MARTIN FILZ | From Pureprofile (ASX:PPL)

Pureprofile - data and insights, powered by technology

Pureprofile are a global data and insights organisation providing industry-leading online research solutions to agencies, marketers, researchers and brands and businesses. It was founded in 2000 and operates in North America, Europe and APAC, delivering solutions for over 750 clients.

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EPISODE TRANSCRIPT

Chloe (1s):

Shares for Beginners. Phil Muscatello and Fin Pods are authorized reps of Money Sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Martin (12s):

We've got a health crisis. Covid goes back if you can all remember not that long ago. So we have a health crisis and one of the problems in Australia was people weren't taking the vaccine. And so the government was very concerned about that. So the government undertook quite a lot of research to understand why. And so there, the government used online market research to do surveys really well. Understand the different segments and then deliver the right messages to those segments and then we know how that turned out. So a positive thing.

Phil (45s):

G'day and welcome back to Shares for Beginners. I'm Phil Muscatello. What is market research and how is it changing in the digital age? Today we're taking a look at a unique company on the ASX called Pureprofile and joining us as CEO and managing director Martin Filz G'day Martin.

Martin (1m 2s):

Hi Phil. Great to be here.

Phil (1m 3s):

Pureprofile Limited provides profile marketing and insights, technology services for marketers, researchers and publishers in Australia and internationally. So let's break that down. What's that mean to an ordinary person? What's market research?

Martin (1m 17s):

Yeah, look, market research, it's a, it's a funny world. I first discovered it in year 2000 and I was, it was like I discovered chocolate and it was like, wow, hang on. There's all of this data, there's all of this information. Surely every company should have access to this and should know about their audiences so that they can be better. And that's really what market research is. Market research enables companies to understand, or organizations, cuz it could be government, it could be education as well as brands, companies to understand their audiences better. It's in effect the evaluation of the viability of a, could be a product, it could be a message, it could be winning an audience from a competitor or retaining an audience from yourselves.

Martin (2m 8s):

And it allows companies, governments, et cetera, to better target. It's 137 billion US dollar market. It's huge. But it's a market perhaps you haven't heard of. But every product that you and your listeners today touch own, whether it's your car and advert that you see on television, clothing that you are wearing, drinks that you are drinking. Every company has conducted some level of market research to ensure the product is right. Maybe the messaging that you are seeing is, is correct so that they are more successful and you get something relevant.

Martin (2m 53s):

It touches every part of our lives.

Phil (2m 56s):

Some people of a certain age might remember going to those market research meetings. You know, I've, I've, I've went to a couple where you'd earn 50 bucks to go and answer some questions where you'd be looking at a particular product and giving feedback on the colors and the, the typeface and all of that sort of thing. But it's moved on a bit from then, hasn't it?

Martin (3m 13s):

Just a little bit. So

Phil (3m 16s):

I'm just showing my age. Am I Martin?

Martin (3m 19s):

Look, as everything has moved on, it has moved on the, the regional market research was going back to pen and paper. You'd be stopped in the street and asked to survey, maybe you would receive something through the post and it might be a really long thing that you'd fill out. Can you, what radio stations have you been listening to or what products have you bought? And so it's all on, it was all on recollection. And again, multimillion dollar decisions made on somebody. Trying to remember, yeah, last week, what drinks did I have at home? Oh yeah, I had a tea on Tuesday and I must probably had forties and had a coffee and had a beer or a wine or whatever. And so it was based on recollection and it's moved on and it's moved on especially around about 2000 ish with the internet.

Martin (4m 8s):

And what you found is much of what was offline research, that pen and paper, face-to-face type interviewing moved to online and suddenly I was able to get a much larger audience and a much wider audience through their computers or through their, wasn't their phones at that stage, it was through their computers who wanted to share views and, and differences. And so the big changes that we've seen in market research to date have been around 2000 when we all moved to online. And so suddenly as said, it lowered the cost, increased the speed increased the people, the the variety of people I was talking to or able to talk to as a brand.

