Following on from our initial post last week about the findings of the 2007 ESOMAR Prices Study, in this post we look in more detail at how online research methods, such as e-surveys and e-focus groups, have continued to exert a strong downward pressure upon research prices.
That online research tends to lower costs is amply demonstrated by the fact that while telephone interviewing was found, on average, to be roughly three-quarters of the cost of face-to-face research, online techniques were a further 33% cheaper than telephone-based methods.
The article then concludes by examining the key factors that determine market research price differentials between countries and regions:
How cheap will on line go?
In the current study, 19 countries were able to provide at least three bids for conducting a tracking study using online data collection, up from 10 countries in 2005. Prices fell, in US dollars, in five of the eight countries that were included in both the 2005 and 2007 studies. These falls were despite the fact that exchange rate movements alone should have made most of them more expensive. In Australia, Japan, and UK the absolute price reductions were particularly large. It appears that a major factor in these price cuts is the increased number of suppliers and fierce price competition.
However, there is an indication in the study that prices won’t continue to fall indefinitely. In the USA prices rose between 2005 and 2007, by about 13% per year.
The main drivers
The study suggests the key drivers of price are the cost of labour and the size of the research market where the work is done. The cost of labour, in turn, being driven by a combination of local wage rates and the shortage or abundance of talent (markets that feel the need to hire international talent certainly end up more expensive). Smaller research markets, in economically advanced countries, find it hard to create online access panels. Without a range of online access panels, these countries miss out on the cheapest options for research. This, in part, explains why Ireland was the most expensive country on the Global Index.
The cheapest countries tend to be those with the lowest cost bases, with the cheapest being Pakistan, followed by Bulgaria and Macedonia. Several of the recent EU accession countries, for example Bulgaria, Cyprus and Romania, are amongst the cheapest on the Global Index. This position may change markedly over the next few years, as these economies harmonise with the rest of the EU.
The above article orginally appeared in the October 2007 edition of Research World