Government regulation vs. self-regulation
Editor’s note: This session was recorded live at The Quirk’s Event – Chicago on March 27 and 28, 2023. The recording was played as part of Wisdom Wednesday on December 13, 2023. This transcription is automated speech-to-text, edited lightly for clarity.
In March of 2023, during The Quirk’s Event – Chicago, Brooke Reavy, associate professor of marketing at Dominican University, gave a session on regulating the market research industry.
In this session, she discussed legislation that could affect the industry, possible ways of regulating an industry and the next steps for regulation of the market research industry. The live session had a lot of good discussion from the audience on various aspects of regulation, including education, a governing body and ideas of what should be included.
The live session in Chicago was recorded and replayed as part of the December 13, 2023, Wisdom Wednesday series. Watch the full video or read the transcript below.
Webinar transcript:
Joe Rydholm:
Hi everybody, I'm Quirk’s Editor, Joe Rydholm. Thanks for joining us today and welcome to our session, “Should the MRX industry regulate itself or be regulated by the government,” which is a recording of a session from the Quirk’s Chicago event earlier this year.
And if you're a client-side researcher and you'd like more information about speaking at a 2024 Quirk’s Event, I'd love to talk with you. You can reach me at joe@quirks.com.
And just a quick reminder that you could use the chat tab if you'd like to interact with other attendees during today's discussion.
Enjoy the presentation.
Brooke Reavey:
...Dominican University, which is located just outside of Chicago. So, I'm a good 20 minutes from here and I do research on research.
My background is market research. I got my bachelor's in marketing. I started an internship in market research that got me into a job on the client-side. Then I moved to the agency side. I got my master's in market research and then went on and got my PhD and now I teach market research. So, I am a huge market “researcher-file” or whatever you would call it. I mean all day long. This is what I do, and this is what I love.
And so, talking today about regulating the industry or should we wait for it to be regulated by the government, the reason why I'm talking about this is because I really do think it's an important conversation to have and we want to be proactive, not necessarily reactive with what's going on.
One thing I will ask is I am used to lecturing university students and grad students, so feel free to make any kind of comments. You're not going to throw me off. You don't have to wait until the end of the presentation. If you have a question, either raise your hand or just start talking. It's totally fine.
What are the reasons for and against regulation?
We've got a couple of things going on about thinking about why we're even considering regulating and one of the reasons for regulation is to protect the rights of participants.
We have a lot, we're fighting, there's a lot of fraud going on out there. We're fighting to get people, to actually be able to talk to the right people. It's very expensive and we know how expensive it is. It's just been getting increasingly more expensive and harder to get in touch with people.
I mean, think about how inaccurate now the presidential and political polling is because it's just insanely hard. I mean, I was on a call with APOR a few years ago right after the presidential election, and they said that only about 2% of people were answering their phones to do any kind of polling. And in comparison, to years before when we had landlines, totally different.
What are we supposed to do as an industry? Part of it is to protect the rights of participants.
Participants don't necessarily trust us anymore. They don't trust that their data is going to be used. A lot of the participants feel like they never get feedback of what actually changed. They give feedback, but they never get the feedback that their feedback helped.
And so, if you think about it, what's the point? Why do I have to spend my time and give you my 15 minutes when nothing's going to change? And that's how a lot of them feel. It feels depressing.
The other thing too is to ensure research quality. Ensuring that there are set standards, so standardizing what things would look like in the research agencies and on the client-side is the idea of getting an idea of how things are set up.
We also know that, within brands, there's oftentimes multiple divisions and everybody is surveying people in different manufacturing ways and different ways of what they're asking about. There's a lot of redundancy
There's also just the fact that knowledge is not being shared meaningfully. Standardizing and having things set up in a way of how we're actually asking questions and knowing when we're going to be doing things is the goal.
Preventing fraud and deception is also huge.
I did an anecdotal research study with my students. I asked them to record how often they're getting asked to participate in surveys and to take pictures of what they look like so I could see. They told me that a lot of times, most of my students, if they get something from a restaurant, a lot of them told me that they are happy to, it doesn't matter what the meal was like, they'll say that it was a bad meal so that they can get a coupon for a free meal the next time.