Martin (4m 52s):

More people could share their views and share their input. Then mobile, which came out little bit later. So what are we talking about? 2005, 2006, everything started to go mobile. And so again, market research turned to mobile. So suddenly whether somebody was answering online surveys, sitting at home and it was 6:00 PM or 7:00 PM or or maybe a lunch break at work or something, suddenly I could do research on the bus and I could do research in the moment. So that was then the big change. And then the change that's occurred since then to date is combining that data.

Martin (5m 34s):

So more and more data is available. So for example, you might have a Flybuys card and you go shopping in Coles with your Flybuys card or it could be Bunnings or Kmart or wherever. But you go in Coles and you buy certain products. Now Kohls know a little bit about you cuz you have a card. They know what products you've bought. It's been a fair exchange. That's what market research is all about, market research, it's all about a fair exchange. You will share some information and in return you will get something back. If it's with an organization like Pureprofile, it would be money you get back for sharing that information or those views. And with somebody like Coles, you using fly bus cards, you get cash back and points, et cetera, et cetera.

Martin (6m 18s):

So Coles are able to say, well we know you just bought soy milk. We'll give you what's called a trigger survey. We'll ask you what you thought about soy milk and that's no different to you might take your car for a surface and then a day later you receive a research or a survey that says, what did you think about our offering? Or you buy a new product, et cetera. So that's how market research has really started to change. It started to change that we know what you did because you've got a relationship with that brand and that brand is directly able to ask you what did you think? And the importance of that is they get immediate feedback about their service.

Martin (6m 59s):

So I can see straight away my customer service, maybe I just had my car serviced, I got a survey back that said, what did you think about that? So my car had to go all the way to Liverpool to be serviced. They have branches all around so maybe they can see Liverpool customer service is actually better than new caster customer service or Sydney customer service, et cetera. And so they get immediate feedback that they can make business decisions on. And also because you know somebody that's bought a product, you could ask them, why did you buy that product? Why did you buy that brand of soy milk over some other brand of soy milk? Why did you perhaps look at that television show instead of some other television show or that we saw, you saw that advert, did you have a higher brand recollection?

Martin (7m 46s):

Maybe I'm getting a little bit too deep. I'm not sure here Phil. No, no, that's great. What we're understanding is that brands will be more relevant to you the more they can understand you. So where I get, I'm in market research world, we don't share any personally identifiable information it's called it's it's, it's called, it's all anonymized information. Yeah. So none of that is shared. Where I get frustrated is going back to where we had the whole privacy world started or concerns started around Cambridge Analytica with Facebook sharing. They did two things. One, Facebook shared with them personal data, which overall isn't an issue because again, there is a famous line that if the product is free, you are the product.

Martin (8m 39s):

And so what that means in the online world is if you've signed up to something that costs you no money, but I'm receiving again an exchange, a fair exchange, I'm receiving something back. So I'm using Facebook, there's no cost to use Facebook. How does Facebook makes its money. It delivers you adverts and it sells you data. Now in selling anonymized data, there's no issue with that because you're going to get a better experience on Facebook. If I've got more relevant offers, more relevant ads, if my content is more relevant to what I'm doing, then that's a fair exchange. I've got a free product and in return I'm giving data and in return they're giving me a better experience.

Martin (9m 19s):

Where it goes wrong is what Cambridge Analytica did was Cambridge Analytica then started to manipulate people based on the, what they'd received and what they'd found out, which is really bad. And we now have GDPR in Europe, we have the a ACCC here we have California privacy law, which really is nothing to do with us because we don't share, it's all anonymized data and we've got permission from our members who have joined our program, but it's stopping a Cambridge Analytica occurring in the further. And what it's given a a bad name for is privacy full stop. And it's a shame because my user experience is better if somebody can analyze my data of what I'm interested in, what I'm doing, how I'm doing it, how long I spend, et cetera.

