The Race Is On For Selling MROCs To Agencies

On Tuesday, Passenger announced that it is officially selling into agencies in the digital marketing and market research space. Here are some quick reactions on what this means:

First, this puts it in competition with other vendors (such MarketTools, Vovici, Globalpark) that will also sell into agencies and have a proprietary platform that they can decouple from their services.

Why would Passenger announce this as an explicit strategy? I can tell you from the calls I have with agencies that they see MROCs as a value-add to clients they are working with on social media or research. Also, community services (planning, ongoing management, facilitation, reporting) are the most expensive part of the equation, and it’s likely that many of the agencies that Passenger sells to either already have some services capabilities or will be willing to take more of them on at some point. This move meets a market need and diversifies Passenger's business channels with a potentially higher-margin offering.

Second, this announcement got me thinking about where the market for MROCs is headed, and I’ve got three main ideas:

  1. Agencies will build efficiencies of scale with communities. More agencies in marketing and market research will start using communities as a way to serve many clients. They can spread the cost of community upkeep across their accounts. Agencies will obviously still charge a premium for their expertise and services such as ongoing studies, custom projects, or even syndicated reports. However, clients will benefit from having the flexibility of being able to engage with communities as they please -- and at price points that are easier to manage.
  2. End user clients will continue to need services. Because MROCs are so labor-intensive, most client-side researchers and marketers will continue to prefer to outsource this work and expertise to outside resources that can do the heavy lifting. Again, agencies are in a great position to play this role because of their broader human resources and ability to distribute investment costs.
  3. The line between marketing and market research will blur. Passenger’s announcement included quotes from its new clients. One from Direct Partners states that communities allow it to, “bring their customers into their virtual board room and [send] them back out to the social Web with positive messages.” Participating in discussions with your customers inevitably influences their perception of your brand. In social media, market research essentially becomes marketing, regardless of whether advocacy is the end goal.

Thoughts?

Categories:

Comments

Communities and Marketing/ Market Research

I'm not sure about communities being used effectively for marketing. If I was, for example, an FMCG company with a massive consumer base, I would want to recruit as many people to my community as possible to make this marketing effective. Of course some companies may just want to market to a small segment of their audience and indeed if they only have a small audience in the first place, setting up an online community would reinforce that they care about them. As you mention above though, communities are quite expensive, not only in terms of set-up costs, but the ongoing resources needed to run them. By that logic, the end clients out there with the budgets to purchase and pay for maintenance of communities would by enlarge want to attract as many people as possible to them if they are to be used effectively for marketing purposes. In that case the costs of recruiting, managing and maintenance would shoot up, making the investment unappealing from a marketing point of view.

To use communities for market research however, the element of interaction between members needs to be carefully managed. How many times, for example have we seen respondents be asked an open ended questions about product concepts and re-act with answers like "This cereal bar looks great and healthy! I can't wait to try it!" or "I loved picture A, could you let me know where I could buy this product?", conversely "I'm fed up of doing surveys about bathroom cleaner, send me something fun!". A community used for MR purposes cannot afford to have members sharing such comments with each other. For the same reason researchers try to exclude people who have done a survey about topic X recently from doing another survey on topic X, to avoid biasing the results.

I think that as time goes by, end clients will think longer and harder about whether a community really meets their research needs and tend towards more structured online interaction between their audience members such as online qualitative research, video qual and the running of a custom research panel (with it's own identity, messaging made clear to canvass people's opinions rather than promote the a brand). They may also question whether an online community is anything more than a peripheral element in a digital marketing strategy. Whatever end clients decide, these points are essential to bear in mind when thinking about what they will get for the considerable money needed to set-up and maintain an online community.

RE: Communities and Marketing/ Market Research

Hi Misha,

Thanks for the thorough response.

I do have a few thoughts with regard to your comments on using private communities for research:
On bias: I have to say it’s extremely important to bear in mind that there is bias in any type of research – it’s the market researcher’s job to recognize what that bias is and interpret any insights or analysis with that bias in mind. Clients who use these kinds of research communities, if they have good researchers behind them, tend to be very well educated on what can and can’t be done within communities. They often use community insights as a source for new ideas, a quick turnaround pulse of a core consumer segment, or concept and messaging testing. All of this can then be validated by other research means when needed, but the the value of getting this kind of rich feedback in a short amount of time is very impactful for executives and for researchers.

As for unstructured conversation: While a successful community requires a very skilled moderator, the unstructured conversation that happens between members is often where some of the most valuable insights come from. And this has been backed up numerous times by conversations I’ve had with clients.

On cost: Indeed, owning your own private community can be an expensive endeavor. And clients should not take lightly the cost of both money and time that a successful community requires. And it’s for this very reason that agencies have an opportunity to provide a service that enables clients to use communities on a shorter-term, less expensive basis. At the end of the day, more options for clients is a good thing.

MROCs are not without their limitations, but the same can be said for any other methodology out there. It would be foolish to say that MROCs are the end-all-be-all of research or that they invalidate other research methods. The way in which a community is used and the degree to which they are used in concert with other methods will vary widely from client to client and project to project. But the fact so many client-side researchers have found such success with these kinds of communities shows that they can truly be valuable tools.

Please do let me know if you'd like to talk further. I'm always up for lively discussions on topics like these.

Thanks,

tamara

The Spirit of MROCs

Tamara, I think you are absolutely correct about where MROCs are headed given announcements such as Passenger’s. We are seeing more and more Software-as-a -Service solutions, which is driven by shrinking head counts and disappearing profit margins of companies both large and small.

As you point out, MROCs are value-add offerings, and can serve as a key differentiator in an ever increasing competitive environment. From a financial stand point, it will likely be easier for larger agencies to incorporate MROCs into their portfolios than it will be for smaller companies given the large investment in staff time and money required.

Because of this, it is very important for agencies who are considering creating a private online community to be 110% committed to the initiative. It’s critical to have a full understanding, and appreciation, of the number of labor hours required to develop, launch, and maintain a successful MROC.

Additionally, MROCs offer a gateway to building relationships with community members, and through these relationships we not only learn members’ needs, desires, and opinions, but also their core values and motivations. This “spirit of community” is extremely valuable to mining priceless insights that drive innovation and should not be contaminated by agencies half-heartedly adopting a MROC strategy.

In my opinion, if the research community honors the “spirit of community” and truly partners with community members, instead of pushing long, boring, quantitative surveys, we will all be winners – clients, agencies, and consumers!

MROC costs

Hi Tamara,
great article on MROC's. I've been looking into these lately and they seem like the way to go in terms of gathering consumer insights. I wanted to see if you could give me any idea on the costs of MROC's and what exactly you get when building one through some of the larger players in the space?

Thanks for the info!

re: MROC costs

Hi James, thanks for the response. The vendor costs can range from underk 100k if you're just going to use a platform and administer everything yourself, to $250+ if you use a full-service vendor who manages everything from set up, to moderation, to research planning processes and final client deliverables. Vendors are also starting to offer more short-term community engagments that would be less of an investment. Feel free to drop me a line at tbarber@forrester.com if you want to talk further. The costs and 'what you get' will really vary based on what you ultimately need.