I'm not saying that that goes into fraud and deception, but that's still something that needs to be understood. And we know that fraud is rampant right now. There's a lot of people, bad actors out there that are just trying to get as much money as they possibly can. There's ghost completes. It's costing millions of dollars to folks.
Then the other thing too is improving the industry's reputation.
We have to start thinking about what participants care about, why they are going to be giving information to us. We're asking for time for them. And if you think about how often people ask you for time, it gets a little overwhelming after a little while.
In the anecdotal study that I did with my students, they believe whenever an app is asking them to rate their app with five stars or one star as a survey, it's not what most of us would typically consider. But if you also think about going into a bathroom where there's a happy face or a sad face, they see that as a survey too. We're bombarded with this information, and we're constantly being asked for our opinions. They also consider reviews like an Amazon review to be a survey because they're giving an opinion even though we classify it and we call it this and that, to them it's the same thing.
So, then why would we not want to regulate?
Well, it can impede innovation and creativity. If somebody's saying, you can't do this, or you have to get it approved by whatever and you need to explain or justify the needs for this and that can definitely impede creativity. Everybody understands what the bottleneck is like within any kind of an agency where you have to ask for permission.
Then there's also restricting market competition. It can create a barrier to entry for new entrants because it could be too costly. There's different ways to do that. We can think about the unnecessary costs that could be added in. It could be that there's conducting research. It could be that fines are imposed. There could be adding in new personnel that have to account for things. There's a lot of different types of costs that are added.
And then we also have to think about the difficulty of enforcing regulations. All you have to do is turn your head to look at GDPR and how every single country has their own regulatory department and how they're trying to find people, and it's all over the place. If you've talked to anybody in Europe, since GDPR has been around, it's a little crazy. And so, enforcing these regulations can be tough.
But the next thing I want to talk to you guys about is what are these types of regulations and what do they look like? Now remember, I am a marketing person. I am not a public policy or a social studies person. There could be a lot of you guys out there that have way more knowledge than I do about this. And if you do, please feel free to pipe up.
When we think about regulation, we tend to think about government regulation. There are a couple of different ways we can do that through laws and policies.
An example that has been in the news quite a lot lately is the Dodd-Frank Act. Because of the collapse of the Silicon Valley Bank, the Dodd-Frank Act was rolled back to make sure it was set up that the FDIC was going to be informed if there was going to be an issue and have more time to intervene and it got rolled back. And now we've had two banks collapse.
We can also think about the CCPA being at the state level. There are laws and policies that are passed at the federal, state and municipal levels.
An example of the municipal level, which is getting to be problematic for many folks is Airbnb and Vrbo. If you think about at the local level, a lot of local level places are putting in policies saying, “no, we're not going to have Airbnb here.” Or if we do, it's going to be very limited. You have to apply for a license. There has to be a limitation. We're going to limit how many people are allowed here.
I know my town in particular just did this, and they limit how many people by how many rooms and how many beds you have available. They limit how many people can be there. They're allowed to do that. All they have to do is vote for it and pass it. They don't have to ask for a public opinion, they can just do it.
Then we have taxation. Taxation is something you probably don't really think about as a way of regulating, but it is because it incentivizes behavior. The entire American tax code is set up to incentivize behavior. Every 10 years or so, there's always some politician that says, “we need to do a flat tax. We're not going to use any of these complicated taxes systems anymore.”
It's never going to happen because the American taxation system is set up so we can incentivize folks. Like for example, if we want to add in solar panels. You get a deduction at the business level. If you want to add in, my husband and I just put some installation in our attic and now the feds are going to give us $1,200. I mean, there's all kinds of ways that you can incentivize people to do certain things.
Then there's also tax abatements that local places will give for opening up offices in a desired zone. So that's all well and good. These are all good things, and they can be used in different ways.
The other thing too that a government can do is antitrust. The biggest one that we always talk about all the time in business school is about getting broken up into The Baby Bells. There's the talk about Amazon getting broken up or Facebook getting broken up, or excuse me, meta I should say. And we've got a lot of ways of how we are starting to think about antitrust.
