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
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.’