Research At Web Speed.

Online research has become an important adjunct to traditional market research -- enabling companies to learn and react quickly and shape their strategies accordingly.

We live in an age of polling. The 2000 election cycle spawned more about public opinion concerning the candidates than ever before. The media now regularly taps viewers on everything from societal trends to purchasing behaviors, frequently using online research. Webbased information-gathering is emerging as the biggest change ever in research techniques as it creates a sophisticated tool that is altering the way businesses learn about consumers and subsequently make crucial market and financial decisions.

The desktop is evolving as an information delivery channel as powerful as television or newspapers. Today, half of all U.S. consumers have Internet access, and online research can often be used to gain market insight with greater speed, accuracy, creativity and cost-effectiveness than other methods, especially the old-fashioned market research sampling done over weeks or months.

Clearly, online research enables companies to gain real-time market knowledge. "Online research is about continuous market intelligence," says Jacob Brown of King, Brown & Partners, a market re search firm in San Francisco. "It provides a real-time window into the marketplace. "Out of no where, breaking news can impact your company," he adds. Further, in addition to awareness, companies need to continually "check the pulse of their marketplace in response to outside variables and gather market intelligence they can use immediately," says Brown.

Inside Research, an industry newsletter, estimates that in the next three years, up to 60 to 80 percent of research will be conducted via the Web. "The benefits are hard to ignore," says Ron Beall, professor of marketing at San Francisco State University. "Unlike slow and cumbersome mail surveys, with online research there are no postage costs and no stuffing envelopes. The data entry process is eliminated, and the speed is amazing. Within days -- and sometimes hours -- market information can be electronically routed directly into a spreadsheet."

One company that has become a true believer is General Mills, which last year conducted 20 percent of its research online. That number is expected to grow to 60 percent next year. The company believes that using the Web trims as much as 50 percent in costs and speeds up research by up to 75 percent. "Surveys that used to take four weeks can be completed in eight to 10 days," says Gayle Fuguitt, vice president of consumer insight at General Mills.

Overcoming Criticism

When it first emerged, online research was criticized as unrepresentative and limited in its ability to mirror the overall marketplace. Among the criticisms: online research is restricted to those already online, and that it doesn't represent a broad enough cross-section of consumers.

That is changing as traditional research has been plagued by decreasing levels of public cooperation. The refusal rate of people asked to participate in telephone or in-person surveys increased from 49 percent in 1978 to 60 percent in 1999. Now that more than 50 percent of Americans have online access, Internet market research has new validity.

With Web surveys, people can be invited to participate via e-mail, then decide when to complete them. What's more, the Web opens up the use of rich media, such as streaming video, to test ads and movie trailers, something not possible over the phone.

Traditional telephone surveys also generate a mere 1 to 3 percent response rate. Web surveys pull a response rate 10 to 20 times higher, researchers say.

The "old" model of market research was one of marketing departments conducting huge market studies a few times a year, culminating in market reports that revealed customers' attitudes and gauged a company's brand, products and services in its marketplace. These periodic reports were like snapshots in time -- reams of information that was, by nature, dated by the time it arrived.

"Market research, the every-so-often approach to market intelligence, is dead," says Hal King of King, Brown & Partners. "Companies now need data to make quick decisions based on current information directly from the marketplace. Online-assisted market research systems monitor customer attitudes on a continuous basis and provide information that can be processed back to the marketing or finance departments as a basis for company decisions."

King, Brown & Partners' client Wells Fargo Bank performs regular tracking studies on its Web sites, seeking to analyze customer satisfaction and site usability to better facilitate online banking and brokerage services. "We place a link on both our public and secure sites that resembles a banner ad, and customers who want to take part in the survey click on it," says Wells executive Sarah Edelman. "We survey both customers and non-customers, asking them to rate the functionality of the sites and the features of our products. We also ask about product or service enhancements and site usability or navigation enhancements."

The studies are always driven by immediate business information needs. "Product managers of online banking, for instance, might be working on an enhancement to our bill pay function. Or people in our alliance group may want to know about shopping or wireless topics. The marketing group might ask about e-mail or direct mail or advertising. Prior to our surveys, we get input from product managers, marketing people and others; we encourage everybody to put something into the hat."