The government, in many different aspects, can come in and do whatever they want when they want it.
I think it was two years ago when California passed a law and made respondents employees or contractors. Yeah, 2247. Yes. So, that was obviously very problematic. Nobody talked to the entire industry, nobody talked to us. Nobody said like, “Hey, does this make sense or not?” And then it wound up being a reactive type of condition.
What happens then is that there can be other ways of things that are happening. There's some burgeoning regulations that are occurring.
We know that at least in the states, at the state level, there have been five privacy regulations that have been passed so far. There are 19 active bills. So, there's 19 other states that have active bills that are all different. Every single one of them are different. They all have different things. That's a problem. That's a problem for a lot of businesses, particularly since we tend to work at a digital level.
There's also regulation of AI going on at the federal level. They're talking about how do we regulate this? The owner and the original founder of Chat, GPT has come out and said, I think that AI should be regulated. And so we're not there yet. It's burgeoning. We're still in the public comment stage, but we're still talking about it.
GDPR is enforced at the individual country level. I happened to be living in Europe at the time when this was launched, and my husband helped set up a center of excellence over in Europe for it.
And so, the initial talk in 2018 was like this, “Oh my gosh, I can't believe what's going to happen now. Where are we?”
I think there's lots of different types of stories. I don't think that the playout of what we were expecting to happen did happen. There was obviously a fair amount of corruption that went with it, but the idea of having consumers have some degree of control over their data was huge.
We also have the transatlantic data privacy framework coming through, so that way we can share data between Europe and the U.S. That's a big one where we have a lot of connections. There's a lot of what we do in the states is service level, and we have a lot of folks that need to be able to run our data. We need to be able to share that data.
It's not necessarily products. Section 230 of the Communications Decency Act was just discussed at the Supreme Court, is getting rolled back. My guess is that the Supreme Court is not going to actually vote on it. They're going to kick it back and they're going to let Congress vote on it.
Section 230 of the Communications Decency Act looks at how platforms and internet platforms are regulated. In 1996, they passed Section 230 and they said they wanted to let the internet grow and they didn't want the platforms to be able to get sued.
And so, what we have then is if the internet gets regulated, that means that if a user posts something on a platform, the platform is now considered a publisher and can be sued for it. Right now, it has been rolled back.
There's a lot of issues that we can have when we're dealing with, I mean, think about how much is going on with misinformation and disinformation and how conspiracy theories have been flying around. There's a lot of issues with that. And it comes down to market research possibly getting caught in the fray if that does get rolled back.
There's also a fake review regulation going on right now with the FTC. It's in the public comment stage. There is a law that was passed in the U.K. where people can get fined for writing fake reviews. The FTC is trying to mimic what is going on in the U.K., but this is huge.
This is a big deal, and I don't know if there's going to be a law coming soon, but everybody can agree that fake reviews are problematic on various different levels.
Audience member:
Hey, Brooke.
Brooke Reavey:
Yes.
Audience member:
Do you think that the fake review regulation that we were talking about earlier – so many different examples of surveys, right? So, I would love to see something like that roll out because I think we could really hold responsibility.
Brooke Reavey:
Available. Yeah. Yeah. Responsible. Yes. So yes, and this is also looking into figuring out where they're coming from and how they're coming in and just doing it to mess with people. And so yes, that's one way, if it does pass, it would be really good for the industry. I don't know. I mean, I don't think until there's another election, I don't think that anything's going to get passed, but that's me.
And then we have the environmental marketing claims – What's organic? What's bio? What's recycled? There's a million different types of terms out there. When can we say that something is post-consumer goods? All that terminology is being investigated right now of what do you need to do.
And that's based on consumer complaints. Think about eggs or something being free range or pasture raised, or I don't know, open house. They've got a million different names of things, and they can charge upcharge on stuff. It's more of a consumer protection act, and the reason why the FTC is getting involved.