Martin (10m 7s):

Yeah, so presumably

Phil (10m 9s):

You're, you're soy milk that you buy is the example. It's going to improve in terms of satisfying your needs, flavor, whatever outcomes you're looking for based on the research that a company is undertaking.

Martin (10m 22s):

Very good point. So if, I'm not saying Coles use their data in this way at all, but we'll carry on that as an example. So let's say Coles knows I've bought so this particular brand of soy milk and they also know how much I paid for that particular brand of soy milk at the checkout. They then can let the competitors of that soy milk brand know that I'm a soy milk drinker. So that now gives them all the opportunity of sending me messages to say, hey, we are better, perhaps we are better, we're creamier, we are milkier, we are lower sugar, we're more calcium or whatever else it is. So suddenly I'm getting, I like soy milk, I'm now being given research or information about other brands that I might try out.

Martin (11m 8s):

They also might say, Hey, we'll give you special offers to come and try our soy milk instead of somebody else's soy milk. So now I'm saving money. So I've learned about new brands, I've maybe found a new favorite that is a bit milkier and a bit more to my taste and I'm paying less money for it. So that is an example of my behavior and that data, that information being really, really well used and giving me a better experience. But in turn, what has it done? It's enabled organizations perhaps to increase their sales to win competitive market share. And now I also think, well that's good of Kohl's as well cuz Woolworths doesn't do that. Now look at Kohl's, they're recommending different brands to me.

Martin (11m 50s):

They're recommending different prices to me. They're giving me offer. So my loyalty to Coles has gone up. Perhaps I've changed soy milk. So it's a win-win for everybody. And that's a perfect example of market research and being world used. And then you add to that. So that's what we call passive data, but you don't know why somebody has chosen that particular soy milk. So that's where pure profile comes in. So one, we can provide that data that tells what people do, but what we really do is we help brands understand why by asking them online surveys. So we can say that particular soy milk has been bored and the brand says, okay, before I contact them, I want to know why did they buy that?

Martin (12m 35s):

So now we survey everybody who bought that particular brand say, why do you drink soy milk? And perhaps it's a health thing. I I, I've got a lactose intolerance and perhaps I'm trying to lose weight. Oat milk for all your listeners has a lot more sugar than soy milk. So perhaps I'm dropping oat milk to go to soy milk cuz I'm trying to lose weight. Perhaps it's because of a cost thing perhaps. So there can be a myriad of reasons. And so once the brand understands what the reasons are, then messaging can be tailored. It's the same product, but I've now got tailored messaging depending on who the user is.

Chloe (13m 11s):

Super is one of the most important investments you'll ever make. But how do you know if you are in the best fund for your situation? Head to live sherpa.com au to find out more live Sherpa Australia's most affordable online financial advice.

Phil (13m 29s):

So can you run us through some case studies of how this has worked? And I know you've prepared three cases beforehand and they're really interesting cases. So yeah, let's just run through them now.

Martin (13m 38s):

Yeah, thanks Phil. It is a good question and it is one you told me beforehand. So I have three cases government, I'll give a good example of government research around covid hesitancy. We've got a health crisis. Covid goes back if you can all remember not that long ago. So we have a health crisis and one of the problems in Australia was people weren't taking the vaccine. And so the government was very concerned about that. So the government undertook quite a lot of research to understand why. So again, I'm gonna deliver online surveys to understand what the drivers are for users. And what came out of that research was there is an absolute group of people who would never have any vaccine at all.

Martin (14m 23s):

You're not gonna be able to give any messages to that group. You can continue to try, you're not gonna convert them. And then if you look at people that were, were willing to take the vaccine, what were their drivers? They haven't yet, but what were their drivers? So it could be a fear about their health. They've heard that there are health challenges about certain vaccines, they that can be one. So now if that's to that group, I can start to give detail and information about No it's fine, don't worry about it. The health is proven. Millions of people are taking this around the world, you'll be fine. Another group wants perhaps a little bit more of a push. So to be able to travel, maybe they want to do international travel.

