IRI vs. ACNielsen: P&G pits rivals in data review

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Procter & Gamble Co. has set up a shoot-out between arch rivals Information Resources Inc. and ACNielsen Corp. for its $30 million scanner and consumer-panel data contracts. The contracts represent the most lucrative accounts in the global market-research business.

P&G expects to make a decision "in the coming weeks or months," a spokeswoman said. The marketer's three-year scanner data contract with IRI is set to expire next June. IRI has provided scanner data, the bigger of the contracts, since 1992. But VNU's ACNielsen unit now provides most of P&G's consumer-panel data.

P&G's request for proposals covered both contracts, although the marketer could decide to either consolidate the accounts at one supplier or keep them split.

The review comes amid continued legal rancor in an analytical business driven by strong emotion. A 1996 antitrust suit filed in U.S. District Court in Chicago could go to trial next year. And an IRI spokeswoman said a recent "incident" involving the possible theft of confidential IRI information by an ACNielsen employee at a Microsoft facility where both companies work is under investigation. An ACNielsen spokesman said he was not aware of an investigation.

ACNielsen is believed by industry executives to hold a slight edge in market share over IRI in U.S. scanner data and a commanding lead in global scanner data and consumer-panel data. In its suit, IRI accused ACNielsen of illegally bundling U.S. and European data contracts to limit IRI's growth, particularly in Europe. ACNielsen said the suit is without merit.

Representatives of IRI and ACNielsen had no comment on the P&G account.

IRI remains barely profitable after more than two years of restructuring, and its stock hovers near all-time lows. Loss of the P&G account would deal IRI a severe blow, said former IRI Chairman-CEO Gian Fulgoni, now chairman of online audience-measurement service comScore Networks.

fixed costs

Collecting and processing scanner data involves fixed costs that can't necessarily be reduced when a big account leaves, Mr. Fulgoni said. He added that both IRI and ACNielsen have been squeezed at both ends by industry consolidation. Client consolidation means fewer buyers, while retailer consolidation leaves bigger suppliers that charge more for data.

The biggest supplier, Wal-Mart, stopped selling its data to both companies last year. Ripples from that decision continue to pressure both companies-and their clients.

"The clients look at it and say, Wal-Mart was 20% of the category, so if you don't have Wal-Mart in your database you should drop the price 20%, and that's a killer, because 20% of your costs don't go to Wal-Mart," Mr. Fulgoni said. "On top of that, you've got these massive costs to retool your entire system" to compensate for loss of Wal-Mart data.

rankled clients

Incomplete information given to the media or Wall Street because of lack of Wal-Mart panel data also rankles clients, including P&G. Chief Financial Officer Clayton Daley, in a conference call last month, criticized numbers cited by suppliers and said P&G is "working with our partners" to develop a solution.

Mr. Fulgoni questioned whether P&G ultimately could afford to take its scanner business away from IRI, which he believes could put IRI's future at risk and return the business to monopoly status. "Look at what this business was like before IRI, or at the Nielsen" TV-ratings monopoly, he said. "You've got to struggle to find a client who's happy with what they're getting."

P&G's spokeswoman wouldn't comment on factors in the decision. "When we make these kinds of decisions, we look at a variety of factors," she said. "It's a comprehensive review."

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