Then we have non-compete clauses, which also very much affect our industry. That comes up every so often. All three of these are open for public comment right now. And the way that it typically works is that once it goes through public comment, it can go into going into the House and Senate for voting on it.
Audience member:
Which direction do you see some of this going?
Brooke Reavey:
Well, so it helps the lawmakers come up with the bill for it. Most of Congress says that there should not be a non-compete, because the problem with the non-compete clauses is that there's now people who are hourly employees that are having to sign non-competes. And that's very different than “I'm going to take my book, my Rolodex and take all my clients and move over to a different place.”
So, I think that definitely is going to get passed. I think the non-compete clause is going to get passed.
Audience member:
Inaudible
Brooke Reavey:
It goes both ways. It can go top down or bottom up. And right now, this is the bottom up.
The FTC can recommend that there is a law that gets passed for it, or they can try and shove it into a law that's already there and then try and find it.
The FTC has gone after some folks for the fake reviews. They have fined some agencies. It's not quite the same as in the U.K. The U.K. has an entire agency that goes after people, and you can report to it and then they get stuff.
OK, so what about self-governance?
Self-governance is something totally different. We tend to think about when we hear regulation, we're like, “that's good. Somebody's going to tell me what to do. Why is this lady even coming up here and telling me that the government should be telling me what to do?”
This is the call to get you guys to start thinking about what would happen. We want to get ahead of this with everything coming in with GDPR, the multiple states privacy types of stuff. With anything coming off with Section 230, if we have the inclination to do so, we need to get everybody to get together to band together, circle the wagons and protect the industry.
The idea then is to self-regulate our profession. This is just to give you guys an idea of what this would mean is that we would be licensed market research professionals. And the reason why this would be a good thing is because of how fragmented our industry has gotten over the past 20 to 30 years.
Market research has been around for 80 years. It used to be that you had a market research agency, and you had a market research client, and that was it. And now we have companies that used to be accounting companies, becoming consulting companies. We have lots of software companies, we have digital marketers. We have just a lot of noise going on, and we can't necessarily agree as to what is actually happening.
When I come to conferences like this, we're always talking about the threats of what's going on in the environment. I don't know how many of you guys went through business classes or business school, but if you always think about what's going on with threats is you want to be able to counter the threat in a different way.
By circling the wagons and creating a regulation that we're regulating ourselves, similar to what these organizations have already done, it makes the government go away.
The American Bar Association is a self-regulated organization. They have a license. You have to have a license. You pass the bar exam, and you have a license to be able to be a lawyer. You can go to law school, but you're not really a lawyer. You can't practice law without passing the bar. If I was to wave my magic wand and we could do everything, set it up in that way, we would follow what the bar is doing. The bar has folks every two years, continuing education. They have to go and learn new things every two years. Actually, most of these guys do.
Anybody like CPAs, CFAs, yoga folks, realtors, they all have continuing ed. And if you think about it, think about how often our industry is changing now because of technology, having more education is a really good thing because it allows us to be able to innovate more because we have more knowledge.
I've been teaching for a long time. I know that if I assign reading to my students and I don't give them a quiz that they're not going to read. How many of you guys read?
How many of you guys have a stack of books at home that you've been meaning to read but have never actually read?
Exactly. What if somebody told you that you couldn't work the following Monday, if you didn't read that book, you'd prioritize it. So, having this continuing ed where we have to go and an increase our knowledge would be good. What the bar does is every time they have a conference that counts as continuing ed because they have workshops where people are learning and teaching new stuff.
That's where we continue to add the knowledge in is by saying you have to do it. You have to get it passed to be able to continue that knowledge. There's a lot to how this can add to the professionalization of our degree.
The National Division of Advertisers is also pretty interesting. I don't know how many of you guys, raise your hands, have heard of The Advertising Association of America (AAA)?
Yeah. OK. They're the ones that produce Ad Age and come up with a lot of really good things. So, when we start thinking about what they do. The National Division of Advertisers for Truth in Advertising and some other types of advertising laws that are in place for consumers.
