How Valuable is Data Really?
How valuable is data really?
A strange question, perhaps. Many research agencies are likely experiencing strong growth in 2021, with probable improvements in company profitability.
And there can be little doubt that recent and ongoing changes in end-user decision-making offer multiple and strong reasons to keep insights budgets high:
- New behavioural patterns either accelerated or created by COVID
- Ongoing digital transformation - impacting everywhere
- Questions over brand positioning and strategy plans: are they still valid?
- Sustainability as a mega-trend: how to address it best?
- Diversity and inclusiveness - similarly, how convincingly engage?
Lots of areas where a better understanding of the changing end-user landscape is needed - fertile ground for research of all shapes and sizes.
Valuation Questions
So why is the once-mighty German research giant GfK being touted as a divestment candidate?
Reports in the financial press a few weeks back suggest that parent company and private equity giant KKR has hired GS to explore a possible sale. No details available, but talks are apparently advanced:
KKR Is Considering a Sale of Consumer Confidence Tracker GfK - Bloomberg
Could be that there's nothing in it, just the way private equity operates? Or maybe something else - a bad strategic fit after all (KKR took ownership of Gfk in 2016), or slow progress in profitability improvements?
It would also be interesting to hear the views of folk at Bain Capital on their part-acquisition of Kantar of two years ago.
Analytics - Challenging Times?
Switching to the large and growing analytics segment: consider data-crunching company Splunk. Certainly not a "market research company", more a technology-powered analytics operation with wide-ranging industry applications - IT and security applications as core areas. Not a minnow, with sales of over $ 2 Billion in 2020/21.
It's share price development in 2021 has been poor: -36% as of mid-December. Not impressive in a year where tech as a sector performed strongly - the Nasdaq 100 was up +27% for the same time period.
Just an example, of course - perhaps an outlier. But high profile stuff.
Maybe data isn't the gold it was once touted a few years ago. Perhaps the investments haven't paid off.
Maybe the analytics sector is challenged in an environment where the assumptions underpinning models (which can be time-consuming to build and validate) need pretty frequent re-calibration, given the unstable consumption environment. Something for data scientists to ponder.
Rosy Outlook for Exploratory Research?
What about the humbler end of the spectrum, those at the more traditional MR coal face - with lower cumulative growth rates over the past 5 - 8 years or so?
Maybe it's a more benign environment - precisely because of the ongoing uncertainty. Decision-making is even tougher, investment decisions need more than ever to be based on to-the-minute category and brand understanding.
So that could be anything from semiotics, behavioural science, F2F or digital qual, UX/CX, some primary reserach quant. areas to name a few.
Which doesn't mean that the companies engaged in these activities are necessarily more valuable - just that the activities they perform have an ongoing importance. Pricing power is a different kettle of fish - as are value perceptions.
If we want the Golden Twenties to be a special time for MR we need to make the music play.
Curious as ever, as to others' views.
And happy 4th Advent!
(Photo by Jake Weirick on Unsplash)