Martin (15m 3s):

So I would take the vaccine if I was able to travel. So again, talking to that group, that message is what countries are open, how I could travel, maybe simple things like going out to the pub, going to work, et cetera. So you can again see a single population needs to have different messages cuz we all have different drivers in our lives. And so they're the government used online market research to do surveys really well, understand the different segments and then deliver the right messages to those segments. And then we, we know how that turned out. So a positive thing. Another good example is opt the Optus breach. Awful what happened with Medicare and Medibank, sorry, an Optus obviously and the effect that that had on individuals and how the, the data breaches.

Martin (15m 52s):

But what Optus did was it happened on a Friday, it happened to be a holiday weekend in Victoria because I think it was the AFL weekend, it was where all the data got hacked, wasn't it? All of Okta's data and and yeah, their headquarters as well. Yeah. Oh, the data was hacked actually everywhere. But they headquarters. So, so they sprung to life. And so over that weekend they conducted a great deal of market research across their audiences to understand what were their concerns, the, the use of their data, what data had been taken, identity theft at one extreme level, et cetera, et cetera. And so in 48 hours or so, a large amount of research carried out by Optus and then that was used in their messaging on the Monday.

Martin (16m 37s):

So you've got a crisis on the Friday, understand the audience over the weekend, deliver the right messaging on the Monday to the audience. It worked really well as well as it possibly could do in that situation. And Optus have certainly come out of that world and making, making the best of it out of a bad situation. And the customers have confidence. Yeah, and then we've got an example of it not being well used or it not being used at all. For those of you perhaps are aware, Budweiser light in America just used Dylan Mulvaney for a campaign. Dylan Mulvaney identifies as a woman and that didn't work well. And the traditional drinkers of Budweiser light, Budweiser light, which had been all about cowboys and riding horses and guns and whatever else in America, they use the basement, what's going on?

Martin (17m 28s):

We don't, we don't relate to these messaging, this campaign that's being held and huge amount of backlash. And almost overnight it took off 6 billion from their market cap. If they'd conducted a little bit of user research first to understand perhaps if that campaign would work, then they wouldn't have lost 6 billion. And then very quickly they've tried to launch new campaigns for which you'd imagine they have conducted research, which is going back to their traditional values, but it'll take time for them to get that brown back. So market research should be done. I don't

Phil (18m 6s):

See, it seems to be on belief that they would go with such a radically different campaign without conducting that kind of research to start with to see how it would be if it would be effective or not.

Martin (18m 19s):

It does, it is quite credible. I think a couple of people have been put on leave, I've seen in the news from Budweiser regarding this. And yes, it's so easy to do market research so easy and fast to at least get a pulse on your, of your users, et cetera, or your customers in incredible, they didn't. But yeah, couple of examples, it's worked and examples where it hasn't, and one or another one, which you might see a lot of, if you watching television or actually any medium at the moment, Volvo, they're doing a lot of advertising at the moment around electric vehicles, et cetera.

Martin (19m 1s):

Volvo is Chinese owned, however, all of the adverts are Swedish accents and Swedish scenery and giving again, what do users like, they like that impression. It is the design and style.

Phil (19m 16s):

Yeah, the, the perception that Volvo has always had for safety and design style and being Swedish

Martin (19m 22s):

And being Swedish. So again, market research being reused really, really well to build a brand, understand the audience and understand what the reasons are that people would buy Volvo over a high-end dye or whatever

Phil (19m 35s):

Does Pure Profile, sorry, I'm just going up a bit off topic here, but does Pure Profile ever have to have tough conversations with clients and say, okay, you've, you really invested in this idea of how you want to approach market and you, you're saying we really don't think it's gonna work.

