The Reason Why Businesses Aren’t Losing Billions on Fraudulent MR Data
Data Quality | June 6, 2023
In early May, an article circulated with a claim that was primed for the social media rounds. In short, it argued that businesses and investors are losing Billions to Fraudulent Market Research Data. But is that actually the case?
If you are a brand leader who has started getting very worried recently about fraud, I’m glad you’re reading this. You can rest assured that if you work with a professional Insights firm (aka Market Research firm), you’re likely well-protected. If you’re investing in bringing an “Insights Platform” in-house to replace spend with Market Research firms, you hopefully added steps to your internal processes to protect that investment.
Let’s dig in to be sure…
Here are 3 core claims from the article.
- Corporate Revenues, Profits, Share Values are getting drained by “an insidious force” that’s worsening every day (fraud).
- MR is an $80bn industry worldwide, mostly online and mobile.
- “Between 15 and 30% of all market research data is fraudulent”- citing a Fast Company article from a year ago, which also cited a Greenbook blog article from early 2021. This could be referring to Case4Quality research or generally experienced “data rejection” levels on online consumer and b2b surveys.
This article seems to use the logic jump that if 15% of MR data is fraud, and Annual turnover in Market Research is $80bn, then billions of dollars get lost to fraud. If my guess is right, major elements of the research process and budget norms were overlooked.
Counterpoint 1:
Fraud is of course a growing problem. We’ve written about that extensively. But so has the industry’s ability to detect and remove it from our surveys. We at OpinionRoute have written , presented, and created videos on this for years now. We also build technology and employ experts to keep our research clients supported in their quality processes. We are better than ever at combatting this.
Counterpoint 2:
To me, it’s vital to recognize the heroic efforts made every day by market researchers to mitigate risk for clients in their Insights investment. Just because fraud is entering the survey ecosystem, does not mean it’s making its way into the final report. This is a deliberate (and uncompensated) value-add that is just happening behind the scenes most projects.
Counterpoint 3:
The core economic unit in today’s survey sample ecosystem remains the Cost per Completed Interview (CPI). This refers solely to a “quality” complete. Every day, bad data is tossed with no direct financial costs for Researchers or brands. But the labor cost for researchers is real, and often uncompensated within project budgets. For programmatic sample companies, however, there are dramatic costs tied to fraud as their direct expenses are tied to a Cost per Click (CPC) buying. This means that during fraud spikes, sample firms get crushed by data removals as anticipated revenue dissolves. This pain has recently been referred to as “reversals” in public filings. Despite this real challenge to the programmatic sample landscape, the sum cost is far below the “billions” claim.
In short, there are just too many mitigation measures in place to conclude that billions of dollars are getting lost to fraud for Brands. We can thank the commitment of Market Researchers who obsess over getting it right by leaving no record unreviewed. This is why we are proud to invest in their process flows and data quality efforts.