Let's Go Dutch

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Few eyebrows were raised in August when Dutch media company VNU NV announced it would buy Nielsen Media Research - the doyen of TV audience measuring in the United States - for $2.5 billion in cash and the assumption of $200 million in debt.

"It's the biggest yawn that's happened in our business in a long time," says Jim Spaeth, president of the Advertising Research Foundation, about VNU's largest acquisition in 15 years. "It was a great buy, that's all."

Spaeth's comments echo those of analysts and others in the media community, all of whom have grown accustomed to the rapid consolidation taking place in the industry. With accountability becoming more important than ever, the race is on for giants to gobble up companies that can provide extra insights into effectiveness. There were even rumors for a while that ad giant WPP Group was eyeing Nielsen. Instead, in August WPP opted for X*Pert, one of the original optimization innovators, to add to its research muscle at The Kantar Group. The same month, it also acquired IntelliQuest Information Group, an IT-consulting firm.

"We knew Nielsen was going to be bought, and we knew VNU was interested in making more media acquisitions," says Kate Lynch, vice president of research at Starcom Worldwide, the dedicated media unit of Leo Burnett in Chicago. Experts say that Nielsen, which was spun off a year ago from Wilton, Connecticut-based Cognizant Corporation into its own publicly traded company, needed the stock boost that VNU's acquisition provided. VNU, on the other hand, stands to gain a coveted entry into Nielsen's fast-growing Internet ratings business, NetRatings, which provides information about online advertising and consumer behavior.

Lynch, like others, expresses some concern that Nielsen may become complacent about investing in new technology, especially now that the demise of Statistical Research Inc.'s SMART initiative has left Nielsen's monopoly intact. And there is already talk of combining VNU's Competitive Media Reporting, which measures ad spending in media, with Nielsen's Monitor Plus, which performs a similar task.

Deep down in the trenches, however, there are rumblings about less obvious but potentially more damaging implications from the acquisition. VNU, one of Europe's largest publishers, has inked some 50 acquisitions or alliances in the United States in the past five years, which is why some jokingly refer to the company as "Vee Own You." Most of those deals - CMR, Scarborough Research, Claritas, MediaPlan, to name a few - have occurred in areas that are vital to marketers who depend on the kinds of media-tracking devices or database and software systems that VNU's companies offer. "They're getting a stranglehold on data that ad agencies and others use," says one media expert who declined to be identified.

True, most point out, VNU has a history of leaving its new acquisitions to operate independently, but what happens if it ever decides to integrate them and act like a true monopoly? Spaeth, for one, does not think that time will come. "VNU has never been the bad guy," he says.

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