Inside Look Into Scam Market Research
Scam market research has exploded over the last few years becoming the most commonly cited 'statistics' for most industries, despite there clearly being little to no real 'research' done.
An undisclosed insider who worked at one of the major firms in the space spoke with IPVM about these companies.
As we exposed in our report Beware Scam Market 'Research', these companies:
- Make optimistic groundless projections to sell reports for thousands of dollars each
- Have non-experts who repackage Google search results, moving from market to market
- Are primarily Indian based and actively try to obscure that
Now, a former employee reached out to us, explaining:
I read your post. What you have observed is completely true. In fact, the 'Research' space is far worse than you can imagine - crunched numbers, falsified interviews & testimonials. Although, there are also some studies (1-2% of the total) undertaken by these companies which may provide a very concrete view on the market just because the corresponding analyst has done his homework sincerely. [emphasis added]
Interestingly, he says that they do have many customers, not because those customers believe the research but because they want external validation for cheap:
1. All sorts of customers from Small, mid, large, fortune 500 globally... Majorly from US n Europe, for whom the prices are negotiated from 5-7k down to 1-2k , depending on customer budget 2. Mid tier managers are the major buyers cause of small budgets, requirement of market estimates in ppt to higher management... And yes they are happy because they get sort of validated data at a price 10-20% of the major research houses... Their need is not to strategize based on numbers but only to keep the stakeholders happy. Some who are contented become a regular for reports & customisation, the rest leave a negative feedback and move on.. The research company doesn't suffer cos there are too many fishes in the pond. [emphasis added]
We have seen a similar phenomenon over the years as executives in companies large and small ask for numbers. None ever seem to care if the numbers are 'right' just that they have some outside number to justify the strategic decision or plan they have already made.
To that end, there is a symbiotic relationship between the sellers of this bogus research and the buyers. Neither side really cares if the numbers are true, just as long as others do not question them.
Finally, he explains that their projections are based on manipulations of larger research firms numbers:
The forecasts are based on limited primary interviews or secondary sources of research houses. Eg- Gartner says xxx market was $100 in 2015 . So they'll estimate it to be $125 at 5% pa in 2019, and assuming a similar growth as per their convenience of say 5-10% pa, they'll project it at $180 in 2024. The series is drawn as a geometric progression and thus they have a market size estimate. The underneath segment splits are random based on the content the analyst reads. Eg. if there are solution: services: maintenance , I would consider a split of 60:25:15% of the market size, and further on. There are no tactics, just simple mathematical manipulations. Then these market numbers are validated with few Primary interviewees, who for the sake of it agree because they get free summaries and large discounts if they buy. [emphasis added]
We have seen that these scam research providers growth projections are generally much higher than Gartner, Forrester, etc. This also is a differentiator for a buyer who does not care what the actual research is but wants to put the biggest possible number in a powerpoint.
The problem is there are lots of naive people who believe these numbers and then declare that X is the future. In our industry, we have seen this in PSIM, VSaaS and security robots to name a few - all markets that obviously (to real experts) had substantial problems but that because of the scam research reports naive (but often public) people would declare that X is the next big thing.