MARKET RESEARCH: RESEARCH MEANS BUSINESS - A scramble by marketing groups to acquire major market research companies has left precious little to buy. Julian Lee investigates

WPP has been doing it for years. Aegis has just begun. Omnicom is understood to be interested. We’re talking about buying into market research.

WPP has been doing it for years. Aegis has just begun. Omnicom is

understood to be interested. We’re talking about buying into market


Ever since Aegis bought the US market research company, Market Facts,

earlier this year for the inflated figure of dollars 287 million,

followed by Dutch publisher VNU’s deal to buy Nielsen Media Research in

the US, talk in the sector has been of which group will be the next to

swallow up yet another market research company. If Omnicom enters the

race to add to its portfolio, it would certainly quicken the pace.

But even if it commits, Omnicom is going to need to move swiftly. It

will also need deep pockets. Put simply, in today’s market there are

fewer companies to buy and what is for sale is often overpriced. Aegis

paid twenty times the operating profit for Market Facts. The dollars

42.5 million that United News & Media paid just weeks earlier for the US

group, Audits & Surveys - a company predicted to double UN&M’s presence

in the US market research field - looks like a bargain by comparison.

Last year the number of transactions of market research companies in the

US alone rose to 40 - more than double the rate of 1997, according to

the newsletter for the industry, Inside Research.

Its editor, Larry Gold, says any buyer is going to need a war chest of

between dollars 500 million and dollars 1billion if it wants to enter

the market as a major player. Even then, he says, there just isn’t much

left to buy.

All of the major syndicated market research companies are in the hands

of a few companies such as Taylor Nelson Sofres, AC Neilsen, IRI, GfK

and WPP. Any business that has syndicated research such as TV monitoring

or audit data has already been sold and the gulf between smaller, niche

players offering quantitative, customised research and large companies

with syndicated research continues to widen.

Where then does this leave the likes of Omnicom, which has yet to leave

the starting blocks? Or for that matter Aegis, which has just begun to

make its way down the track? Tony Cowling, the chairman of Taylor Nelson

Sofres and a seasoned observer, believes they would find it hard


’They could do a deal with one of the worldwide organisations which

already exist, but the very idea of them going around the world and

buying up a set of new agencies in order to create a network just isn’t

on any more.’ Neither Omnicom nor Aegis are willing to discuss if or how

they plan to overcome such hurdles, so it remains a subject of much


But overcome the hurdles they may feel they must if they are to pose a

serious challenge to rivals such as WPP. In the age of the knowledge

game, when knowledge gathering and management command such a premium,

market research has finally come into its own.

From a strategic point of view, global businesses that understand the

importance of the collection and management of information probably

stand a better chance of success. Global markets demand a common

language and market research provides a means to compare


Simple though it may seem, it is a concept at the very heart of WPP’s

strategy. Brands such as Research International and BMRB may have come

to be in the WPP stable because they were part of the Ogilvy & Mather

and J. Walter Thompson groups, but such a simple explanation belies

their importance to the group. WPP’s chief executive, Martin Sorrell,

soon realised the profitability of market research and became one of the

industry’s earliest and greatest advocates.

WPP’s ability to offer clients services that stretch across the spectrum

and are anchored by solid research arguably puts it at a distinct

advantage over its competitors. It also moves WPP’s senior practitioners

further up the value chain and closer to the decision makers.

The increasing value of market research comes as no surprise to Juergen

Schwoerer, the director general of the European market research body

ESOMAR. ’We’ve been building up to this for nearly 50 years,’ he


’Market research is finally getting more attention from the top players.

It’s no accident that they’re all investing in this area at the same

time. They’re not buying companies just because they’re available - this

is part of a strategic shift in business.’

Market research is also rapidly becoming part of the money-making

machines that inhabit Wall Street and the City. Aside from high-value

sales such as Aegis’s purchase of Market Facts, there is another reason

why market research companies have attracted the attention of the

financial community. The dollars 1.3 billion market research industry is

growing at over 10 per cent a year with profits running at a similar

level, making the area a tempting one for chief executives under

pressure to meet annual growth targets.

If all that’s left are the minnows in the market research pool, where

does that leave companies eager to make their mark in the area? Inside

Research’s Gold predicts it will all end in three to five years when

there’s nothing left to buy, although he adds: ’Small niche players will

be fodder for the big companies. There’s always something going on at

the bottom.’

But while the big players scout around for the next purchase Sorrell

looks ahead to the next development in market research. In the group’s

annual report, he outlines challenges facing the industry: ’Often CEOs

despair at the lack of speed of research, the preoccupation with

statistical techniques and the lack of actionable and practical data. By

the time the questionnaire has been prepared, the panels interviewed and

the data analysed, the problem has changed.’