Their reaction to “data driven” the fake market research organisation is one of them. Basically their argument is that if you find a market research agency on the febelmar member list it is legitimate and I cannot disagree with that. However it seems to imply that all other market researcher who are not a member, are more suspicious which by definition is not the case. On websites of the government you can check easily whether a company exist or not; you do not need febelmar for that and there are also other organizations like ESOMAR for instance   However the fundamental questions are not whether data driven was fake or not and it was also not whether the information was presented in the right why. In most cases market researchers do a good job of analyzing and representing insights in a meaningful and objective way. The problem is that media and journalist make their own interpretations of the findings and those researchers who want to see their work and name in the press accept these distortions without any resistance. Yes you can find more information than before about the voting polls on the website of febelmar but then why the media still talks about point estimates when they should provide ranges?

Basically the argument now is that once all (reliable) information is given to the media, researchers do not have any responsibility about the way the results are presented in the media. This position is debatable although I understand it is hard to keep media in line. However not one single comment is made about the role of the media in the reaction of Febelmar which basically means they missed the whole point. Rather than an opening for a fundamental debate about the role of the media and the power of figures, they take a defensive stands.

Fake information is given all the time in reality programs at contestors. The intention of woestijnvis of course takes it one step further. How to fuel an entire society with fake information. Apparently very simple by a fake research agency. However it also shows how strong information is and how weak the media has become and how they depend on reliable or any information streams. Unfortunately even with reliable information then to distort it at the sake of  their constant need for content, to be better than competition and achieving  short term fame and glory. Although in my opinion it says more about the media and sourcing than about the research industry you immediately feel this is not good for the industries reputation. 

But are researcher  really without fault here? On the one hand researcher hope to hit the media by their genuin findings so they can prosper on the free publicity and their 15 minutes on the other hand if you been around for a while you know media and journalists in most cases do not have the skill nor the intention to write a reliable piece. In most cases results are always interpreted so they fit their spectacular heading. You do not need a fake agency to know or show this. You just need to follow how research is published in popular press, especially during election time. Bigger agencies compete with eachother about whose poll is best to “predict” the election outcome although ofcourse it is never the intention that such research is used for prediction. Therefore I urge all polling agencies to protest to the way their findings are published and to stop publication if what journalists write is not supported by the research. The ego of being published and seeing one’s name in the newspaper or on TV is apparently also more important for researcher than scientific deontology. So here also researcher have a responsiblity to show somewhat more guts and to point out to media that they do not agree with the way their results are represented. Calling on such responsibility can only increase awareness among journalist that they need to check their story. So researchers are not to blame directly for a distorted press but they should at least influence it. To all reseachers  just out there looking for fame and glory; find yourself another profession because you should not find it here.

and may be again this entire message spread by publication in the concentra newspapers might be again misinformation of woestijnvis. I did not check with woestijnvis only the newspaper and apparently they cannot be trusted.

The only reason why most of the major research companies still could present an increase in turnover in 2008 was only possible because research International finally decided to stop its business after years of reporting losses. Their 4 million turnovers in 2007 dissolved over different competitors. Mainly significant, Ipsos and Synovate could profit from this admission of defeat but it did not result in more profit for them. The RI case in Belgium should be studied more in detail because it demonstrates how vulnerable all research companies are. In 2002 RI reported a turnover over 12 million. Over 5 years it saw its sales reducing to only 3.8 million in 2007 and finally 1.2 million in 2008 over 6 months resulting in the final call “retreat to the Netherlands”.  If it can happen to RI it could probably happen to any of us.

That research International was not able to transfer most of its turnover to their Dutch operations demonstrates how local the research industry in Belgium has become. This will not improve given the number of HQs that are leaving our country. It is also rooted in the fact that most research businesses in Belgium are based on personal relationship of its founders even if they are taken over afterwards by one of the international groups. Synovate’s Censydiam affiliate had to learn this the hard way. The turnover of Censydiam decreased from 10 million euro to 6.7 million in the same year that Jan Callebaut research tycoon and research entrepreneur of the first generation decided to leave the company after he realized that he rather would be king of his own castle than a lieutenant in an international army, taking with him a dozen of former Censydiam employees. Although his company does not report turnover it can be expected based on the reported gross margin and profit to be 1.5 to 2 million euros. Also Ipsos is still licking its wounds of the takeover in 2004-2005  of the at that time market leader INRA. Failure to acknowledge local management and loss of the eurobarometer resulted in significant losses in the years to come. Ipsos still reports a loss in 2008 of 0.4 million. However Ipsos seems to crawl slowly from its pit given its reported losses was no less than 1 million Euros in 2006 and 0.6 million Euros in 2007.

Given the personal nature of most of the companies it is difficult to put the reported results in perspective. Purely based on the reported gross profit one could ask why large groups still bother to do business in Belgium. The reported turnover of about 65 million euro of some of the 5 biggest research companies (Synovate, ipsos, Significant, Dimarso, insites) is one would call aggregated an average company. The total reported gross profit of 1.7 million euro (2.7%) is a cry for help. Main reasons why one stays in business is that results are somewhat deflated by internal transfers to management companies, international parent companies as well as some large salaries. It does not make it easier to compare results. How big this effect is, one can only guess.