As a consumer, I would contact the National Division of Advertisers and say, “I saw this ad and it was not truthful.” A group of lawyers would go through these complaints and then they sue whoever that company was to keep everybody truthful.
So, that way the FTC isn't going after everybody, that way they've got people that are looking at stuff and they've got crowdsourcing basically and co-creation of getting everybody together. Yes.
Audience member:
Do you think there's an existing body that should be regulating or if one should be formed? Insights Association crossed my mind.
Brooke Reavey:
Well, Insights [Association] or ESOMAR.
Audience member:
Yeah, but I mean could they be?
Brooke Reavey:
Yes. OK. Yes. That's who I would recommend.
We've got some benefits and I'm running out of time.
The thing is that it tends to satisfy government regulation when you self-regulate. The FTC doesn't really bother so much with advertising anything because they know that they've got these groups of lawyers that are going to do a class action suit against the truth and advertising claim.
I work closely with the Direct Sales Association (DSA), and they work with a lot of MLMs. I know that MLM is like a dirty word these days, but I think there's many people in here that would agree that Mary Kay and Avon are not, like, a bad thing to do. That's just how a lot of people have gotten money. But there are some bad actors.
The people that are involved in DSA have a very strict regulation and the FTC knows if they're involved, they don’t need to be, because the DSA will kick anybody out that's not following along with their rules, and then they don't get in trouble with the FTC. So LuLaRoe and all the different folks that have been the bad actors over the years.
The other thing too is, if we regulate as a body, we would be able to set the curriculum for what the universities are teaching. And think about that. Think about that for anybody who's a hiring manager, you get to have a say in what the students are being taught.
Right now, I get to walk into my classroom, and if I don't want to teach quantitative research, I don't have to. Nobody can tell me not to because it's academic freedom. But if I have to get my students to pass a certification that's on me, I have to prove that as part of my worth as to why I'm a good teacher or not. But right now, I could do whatever. Honestly, we could just talk about reviews for my entire semester if I wanted to. There's no regulation. Think about it from a hiring perspective - What would you like to see? Why that would be useful?
Audience member:
Your reviews on Rate My Professor would be regulated.
Brooke Reavey:
I would hope that would go away, but yeah.
Audience member:
Inaudible.
Brooke Reavey:
Yes.
Audience member:
And it seems like they could drop it.
Brooke Reavey:
Apparently, it's going away. Yes.
Audience member:
Exactly. So, they spent a good 10 years getting us to be professionally research certified, take a test or have all this expertise in the industry. And then you paid to have your accreditation continued. They had a hard time tracking your continuous education.
Brooke Reavey:
There needs to be a body for it.
Audience member:
It was a nightmare to go in and put your credits in, and then they would have to validate, “Was it legit or not?” And I think they just got to, to the point where, this is weird, we can't do it. And they just abandoned it.
Brooke Reavey:
Yes.
Audience member:
Inaudible.
Brooke Reavey:
But how many years ago was that?
Audience member:
Pardon me?
Brooke Reavey:
How many years ago was that?
Audience member:
I think they started in the mid-2000s.
Brooke Reavey:
Sure. But ChatGPT is a game changer.
I can't guarantee that my students are actually doing their work right now. So how are we going to hire them? How are you guys going to hire people? I can't, as far as the tests I give them, they got an A on, but was that them or was it the AI? I'd love to talk to you guys more about this.
We've still got a few minutes.
I see this as a positive. I know that there have been multiple models. There needs to be a group of people that come together. I've put a lot of thought into this. I'm happy to show what other industries have done.
It requires everybody circling the wagon. There would have to be a collective agreement. And like I said, one of the things I think that comes with it though, is that if you were going to a conference, like a Quirk’s Event, and every time I walk into a room, I'm getting checked off as to if being here or not, that could then get sent over for continuing ed.
There's a lot more technology now as opposed to a person typing it. We have these conferences of what we're gathering that. We have MRI within the states, MRS, within the U.K., that have been pushing types of work like this.
I'm definitely not the first person to have come up with this, but I am saying that now is the time because we have so much going on with technology, our industry is really getting fragmented very quickly. And for our clients and for our internal clients, if you guys are on brands, it's the easiest way to get them to listen to you is to be an actual, to be an accountant, a CPA, a CMR.
