The elephant in the room: how Big Data at FAANG could eat the market research industry for breakfast
The Market Research Industry hit the $45USD billion mark in 2017. However, growth is slowing, decreasing to 2% since 2015. Companies are hungrier than ever for constant insights into consumer behaviour, feedback on usage and data, as well as personal data Big tech companies known as FAANG, that stands for Facebook, Amazon, Apple, Netflix and Google, are leading the charge in disrupting the market thanks to their ability to reach billions of consumers and handle larger amount of data.
Showing their Market Research FAANGs
First off, Facebook tracks users’ cookies across the internet and offers businesses ‘Topic data’, which shows marketers what audiences are saying on Facebook about events, brands, subjects and activities. Following the Cambridge Analytica scandal earlier this year, data security has heightened, although even with anonymised and aggregated data collection, Facebook offers the market research industry an invaluable treasure trove of information to make businesses’ products or services more relevant to consumers.
Apple amasses swathes of user and health information focusing on the when, why and how and how of smart watch and phone usage; Google collects more data on consumers than any other company on the planet. Indeed, Google equips marketers with a toolbox of tricks to strengthen marketing strategy via ‘think with google’.
As we will discover, Amazon’s AI-powered Alexa gathers information in private spaces and seeks to enter all corners of the home; and the ‘N’ of FAANG: Netflix, harvests data to tailor trailers and create user-specific content. Thanks to the digital revolution, Big Data mining is commonplace. The surge in popularity for FAANG’s market research begs the question: is there still room for market research firms–particularly those using conventional methods–to gather information?
Amazon’s Alexa: a data-driven machine
One company that relies unilaterally on its in-house market research prowess is Amazon, who spend a whopping $17.4 billion annually on research. Jennifer Wise, analyst for Forrester, explains: “Unlike Google, which is already embedded into many people’s lives through phones, partnerships, and other — Amazon-created devices are Amazon’s entrance into mass customer data.” Amazon is convinced of the importance of quick, high-quality qualitative research to answer consumer needs, and as such, are taking small steps into our own homes.
Their smartphone failure, the ‘Amazon Fire’ is a clear indication that it will not be able to obtain consumer data through mobile technology; consequently, cultivating data at home is the next logical step. The company sees its AI-powered voice assistant Alexa and all the devices it can live in as “windows into our purchase behaviour,” and as opportunities to steer that behaviour in a direction that benefits Amazon.
It’s also a self-feeding cycle: the more Alexa use, the more we give Amazon more data, which in turn “helps Amazon improve its algorithms, customer experience quality, and try to corner the intelligent assistant market,” Wise adds.
How Netflix closed the curtain on focus groups
Self-feeding cycle aptly describes the Netflix creation process. Now, the script for launching a gripping television series is as follows: screenwriters gather information from focus groups and market research models, consult reputed reviewers in the industry and attempt to predict, as confidently as possible, where thriller, spy or comedy genres trends might be best lead. An informed, educated and experienced stab-in-the-dark, which sadly means that there are more flops than five star ratings. Netflix, however, creates original content based on user data.
We all know that Netflix recommends content based on its complex algorithm that mines rich behavioural data collected on users, the “If you liked this, then maybe you will enjoy this…” strategy. Little known is that Netflix can also ensure that shows reach the right audience, increasing the new viewer conversion rate. To this end, Netflix made ten different versions of the trailer for House of Cards, targeted toward different audiences. Fans of Kevin Spacey, (Netflix knows if you are a Spacey fan thanks to viewing history) watched trailers that were Spacey-centric, while female-protagonist aficionados enjoyed trailers starring Claire Underwood, Spacey’s on-screen wife, to highlight the role of women in the show.
What’s more, Netflix has skyrocketed the likelihood of commissioning a second season of one of their series from 35% to 80%. The secret is to apply Big Data crunching and analysis to its 117 million subscribers. In essence, every four in five Netflix series will produce a successful repeat season, whereas standard television series created following collaborative efforts between writers, marketing executives, creative directors and focus groups suffer less than a two in five chance of being commissioned for a second installment.
The Industry Response
Faced with tremendous advancements in using data for research purposes, one would expect the industry to be running scared. Presumably, it is only a matter of time before other industries follow televisions’ market research demise?
The YouGov CEO, Stephan Shakespeare, is unabashed: “there is still an important place for market research, there are certain questions that can only be addressed by a single large study. It (big data) is not the end of traditional market research; it just becomes more of a niche area.”
Allan Fromen, UBS Global Technology Lead sums up succinctly, “While Big Data can’t answer all our questions, it is a terrific addition to our toolkit, and should be viewed as complementary to traditional market research methods.” Niche market researchers like POTLOC, who offer hyperlocal surveying and analysis for businesses in a given area, may stand to prosper.
The Big Data Debate
Industry professionals divulge that although Big Data is vital, making sense of the information is far more critical. Steve Wills, Director of the Insight Management Academy, comments: “Big Data on its own is not enough. Big data companies are waking up to the fact that they need the market research industry to make sense of their information. We must help our clients get value from the information and measure return.”
Indeed, in the face of FAANG’s elevated positioning on market research, the future of the industry may involve a fusion of traditional methodologies and practices. As surveying, data mining and information sourcing materialise faster, the quality increases and inevitably costs come tumbling down. Two distinct parties tug both ends of the information spectrum: software engineers and IT professionals devoted to Big Data discovery, as well as traditional market research companies. The future is the blending of these worlds to deliver more pronounced and meticulous insights.
FAANG may appear to have the upper hand, effectively straddling market research methods and harnessing big data information, but market research analysis, particularly at unique companies, can play a role. According to Raconteur’s Gideon Spanier, “The winners in market research will be those companies that can break down silos so that they can harness the power of big data in a digital world.”
By Joseph Hall