What is wrong with crowdsourcing research agencies?

updated on 14 August 2022

Crowdsourcing as a concept appeared many years ago and helped to kick-off businesses in different spheres. Most common example is Amazon Mechanical Turk - a platform where you can place a task and someone will do it for you. The main idea of Mechanical Turk for Amazon has been quiet rational: Amazon needed workforce and software to take care of its own task. To make the flow of workers bigger Amazon released it.

In B2B space in 2008-2014 there was an idea that small crowdsourcing agencies can win customers by working in small market niche of inexpensive and small scale retail audits. Inexpensive is compared to reports prepared by the companies like Nielsen. In stead of professional and well-paid auditors these agencies can hire anyone who has a mobile phone. 

And many companies successfully got established and started signing up contracts. In 4-5 years time it turned out that it's not a venture business. It's an agency business with non-recurrent contracts that are not easy to win and zero loyalty from customers that are looking for cheapest options. Nielsen is selling reports expensive not because its costs to produce are high, but because Nielsen has a brand. 

Then there has been a second blow to the crowdsourcing agencies business - AI tools like Eyrene when you can equip every sales rep with an app with real-time call to action reports. No need to send someone to the store, wait one month to setup the project, coverage is 100% and accuracy is 95-95%.

One FMCG executive complained to me: "Alex, these agencies cannot provide coverage for the stores located in the suburbs. And recently we've discovered that our sales reps are also working in these agencies part time and do the reports for them when they deliver the products". Sad truth that it is still expensive compared with unit price of one store audit with AI.

Concluding I feel that we will see many pivots of the agencies in this sphere. There's not a single example of an agency to grow big compared with SaaS companies like Eyrene

I hope that you're not overpaying for store audits.

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