Martin (19m 52s):

Absolutely. And occasionally you do have clients who will say all that doesn't fit with what we are, what we are expecting to do or we'd like to do. Can you make the data different? And, and the answer is no. The data is the data. It's very, very few, I mean a handful of clients in sort of 20 years, the majority, it's close to the mark. They know their clients, they know their business throughout. This is really final verification that we run the right idea, perhaps some tweaking of some ideas. So very, very seldomly do you have something which is, you know, a complete right turn from actually the path of the brand was, was taken normally is reaffirming what they're looking to do as opposed to just completely blue sky.

Martin (20m 43s):

So very, very seldomly do brands say this isn't what we're expecting at all.

Phil (20m 50s):

We want a different outcome. Okay, so tell us about the, the business structure of pure profile. The areas that it operates in

Martin (20m 58s):

As a company, we're Australian founded 23 years ago. Today we operate in 10 countries. We just opened Indonesia about a month or so ago. For us still Australia is the largest market and the real opportunity is overseas, especially in the UK and the US UK market is 14 times bigger than the Australian market and the US market is 40 times bigger than the Australian market. So big opportunities. We have very low market share. Our UK business is growing at double the rate of our Australian business. We expect UK revenue to overtake Australian revenue at the end of a run rate at the end of financial year 24.

Martin (21m 41s):

And we expect in financially a 25 run rate the US to overtake Australia. So quite quickly in the last three years, we've moved pure profile from being Australian centric to being truly global. And what do we do that all around? We do that all around really online surveys and insights. That makes up about 80% of our revenue. And then the other 20% of our revenue is in our SaaS platforms, which again is delivering insights. So what we do, so

Phil (22m 11s):

Just to, for listeners, that's software is a service, so basically clients can go in and use the SaaS interface, the the interface that you provide, is that correct?

Martin (22m 19s):

Exactly. Higher margin, you don't need people, it's more scalable. SaaS technology is infiltrating everything that we do today. Yeah,

Phil (22m 31s):

Yeah. Just about every interface you see on the web as a SaaS kind of platform for whatever you might be doing. And yeah. So tell us about that. In, in terms of pure profile,

Martin (22m 39s):

Correct. So 20% SaaS platform, 80% doing surveys around the world. The SaaS platform has three main products in it. First one is Insights Builder. So DIY Tools, I can run my own surveys. If I'm budget director, door Beauty and others, I can go in and build my own surveys. Second product is called Audience Intelligence that curates anonymous data of 400,000 Australians, the daily credit card and bank account expenditure. But it's all anonymous data and that enables organizations to understand how they're doing Gates competitors in different postcodes in different genders, ages, et cetera.

Martin (23m 22s):

That is certainly where we talked earlier about trigger research. I can see somebody has just used JB High five or Bingley or whatever, and I can immediately deliver them surveys about their experience, why did they use that versus somebody else. And then the third offering in our SaaS products is called Audience Builder. That's the real secret source within Pure Profile and that enables large companies like Flybys to deliver surveys to their audience. And, and we work with Flybys News, COR Raise, aa Smart Fuel, we just signed Shop Back. We have 30 million members across Asia.

Martin (24m 3s):

We've got a really large partnership going live in the US in June and also a, a partnership in the uk. So they're our first proper outside of Australian New Zealand partnerships. And basically it enables audiences to do surveys. And so why do brands like Flybys do it? Well, firstly, engagement. So I can be on the Flybys app and I can shop in Kohls or I can take a credit card or insurance or I can run surveys to earn points. So that's an engagement flybys gain insights so I can understand more about my users to give them a better experience. And then thirdly, we do a revenue share with the, the third party.

Martin (24m 46s):

Nobody else in the world does it the way we do it with Audience Builder. So in a world where there is more research than there are people to do the research, the world needs more high quality individuals do surveys, audience builder is is filling that gap. So we are really excited about that product and that's the one look we've seen our, our SaaS platform year today it's up 17% last year. It's about a hundred percent that's driven by our audience builder product. So that's really exciting. But everything we do is around insights. It's around companies being able to understand their, their users better.

