed these concerns two-fold. First, they are delivering a service whereby market insights professionals can get context around the insights generated from the social media conversations they listen to by benchmarking and testing their hypothesis against their panel of consumers. Second, they smartly acquired a listening platform that was built for market researchers by market researchers that converts the listening data into terms that market insights professionals are accustomed to. Thereby bridging the gap between the unstructured nature of social media and the structured world of market research.
  • Demonstrates that the market research vendor mash-up is happening.Over the next two to three years, we will see a lot of consolidation of firms as well as a repositioning of their value proposition in the market. The overall movement will be in the direction of either acquiring niche methodology vendors in areas like neuroscience, mobile, and advanced analytics or with consultancies that provide the strategic business insights needed to deliver the story and not just the data to clients. e-Rewards is, for now, following the former direction with the building of its suite of social media capabilities. 

e-Rewards clearly understands the first three points. It has responded by providing not only access to social media sample but also a tool to collect and analyze the conversations this sample is generating, as well as the opportunity to match the results from social market research with information collected through its samples. In fact, it’s a first step to a more holistic approach to social market research.

However, there is piece of the puzzle that is still missing, and right now, it’s theirs for the taking. e-Rewards needs to incorporate consultative services either through internal organic growth or with another acquisition of a firm. Market insights professionals need not only the access and tools to listen to consumers through social media, but also the guidance to help them understand what this social media information means and how to convert it into actionable insights and deliver the recommended next steps that align to their company’s key business initiatives. It won’t be long before other players move in and deliver a full-service offering that marries traditional market research, emerging methodologies like social and mobile, and insights all together. And it may just be that the new competition is already an e-Rewards client.

Comments

Great analysis!

Wonderful analysis Roxie; great job in breaking it down and looking at what this deal signals for us all. Thanks!

Interesting and helpful but you missed one key point

Highly doubtful that e-rewards will add the consultative/interpretive component to its organisation and direct offering for the simple reason that their customers are primarily market research agencies and this additional offering would place them in direct competition with their customers. In fact, their CEO also confirmed this position in an interview yesterday following this announcement.

Yes, but...

Charles I agree that they may not make a DIRECT offering, but they are clearly intending to offer syndicated products which would be competitive to their clients and are also changing their position to be a direct data provider, not a data collection enabler. There is a BIG difference and many firms will see this as a challenge to their own offerings.

Here is the most telling comment for me:

"But when we look at the data assets of our business now, we have significant and scaled online panels for surveys, we’re entering the mobile arena, we’re very interested in aspects of behavioural data collection, we’re interested in social media data collection, so I think there are more and more strings to the bow of the group. That’s the strategy. We’re in the business of providing digital data to power insight."

I also suspect that they will partner with a major firm to be their proxy for more "full service" work. Look for an announcement soon for alignment with one of the Big 5, or perhaps even M&A with one of them, probably WPP.

this will be a difficult tightrope for them to walk ...

I hear what you are saying and they could be going down that path but whenever suppliers who are primarily providing fieldwork services (technology, sample, and more) to market research agencies have made this change, it has made it difficult if not impossible for them to maintain their current research agency customer base. I saw this happen with MarketTools, for example, who early-on (around 2000) had a survey platform utilised by lots of research agencies -- when we changed the business model to concentrate on full service (I was there at the time), all of the research agencies who were subscribing to the survey platform went elsewhere. As long as there are other fieldwork and panel providers to turn to, research agencies will more than likely choose to put their business elsewhere rather than line the pockets of those who are competing with them directly. Also, if they become a part of WPP, I would expect that everyone outside of WPP will choose not to use them (as is the case, for the most part, with Lightspeed).

But the separation of services across companies will diminish

The world where we used to go to separate vendors for each specific piece of the research process (sample, data analysis, consulting, etc.) is colliding. We are seeing more and more companies bringing, especially through M&A, all of these aspects together under one roof. Two types of companies will emerge within the market research industry. You will have the niche methodology vendors that will stay independent or will form a formal partnership with a larger multi-disciplined vendor (unless of course, they get bought out by said partner). And, you will have the market research agencies that provide access to the sample, are methodologically agnostic (because they offer various data collection options), and also offer analysis and strategic insights. It is going to be as Lenny has mentioned, a "bumpy ride", in this evolution, but it will happen. That is why I think e-Rewards has an opportunity here because especially with social media, market insights professionals need the guidance to help them understand what the social media information means and how to convert it into actionable insights. Full-service offerings that marry traditional MR, emerging MR, and insights is where the future of our industry lies.

...eavesdropping....

It's great fun to hear all the speculation. It's hard to say what will eventually happen but no matter what, this move means that where researchers might have normally only worked with a survey dataset, now they can also work with a social media dataset. And we know researchers always need more data!

Great Analysis!

Great Analysis!