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Q U A L I TAT I V E R E S E A R C H C O N S U LTA N T S A S S O C I AT I O N 49 What is a Prediction Market? Imagine that in 2013 you were present- ed with several potential investments, including a super-large Android phone (a "phablet"), a Facebook-based phone, and an Amazon-produced phone. You might have decided to hedge your bets, putting equal amounts of money into all of these ideas. Or you might have decided that nobody would turn down the chance for a Facebook-sponsored phone and put all of your chips on that product's success. Alternatively, you might have bet heav- ily against the Facebook phone and instead, early on, put much of your money on the phablet. If you had done the latter, you would not only be a mil- lionaire, but you would have beaten out your fellow traders by investing heavily in the right predictions: that even devoted Amazon users really don't want to shop all the time via their phones, that Facebook users prefer to treat the social network as an app not as a device, and that phablets satisfy consumers' desire to have a single mobile device, rather than both a phone and tablet. And you would have made your investment early enough for your shares to gain in value. The purpose of a prediction market is to anticipate the likely success of an idea, product, or political candidate. Prediction market "investors" – think of them as "players," since this is a gamified approach to research – are given play money or points to invest in answers to questions. These may be binary questions like, "Will this product appeal to four-to six-year old girls?" or "Will Product A outsell Product B?" or "Will this promo- tion motivate non-customers to sign up for a free trial?" Or you might ask multi- variate questions, such as, "Which of these products will be most successful among four-to six-year old girls?" or "Which of these promotions will motivate the greatest number of non-customers to sign up for a free trial?" Players answer only the questions about which they have a strong opinion. They can invest in the likely failure of an idea as well as in the likely success of one, and they can invest as few or as many points as they want, based on the strength of their confidence in their own predictions. Furthermore, when they invest, they provide an explanation of why they're doing it and have the option of publicly posting their rationale for discussion and debate as well. When the market closes, each predic- tion, e.g., each possible outcome, ends up Put Your Money Where Your Mouth Is: W e live in a relentlessly "social" world, in which opinions are even more ubiquitous than ads, and influence is courted, measured, and sold. Consumers want to be known and heard, and they embrace any opportunity to partner meaningfully with brands. But as many participants in telephone or online sur- veys can testify, answering numerous questions about your likelihood to do or buy something is not only tedious, but also questionably accurate, even when responding in good faith. Online Prediction Markets are generating interest and credi- bility in this climate as a research methodology, yielding not just accurate outcomes, but qualitative insights into the whys behind them. Why a Prediction Market is a Great "Qual-Quant" Tool By Julie Wittes Schlack n Senior Vice President, Product Innovation n Communispace Corporation Boston, MA n jwschlack@lcommunispace.com