Further the results shows that turnovers between 10 and 20 million Euros do not create sufficient economies of scale. The problematic mergers of Synovate and Ipsos demonstrate this clearly but also Insites the Belgian online pioneer had to report lower gross profits mainly because it invested a lot in people (They went from 34 to 58 FTE’s) in one year and consequently salaries over 2007 and 2008.. A bold investment but given the low economies of scales it will not yield increasing gross margins for them for several years.

It also means that the Belgian market cannot sustain more than 5 companies with more than 10 million turnover. As such further concentration of the industry will certainly happen in Belgium. Among the larger players this will be internationally driven. This resulted already in the merger of TNS and Research International creating the world’s largest custom research company. For RI in Belgium the merger came too late but it will probably not be the last merger we will see. Midsized local players will try to keep pace by looking at each other and to some of the smaller fish.  

The low gross profit also shows that the major strategy of far stretched standard product suits does not work in Belgium. In most cases a lot of the offered international tools are simply too expensive in a Belgium context. A small country means relative small marketing budgets. Within this small budget pool market research is further simply disregarded. Luckily this also explains why the research industry suffered far less than the advertising and media industry in Belgium.

Many of these industry characteristics explain partially why the industry reports average to low gross profits but they do not explain the further decrease in gross profits in 2008. It is clear that due to the crisis lower research budgets were allocated in 2008 and to keep turnover at the same level many companies followed the ill strategy of price cuts trying to keep one’s piece of cake as large as before not realizing that the entire cake is getting smaller. Further expected losses in 2009 and subsequent over- reacting price cuts might endanger the industry entirely for years.

The applied cuts did not only serve the goal of maintaining turnover. Given reserves were still high one had high hopes medium and smaller providers could not follow and would be forced out of market. This would mean future opportunity to increase turnover.  This strategy is not a viable one. The net value of this surplus turnover is zero because it will be realised with zero or low margin potential. Second it is based on the belief that medium and smaller competitors would not be able or willing to follow these price cuts. In most cases they did and could because their cost base is considerable lower.

Although it becomes clear research budgets will not be cut further in 2010 it will remain some difficult and challenging years for the industry. Some have shot in their own foot. Whether they will run again is almost entirely out of their scope of control.  Luck is democratic so who knows who will run again and who will remain crippled. Good luck to you all.

Deze factoren zullen zeker een rol spelen in de uiteindelijke prijs die door de vrije markt to stand komt maar het is toch belangrijk om een breder kader te schetsen en alle factoren in overweging te nemen eerder dan zich enkel te richten op deze die Testaankoop naar voren schuift.

1) Eerst en vooral in elke markt zijn de marktleiders wellicht 2maal zo duur als de goedkoopste aanbieding gegeven de prijsdifferentiatie die in elke markt aanwezig is. Met dit feit geeft men toe dat er best wel wat alternatieven zijn en de concurrentie speelt.

2) De Belgische economische realiteit en marktstructuur is beduidend anders dan deze in de buurlanden. Een lagere vraag leidt tot een hogere prijs en de vraag en marktpotentieel is beduidend lager in Belgie in vergelijking met de grote buurlanden. Indien we louter de situatie in Nederland bekijken dan is de internetmarkt in Nederland dubbel zo groot als deze in Belgie. Het spreekt voor zich dat de prijzen daardoor fel lager kunnen liggen.

3) Gegeven deze factoren kunnen andere concurrenten ook niet veel lager gaan in prijs zonder dat hun winstgevendheid wordt aangepast. De kleinere vraag maakt het ook moeilijker voor de kleinere aanbieders om een niche markt aan te boren.

4) De kleinere alternatieve aanbieders geven een beter product naar snelheid capaciteit en volume tegen een lagere prijs maar gegeven de kleine Belgische markt moeten ze dit over het algemeen compenseren door een lagere service

5) De Belgische consument verandert  niet graag en vertoont op dit vlak een risico-aversie. Bovendien de meerderheid van internetgebruikers kiest niet enkel op basis van prijs cfr punt 4) service

6) Als we kijken naar een aantal belangrijke telecomspelers op de markt is duidelijk vast te stellen dat de operating marges van Belgacom en Telenet niet beduidend afwijken van deze van hun Europese concurrenten met een beduidend hogere market cap en marktpotentieel naar aantal verbindingen. Dit wijst erop dat de prijzen van beide operatoren marktconform zijn gegeven de marktstructuur waarin ze moeten werken. Indien de Belgische markt zo beduidend meer winstgevend zou zijn dan zouden de grote europese telecomoperatoren al lang in Belgie actief zijn.

M.a.w. zomaar de prijzen van diverse operatoren die in diverse markten actief zijn vergelijken is te dom voor woorden. Het is een schande vast te stellen dat een consumentenorgansiatie niet alle objectieve informatie en factoren opneemt maar louter die informatiecomponenten filtert en gebruikt die in hun kraam passen. Hun advies is dan ook 0 euro waard en drijft enkel op populisme en eigenbelang zichzelf in de media te verkopen. 

Een degelijke studie zou de marktcriteria van elk land mee in overweging nemen en aldus zeker tot een genuaceerder beeld komen van de telecomprijzen in Belgie.