Symptom 1: Declining Budgets Amid Economic Uncertainty
While R&D budgets aren’t directly tied to market research, they’re good proxies for what is happening in market research. Cuts in product innovation and development have a significant impact on market research spending as well. When companies stop developing novel drugs or start pulling back on certain technologies, that means fewer products and services that call for market research. Which may explain much of the recent cancelled projects and radio silence across market research departments.
Budget cuts seem to be the most obvious indication that something’s going on. Recent headlines are replete with news about major companies slashing their R&D budgets and restructuring and/or reducing staff resources. In fact, data shows that 27% of the world’s top companies cut their innovation budgets in 2024, and pharma, biotech, and technologies industries have been especially aggressive in scaling back.
Moderna plans to cut $1.1 billion from their R&D spending by 2027. Both Evotec and Charles River Laboratory, key providers of drug discovery and development services, reduced their 2024 forecasts, implemented layoffs, restructured staff, and slowed R&D spending. Coherus BioScience made the decision to reduce 30% of its staff, Pfizer announced more job cuts in its U.S. operations, and Novartis announced plans to cut 240 roles in the U.S. They’re joined by Sanofi, which plans to simplify its R&D structure, and Thermo Fisher Scientific, one of the largest pharma service providers, which aims to cut $450 million in costs. Editas Medicine announced a 65% workforce reduction, the sector’s largest, as they move away from their traditional gene editing R&D.
Big tech is joining pharma and biotech in tightening their belts. Overall, the technology sector underwent dramatic restructuring in 2024, with an estimated 150,000 job cuts across more than 525 companies through December 23, and close to 10,000 cuts just in Q4. The brunt of these cuts — around 27,000 layoffs — happened in the hardware and electronics manufacturing sectors. The leading chip maker in the U.S. is reducing 15% of its workforce to a tune of around 15,000 jobs in an attempt to save $15 billion in 2025. Dell cut 12,500 jobs and ADM chip manufacturers eliminated around 1,000.
What’s Really Happening
Typically, when market research budgets shrink, it’s a reaction to economic turmoil — as we saw in the Recession of 2008 and COVID-19 shutdowns in 2020. Indeed, many of the aforementioned companies site rising inflation and economic concerns as the main drivers for their spending and staff cuts. Biotech companies say that venture capital and financing have dried up, as investors and lenders become more risk averse. For big pharma, the influx of COVID-19 money for vaccine development has also waned, and with it R&D budgets. Many big tech companies also say they’re shedding jobs and reducing spending in response to a pandemic hiring binge, high inflation, and weak consumer demand.
The current economic situation is creating some freak-out, as well. The looming threat of tariffs, rising egg prices, the return of inflation woes, and mass firings/layoffs of federal workers — combined, these red flags have triggered a seven-point drop in consumer confidence, sliding markets, and a weakened view of the labor market.
Businesses share consumers’ pessimistic view of the economy, which ripples into their willingness to invest in new products, services, and innovation. What’s more, many pharma, biotech, and tech companies are reshuffling budget and resources away from traditional R&D to AI strategies. This is creating a seismic shift that reverberates across the market research industry as well. More on that later.
What’s Really Happening
In a phrase: lack of innovation. As an industry, we tend to be complacent. We cling to established methods we’ve been using for decades, ignoring blind spots and signs of trouble. Even as consumer behaviors rapidly change and become more complex, and response fatigue sets in, we’re still relying on traditional surveys, focus groups, one-size-fits all reports, and outdated methodologies while eschewing emerging technologies like AI, behavioral analytics, social listening, and mobile-first approaches.
We’re not paying enough attention to major cultural shifts in consumer behavior, either. Respondents are getting younger and defy demographic assumptions we’ve long held. They want more authentic, personalized, and meaningful connections which extend to the market researchers reaching out to them. By overlooking these shifting preferences and behaviors, we’re also missing key opportunities for insight.
We’re failing to respond to changing client needs as well. Today’s companies must make decisions on a dime in order to survive let alone compete. As such, research and marketing departments and C-level decision makers need concise, clear, actionable reports that provide strategic direction — not just data dumps. When they don’t get the answers they need in the time they need them, clients start to do their own research or turn to AI to do it for them.
As research professionals, we need to better ways to demonstrate to clients the value we bring. How do we show ROI? We also need to find ways to provide agile, cost-effective research services, especially for smaller companies and start-ups that don’t have big budgets.
Complicating the situation, this is the age of big data. Researchers aren’t sure how to leverage the massive volume of information across multiple platforms and distill them into actionable insights. With big data comes the heightened risk of bad data, which jeopardizes research and insight quality. As an industry, we’re struggling to embrace and incorporate technology that can harness this data, ensure its integrity, and compete with those firms that have already figured it out.
Symptom 3: Growing Discontent with “Generalized” Research
Market research has taken a generalist approach for decades. Traditionally, researchers and moderators jump from subject to subject and industry to industry — moisturizer one day and mobile apps the next. And that has worked just fined, up until now. Given the complexities of consumer and competitive landscapes, today’s clients across B2B and B2C are starting to voice a need for deeper, more nuanced, and strategic insights germane to their specific challenges.
Yet, they’re also hesitant to make a switch from their current approach. The prevailing sentiment is, “If it ain’t broke, don’t fix it.” This reluctance keeps clients tethered to the familiar, even when it isn’t quite satisfying their needs. Alternately, failing to get the kind of insights they need, clients start doing their own research inhouse. After all, they’re already familiar know all the nuances of the product, service, or niche.
