Editor’s note: Edward Appleton is a client-side senior consumer insights manager based in Europe. Here he recaps a recent conversation with Tony Cosentino, vice president and research director of Ventana Research, San Ramon, Calif.
I first bumped into Tony Cosentino “virtually” on the Web after he’d commented on a post I’d written. We exchanged views and a few weeks later I received a copy of his book Into the River, which focuses on how the concepts of big data, the long tail and situated cognition are changing the world of market research.
Both intelligent and articulate as well as being remarkably concise, it’s one of the best pieces of thinking I’ve read recently about the forces changing the research industry.
Then the unusual happened – amongst the “must-meet-up” e-mail exchanges, I discovered that Cosentino was due to make a holiday trip this summer to Munich, where I live and work. So, despite the competing attraction of the European Football Cup, we met in central Munich to chat about a variety of topics pertaining to our industry.
Tony, you started off in research and you’re now an analyst. Firstly, can you tell me a bit about what being an analyst involves?
Cosentino: Sure. Of course, analyst is a loaded term these days, as is the idea of analytics in general. When I think of an analyst, there’s an IT analyst who looks after and manages the technology systems. There’s the data analyst who is really the steward of data quality and deals with a lot of issues around the enterprise data warehouse and data integration issues. There is a business analyst, who is still a pretty technical person but is the interface between the company’s systems and the business end user. This person for example may know SQL or have in-depth knowledge of a particular supply-chain software.
Then there is another group that I call strategic analysts. To me, this last category encompasses roles such as industry analyst, marketing analyst and strategy analyst. The role for this type of analyst is to provide interpretation of data and a storyline that compels business action. In these roles, the focus is less on collecting and refining the data and more focused on the implications and recommendations that are derived from the data. It’s much more aligned with the “so what” and the “now what” that Chris Frank talks about in his book Drinking from the Fire Hose.
As an industry analyst, I fall into the latter category. I analyze business intelligence systems, which is a broad category and a discussion in and of itself. I own a research agenda but I don’t run the research per se. I write the prospectus, frame the issues, analyze the data and then frame the report and deliverables on the back end.
About a third of my time is spent talking with companies that are implementing software and consulting with them on industry best practices. Another quarter is spent reading industry reports, going to conferences, participating in analyst roundtables and interacting with large software companies who educate me on their latest offers and product roadmaps. I also advise these companies on their direction but without crossing into the area of competitive intelligence.
The final segment of my time is spent on written deliverables, whether these are benchmark reports, a value index, white papers or blog posts. Oh, and I try to spend 10 minutes a day on social media like LinkedIn and Twitter.
How did you move into the analyst role?
Mentally, I’ve always been an analyst. I say this because I have a unrelenting curiosity to understand the world around me. I’ve always been fascinated by the enterprise software market and technology in general. I wrote my master’s thesis on Web-based architectures and CRM systems, which in the late-’90s was still a very new thing. After a few years in the technology field, I made a move into the research industry. While I felt I had some measure of success in the research industry, I was not completely satisfied. I was discouraged by the amount of my time that was spent on just running accounts or troubleshooting project-related issues. In particular, all the focus seemed to be on data collection and refinement, and nobody including myself seemed to have the time to produce meaningful advisory services.
Around 2009, I started to see some big shifts occurring in the research industry. In my role at Ipsos I was talking to a high-level audience at large companies and we were all seeing similar trends emerging around the proliferation of data, crowdsourcing and a shift to revealed behavior. At that point, I decided to write a book on what I saw as these three big drivers and I published Into the River at the end of last year.
In addition, I rekindled my passion for numbers and took a series of formal classes in mathematics, probability and statistics. So the book and the classes were probably the two big things, but to be honest, what I’m doing now is not all that far off of what I was doing before. It’s just that now I have more time and energy to put into doing real analysis and advising clients.
What sort of skill sets do you think market researchers would need to shift to an analyst role?
As I mentioned, I don’t think this is a huge leap for many people in market research. It’s more a matter of focus and mind-set. I believe market researchers are very well-positioned to deal with the onslaught of information that is really going to be the hallmark of the 21st century.
First, researchers have a background in data and statistics. I think it was McKinsey that suggested a demand for over a million data-literate managers in the not-too-distant future. Market researchers are data-literate. The second quality is the researcher’s intellectual curiosity. Given that we are moving into the world of the unknown and everything is becoming more discovery-based, I believe it’s an explorer mind-set that provides huge competitive advantage.
On the flipside, I don’t want to suggest that it is easy. The ability to interact with business intelligence tools is going to be critical. These business intelligence systems are going to be replacing the traditional business analysts in many organizations and only folks who can create value from data will be in demand. There is also the need to have an industry expertise or some sort of functional business expertise.
The most likely scenario for researchers may be to pursue marketing analytics and become much more familiar with things such as Web analytics and what’s available in the organization’s databases. There are also a host of emergent areas such as social analytics, location analytics and mobile analytics that need expertise. Given that they are so new, the bar may be a little lower than it might be otherwise.
Do you have any short thoughts you’d like to update the MR community with?
I would just say that the things I discussed in my book are still quite relevant and that these trends will continue to dominate organizations and the market research landscape for years to come. Just to add to the list in my book, another disruptive approach is sales attribution modeling. As you probably know, trying to tie particular ROI to promotional channels has been a challenging task and the closest we have come is the cottage industry that revolves around market mix modeling (http://en.wikipedia.org/wiki/Marketing_mix_modeling). The problem is that these aggregate models are ill-equipped to look at the explosion in the number of promotional channels – like phone, e-mail, catalog, search banner, social, affiliate, etc. – and they cannot provide direct linkage to particular transactional sales data coming in from the different channels, such as in-store, online, mobile, call center. I won’t go into detail but now we have big-data technologies and advanced analytic approaches that can tie back sales information and score individual records in the CRM database to predictively suggest best message type, timing and channel. This is pretty powerful stuff and it threatens that entire area of research.
All in all, I believe the market research industry is facing a headwind. I saw in the Honomichl report that the industry had grown a few percent last year but for me, the story behind the story was that headcount had grown much more than that. What this tells me is that industry productivity is going down and that margins are being squeezed. I think there is opportunity given that companies are starved for insight right now but unfortunately the major players are not really in strong cash positions to do anything about it. Those who were in strong cash positions decided to buy other market research firms.
The biggest challenge of course, is the legacy business model. It’s a 20th-century manufacturing model for information. It’s built around creating designer data but organic data growth is where the gold is right now. At the end of the day, a company with a multimillion-dollar tracking study where they derive most of their revenue from data collection cannot always be counted on to speak the truth to their clients if the truth threatens their livelihood. So the high-level insight advisory calls and initiatives are flowing more through the consulting firms. That’s a problem for the companies but not necessarily for strong-performing individuals. I think this is why we’re seeing an uptick in individual contractors and project-based work and companies welcoming such individuals with open arms.
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The need for insights is, as Cosentino mentions, going to grow, but the more traditional skill sets of market researchers are going to need to be expanded to cope with the onslaught of data available. How many of us can really put up our hands and say we’re totally comfortable with big data and with using it to produce valuable insights in a business context?
I remain optimistic about the future of market research, even if we are perhaps slow as a body to react to change. We are essentially data-driven beasts – we just need to make sure we’re abreast of trends, riding the wave and not just jumping into a river without a sense of where the current will take us.
Curious, as ever, as to others’ views.