Martin (25m 25s):

So to understand a little bit of data, our revenue is up 26% year over year. Our EBITDA is up 28% year over year. And then if we look at apac, it's up 20%. UK U US up 41% and sat up 17%. So in these uncertain economic times, that's great for market research because brands want to understand more about the users, what are they concerned about, what are their challenges to either keep or win consumers And then as a company, we must be doing something right. We know we're doing lost things, right? Because we are actually winning market share and growing in a market where others are struggling.

Martin (26m 7s):

So really excited about how we're doing as a business.

Phil (26m 10s):

And presumably governments would require a lot more of this information in tough times as well because they, they need to know which way to turn

Martin (26m 17s):

The one constant in the world is changed. So if you've got, we we just had budget, so governments would inherent Australia governments would conduct research six months beforehand understanding what the key thing about voters or their, their voters and liberal votes are to understand what they should focus on, on budget as well as what's needed in the market. We've got the voice coming up and I think we saw in the budget that 330 million has been earmarked for that referendum. There will be a great deal of research from both the YES campaign and the no campaign to understand what the key messages should be to have people vote no or yes.

Martin (27m 0s):

And then before we know it, there will be round to election cycle again. So once again, all the key parties will be looking to understand their constituents and comp and, and opposition constituents for the right messaging. So it's a, it's a continual thing within any business, but especially within the government.

Phil (27m 22s):

And is audience builder something that you are taking to international markets and it's something that doesn't exist in other markets? Is that the

Martin (27m 28s):

Case? Absolutely. Yeah. So the way that it works and the way we partner with big brands, nobody, big membership companies, nobody else does it in the same way. And that's where we are seeing our, our growth come from. So the, for us, the breakout will be the US we're only doing about 3 million or so, maybe 4 million or so this year in the US in a market that's worth in excess of $6 billion. So huge opportunity and Audience Builder is our secret source to entry. So a large partner was starting to go live within June. They have about 114 million members in the us That's a large base to go out and build panel from.

Martin (28m 12s):

That would be especially about social impact and and social challenges people face. And that's what the company does. And then we're talking to other partners about launching specialty panels that are filling in gaps that aren't covered by the mainstream in the US. And even a small niche offering in the US is bigger than the whole Australian market. What we need to be really cautious about, as we've always done, we are operating cash flow positive. We've been operating cash flow positive for the best part of three years. And so all of our investments, whether it's technology investments, new market investments, new product investments, people investments is all within our cash flow.

Martin (28m 56s):

We don't want to raise money to keep the lights on. And so that's been really important to us. So even going out into US and big market, we are not looking at spending a huge amount of money doing that. We'll do that with the partner. It therefore doesn't cost any money out front. We do a backend revenue share and the opportunity is huge. So low cost entry into a market 40 times bigger than Australia.

Phil (29m 19s):

If listeners wanna find out more about Pure Profile, where can they find you? What's the code and the website?

Martin (29m 25s):

Yep. The code is PPL. The website is business.pureprofile.com or just pureprofile.com. And then you can go to the business section, obviously find out more about the company, all our reports, et cetera. And also we're always happy to answer any questions that people may have. So please send us through to Phil or contact us directly and we'll see if we can help you. Martin,

4 (29m 50s):

Thank you very much for joining me today.

Martin (29m 52s):

Thank you very much, Phil.

4 (29m 53s):

The company and or guest has contributed to the cost of production for this episode.

Chloe (29m 57s):

Thanks for listening to Shares for Beginners. You can find more sharesforbeginners.com. If you enjoy listening, please take a moment to rate a review in your podcast player or tell a friend who might want to learn more about investing for their future.

Any advice in this blog post is general financial advice only and does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product read the PDS and TMD and obtain appropriate financial advice tailored to your needs. Finpods Pty Ltd & Philip Muscatello are authorised representatives of MoneySherpa Pty Ltd which holds financial services licence 451289. Here's a link to our Financial Services Guide.