Freesamples.com in San Francisco is one of many companies that have created on-line tools and tactics that supplement traditional research. "We provide data in real time by combining the traditional 'product sample' with the innovations of the Internet," says CEO Jeff Malkin.

"Before, if I wanted to drop 10 million samples in northern California, I had to target recipients before delivering samples by newspaper or direct mail," says Malkin. "But it was difficult knowing anything about the recipient and their household or to track the conversion of recipients to purchasers. I had to wait 90 to 120 days for coupons to come back before I could generate an accurate report."

Now, Malkin says, on-line sampling can be used to build a sophisticated database of behavioral data with amazing speed. "We can do online-assisted product samples in 30 days, where it used to take months. Using our approach, a brand manager can log on at any time during a campaign to monitor progress, see the percentage of conversion, along with demographics, and get a breakdown of gender, marital status or income among sample recipients, all in real time," says Malkin.

Talk City, a national provider of e-marketing services headquartered in Campbell, Calif., recently unveiled Exit Web, an on-line research application designed to provide real-time feedback on customer purchasing patterns for e-commerce sites. Research shows that 80 percent of customers leave e-commerce sites before completing a purchase, but Exit Web claims it can cut abandonment rates and give e-businesses a better return.

Exit Web-enabled sites track customers completing the purchase process, then generate pop-up surveys to capture buyer reactions when they abandon a transaction or complete one. Surveys are customizable and track customer motivations, preferences, brand image and other factors affecting purchasing decisions.

Older research firms are also adapting to New Economy challenges. A case in point is Greenfield Online, an online research pioneer in Wilton, Conn., that recently partnered with AgWeb.com, a Philadelphia research service targeting agribusinesses. Farmers have traditionally been hard to reach due to their work habits and geographic disbursement. But AgWeb.com research revealed that top-producing farmers and ranchers use the Inter net to drive smarter business decisions, making them ripe targets for online-assisted research.

InsightExpress, a self-service online research firm, is leveraging the Web to bring market research to companies that may not have considered it a viable business tool. With prices starting at $450 and surveys completed in six to seven hours, the company has created a fast and economical research service within reach of even small companies.

The limitation of this approach, which even proponents concede, is a lack of sophisticated analysis traditionally brought to the process by seasoned market research firms. Charles Hamlin, president and chief operating officer at InsightExpress, acknowledges these limitations. "If you are making decisions of magnitude, we encourage you to use the traditional market research industry," he says.

The overriding consensus among researchers is that online research strategies do not replace existing methodologies, but complement them. This attitude explains why many researchers are combining traditional approaches, such as personal interviews and focus groups, with online tactics.

The challenge, according to experts, is not whether to embrace online research at the exclusion of traditional methodologies, but to creatively and skillfully blend it with traditional methods as individual situations dictate. "This is a new tool, and we're still learning how to use it," says San Francisco State's Beall. "If approached correctly, and for the right reasons, online research can deliver substantial benefits across all levels of an organization when placed within a traditional research perspective."

If forward-looking market researchers have their way, every facet of an organization -- from finance to marketing to human resources -- will use online research for immediate access to vital in for mation that will help them make more informed decisions. "Companies can't wait months to find out what people think about their products, services or brands when competitive pressures run so high these days," says King. "Management at all levels need continuous data streams, brought right to their desktops."

Online research may soon help R&D tap market opinion on a specific option of a new product as it's being finalized for production. Or a CFO or CEO may be able to get a real-time graph summarizing market attitudes minutes before a board or shareholder meeting.

"We expect that, in time, we won't be doing episodic research at all, but will do online studies that track consumer demographics, attitudes, buying behaviors," King observes. "We will do this continuously. Then occasionally we'll analyze the data. Companies will look to market research professionals, not so much to gather but to help them interpret that data. That's the true promise and potential of online research."

Steven Van Yoder is a freelance business writer in San Francisco.

High-Speed Growth
Online market research revenues
      REVENUE(MILLIONS)  PERCENT INCREASE
2000             $254.8              152%
1999             $101.1              228%
1998              $30.8              177%
1997              $11.1              217%
1996               $3.5               n/a
Source: Inside Research Index of 29 leading
market research firms, representing an
estimated 90 percent of online revenues