Yes.
Audience member:
I think one of the problems might be the front end of it, the education. Because number one, not everybody goes to a marketing research program to become a marketing researcher. I fell into it, half the people I’ve hired fell into it. So, we'd have to have some way for people to be able to do that. You don't have to go to law school to pass the bar.
Brooke Reavey:
Exactly. Yes.
Audience member:
So, we would just have to have something there that not only allows you to maintain it but allows you to build it and get that first certification.
Brooke Reavey:
Yes, yes. No, I agree. I think we have to do user stories and think about what we would do with people. And I think that's part of the step up. I don't see this as a money gain, and I think it's because I'm an educator and I love knowledge. I see this as a way to protect our careers.
I mean, I can't tell you how many universities right now are dropping teaching marketing research and only teaching marketing analytics because it's easier to get students jobs in analytics than it is in market research. And most students don't go on for their master's in market research. And so that makes me cry because I love this industry. And I think that having that, particularly with the analytics end, having that continuing ed is really powerful.
Audience member:
Inaudible.
Brooke Reavey:
Yes, journalism is regulated, at least not on the internet, but if you're working on a newspaper or if you're on T.V., that has more regulation. I think that things are going to change for journalism once Section 230 gets changed because there has to be more regulation. I mean, we could go on and on about the mess that's out there. But yes, I think there's a lot of things coming down the pike.
Yes.
Audience member:
Inaudible.
Brooke Reavey:
Great question. And yes, I do, because that allows us to not have people that decrease the likelihood of nepotism.
I'm not going to necessarily just hire somebody that there are a lot of. My school is mostly first gen, we're an HSI Hispanic serving institution. So, 73% of my students are of Hispanic origin, 64% are first gen. What we work with a lot of the first gen students on, is networking because they don't have the dad that golfs with somebody who owns a business that can give them a job. This opens more of a door because they know when my students get a CPA, they know they're going to get a job.
I also know people who have accounting degrees that are not CPAs and they have jobs within accounting, but they are limited with where they can go. There's lots of different ways of how this could go, but that's why having a conversation about what this would look like is helpful because a lot of this comes down from privacy regulations.
If you think about how a lot of the DIY software is set up, you create a survey and you spit it out and people who have never been trained or have any understanding of what GDPR is or any CCPA, they don't even know what it is. Everything's on the same Excel sheet. They're not separating it. They're not putting it into a double encoded secured database. It's just on their laptop. And if it gets stolen, it gets stolen, whatever. So that helps that part.
There's a lot of protection and there's a lot of liability that's going on, and it's out there right now. And having a regulation protects that. It protects everybody because we've got a set of rules and standardizations of what we want. There's guidance within ESOMAR and there's guidance within Insights Association. But guidance is guidance. It's not the same as getting sued.
Yes.
Audience member:
This is a point I heard you make last time I heard you talk about this. That is when it's the bar or the CPA, firms understand that they're making millions and millions of dollars based on the opinions of a CPA or a lawyer. And the same thing happens to end-clients here, they're making million-dollar decisions based on the input from this industry, and they should want this as much as anybody wants this.
Brooke Reavey:
Yes.
Audience member:
So that's my next question. I mean, a CPA costs more than an accountant, and a lawyer costs more than a paralegal. The number one critique I hear is that our industry is already too expensive. Does this hurt that?
Brooke Reavey:
I think we could look at a lot of ways of looking at costs, but I think that having no industry or having a lot of the reasons why our industry is so expensive is because we're losing a lot of work.
I love knowledge. I think knowledge is a really good thing. I think sharing knowledge and gathering knowledge and moving it around the organization is great. I think that there's ways to look at how that is. If there's more work, it's going to be less cost overall.
There's efficiencies that are gained with this too. When you have somebody who does this stuff all the time, then they're more efficient at it than somebody who's training themselves on a new Martec software that the company insisted on them buying.
OK, well I'm really in trouble now. Alright, thank you everybody.