Research: Reaching Beyond Scanners

PROMOTION RESEARCH: $1.46 BILLION

Web mining fuels 9.0 percent rise in spending.

Promotion-related research grew 9.0 percent to $1.46 billion in 2000, according to PROMO estimates based on industry sources. That’s roughly one quarter of the $5.92 billion U.S. marketers spent on all marketing, advertising, and public opinion research, which also rose 9.0 percent last year, per newsletter Inside Research, Barrington, IL.

The bulk of promotion-related spending is still comprised of scanner data from ACNielsen, Schaumburg, IL, and Information Resources, Inc., Chicago. But marketers stepped up other consumer research, using the Internet and traditional promotion tools such as sweepstakes entries to gather data directly from the source.

The Internet becomes an increasingly valuable (and value-priced) tool as brands reach more consumers, more frequently, online. Online research, which consists primarily of surveys, hit $219.5 million in 2000, up from only $2.6 million in 1996 and $96 million in 1999, says Inside Research publisher Jack Honomichl. He projects online data collection will grow to $416 million this year. “That’s coming out of the hides of traditional research companies,” Honomichl adds.

The dot-com crash has brought research pros back to traditional marketing services companies in droves. “All sorts of young talent left the traditional industry in 1999 and 2000 as dot-com startups staffed up overnight. They wanted people with traditional marketing research skills,” Honomichl says. Those “young Turks” are coming back “broken-spirited,” he adds.

Spy Kids

Online trend-tracking is growing as savvy sites use everything from teen chat rooms to customer-complaint forums to take consumer pulses on hot topics, then sell their insights to marketers.

“The Internet is one of the world’s most powerful focus groups,” says Pete Blackshaw, ceo of Planetfeedback.com. Compared with traditional focus groups, “marketers will end up spending far less on market research because the cost per transaction is much lower.”

Customer relationship management (CRM) is one element driving the trend. Marketers seeking more detailed information from individual consumers have started to realize they can glean a lot just by eavesdropping online. Synthesizing all those opinions has spawned sites to collect and collate millions of data points.

Among the services are Trend Central.com, a companion to New York City-based Youth Intelligence’s Cassandra Report; teen site Bolt.com’s virtual focus group Bolt Lab and monthly surveys; Yahoo’s Buzz Index; and InsightExpress, a division of NFO Worldwide, Greenwich, CT, which has 700,000 survey panelists.

Aside from third-party data, companies have begun incorporating research into their own promotions. Sweeps entrants are asked for household information, prize preferences, shopping behavior, and other insights easily aggregated and analyzed online. “It’s more in-depth than just receiving entries and picking one from a barrel,” says Terry Cunningham, president of fulfillment firm Cottonwood Enterprises, Bozeman, MT.

Viral marketing also boosts research as consumers swap a friend’s e-mail address for a sweeps entry or a premium.

The Buys Go On

At the risk of sounding repetitious, consolidation continues. In December, Dutch media giant VNU announced plans to buy ACNielsen for $2.3 billion. Early in 2001, Harris Interactive, Rochester, NY, bought Norwalk, CT-based Yankelovich Partners’ custom research division, and NPD Group, Port Washington, NY, sold its custom research division to French firm Ipsos as part of a plan to revamp its core syndicated tracking business to form industry-specific, Web-based info services.

What’s Up Online

At the same time, separate joint ventures enabled ACNielsen and IRI to expand online measurement services. ACNielsen and NetRatings, Milpitas, CA, continue to expand the eRatings.com audience-measurement service to reach 30 countries by year’s end. In 2000, eRatings.com signed 200 clients for $5.4 million in annual revenue.

IRI in May teamed with Internet research leader Forrester Research, Boston, on a venture called Netquity to provide Internet trend data to packaged goods brand managers. A separate September venture with Canadian marketing services firm Mosaic Group provides field data collection, auditing, and merchandising services. The new firm, MosaicInfoForce, absorbed most of IRI’s 2,400-person field staff.

Finally, IRI signed a new three-year deal extending its partnership with News America Marketing, New York City, to track its in-store and FSI programs via scanner data. n

SNAPSHOT:

• Spending rose 9.0 percent to $1.46 billion.
• Online trend-tracking grew, driven by CRM endeavors.
• Dot-com gold rushers are heading back to traditional companies.
• VNU bought ACNielsen for $2.3 billion.