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Top research companies by U.S. research revenues (chart) Research companies by non-U.S. revenue (chart) U.S. INDUSTRY SPREADS TOWARD $3 BILLION GROWTH RATE SLOWS, BUT CORPORATE DOWNSIZING SHIFTS WORK TO VENDORS

By Published on .

Research companies have taken on the look of versatile valet Kato, sidekick of the Green Hornet, the radio-serial crimestopper of yesteryear. Kato did more than steer the Black Beauty-mobile on stings to nab criminals; he was cook, chemist, housekeeper, fighter and globalist (as a Filipino working the city's mean streets).

Research organizations surveyed for Advertising Age's 19th annual ranking have turned just as versatile for good reason: to get and retain business in a tight U.S. market and to expand globally.

The U.S. market turned lethargic last year when revenues increased just 6% to $2.9 billion, according to the report covering 117 researchers. That is the smallest increase in the past four years, and considerably lower than the 9.6% growth of the previous year.

The situation was worse overseas, where revenues rose only 1.8%, to $1.8 billion. A stronger dollar mechanically pared growth, by as much as 6% according to some companies.

There is a bright side. New markets for research are opening up in the U.S. and abroad. Corporate downsizing and megamerging is moving corporate research functions to outside vendors; the sluggish U.S. market has encouraged globalization, particularly in emerging Asian markets; and the need for clean, hard data has accelerated the pace of new technology bearing the Kato-like premium of speed.

Nielsen/IMS International, formerly reporting separately as A.C. Nielsen and IMS International, led the U.S. list at $710 million, same as their combined total in 1992.

Parent Dun & Bradstreet has merged the two operations, largely for expansion reasons. Their two different databases are being made compatible because, without such compatibility, expansion would mean perpetuating a more costly two-tiered system.

In putting them together, the company is simplifying data by introducing a single Product Information Number-after 70 years of separate categories for everything, from Pampers to Prozac. Package goods, monitored by Nielsen, carry the Universal Product Code; prescription drugs, tracked by IMS, do not.

The linkup will affect operations in more than 60 countries.

Nielsen/IMS pulled 62% of worldwide revenues of $1.87 billion from international markets. While its world total was down 1.4% from the prior year, it's more than five times the revenue generated by the world's No. 2 player, Information Resources Inc., at $334.5 million, up 21%.

This year, Nielsen/IMS stepped in to acquire Survey Research Group, Hong Kong, when a purchase attempt by IRI fell through. SRG is the largest researcher in consumer market information in Southeast Asia, regarded by Niel-sen/IMS as the world's biggest emerging market.

"We see international as the growth area," says Archie Purcell, president of No. 85 FGI Integrated Marketing, which doubled its non-U.S research revenue.

No. 7-ranked Gallup Organization drew 28.6% growth in non-U.S. business.

"We had larger tracking projects," says Steve O'Brien, VP-general counsel, in explaining the company's 18.8% growth in the U.S., but "the percentage increase is faster outside the U.S. than inside."

Researchers surveyed by Ad Age made it clear getting international business means more than buying a ticket.

According to Gail Griggs, president of No. 73 Griggs-Anderson Research: "We have a stated goal-we want to do international business. So we went out and learned how to do international, went overseas and learned what kind of companies, what kind of work they have."

Griggs-Anderson was up 60% in international revenue last year.

As for Nielsen and IRI, Nielsen/IMS' foreign operations recorded a 2.2% decline, to $1.16 billion. IRI, ranked No. 2 at $284.3 million in U.S. volume, up 17.9%, saw its international business advance 42.6%.

Nielsen says its total revenue slippage was less a reflection of a poor market than the sale and loss of the revenue stream of Donnelley Marketing Information Service and, of course, the stronger U.S. dollar's impact abroad.

This has been a long period of intense competition between the two giants in their home market. IRI got a jump in the 1980s by identifying and meeting the need for fast, scanner-based sales data on package goods sales, and cornered about a third of the U.S. tracking business.

It has pulled that business from Nielsen, most recently the big Clorox Co. sales-tracking business. Now come the bumps. Nielsen has made a string of client wins as IRI has struggled.

IRI experienced a fourth-quarter '93 slump in earnings per share, and there were assertions of insider stock sales preceding the slump. That brought a shareholder lawsuit, settled in October.

Its momentum further stalled when a software conversion, to Windows, took three quarters instead of two.

Nielsen/IMS President-CEO Serge Okun claims that his company has won 80% of the head-to-head reviews against IRI in the U.S. in the last year, including those of companies such as Tambrands, Johnson & Johnson and Dole Food Co. The latter had switched from Nielsen to IRI earlier.

IRI Chairman-CEO Gian Fulgoni admits the stock issue and Windows conversion have been nettlesome.

"We're optimistic about 1995. We've refinanced .*.*. and have a credit line of $65 million and settled the 1994 class-action lawsuit," he states.

In other U.S. business, local-market media measurement put Arbitron Co. in the third spot in U.S. revenue rankings-at $172.2 million, off 3.2%.

The company took a big step to fill the demand for faster data. Arbitron is developing the portable passive meter, although its launch currently is tied up in a lawsuit.

The introduction this fall of the radio and TV audience PPM was thwarted by a suit from Pretesting Co., No. 58 on the research list. Both units are highly mobile; they receive silent coded audio programming and operate in or out of the home.

Speed is key in research today, and that comes in many different packages, evidenced by the 9-by-11 inch TrendTrak keypad used by No. 54 Dohring Co.

Set in the lobby at the 1994 Detroit Auto Show, 15 of these units pulled 6,000 responses in an auto preference study in just four days. TrendTrak has been instrumental in boosting Dohring's revenues 38.5% to $7.7 million.

Wirthlin Group credits a good part of its 24.6% gain in U.S. revenue to its Pulseline service. In a Pulseline survey, respondents provide a second-by-second response to a speech, video/TV presentation or newscast.

Speed can save staff time and scheduling, too. NFO Research, up nearly 15% to $57.2 million in U.S. revenue, eliminated the need for data entry by using a new "imaging" system that displays and interprets whole questionnaires at a glance.

Speed for the leaders, Nielsen and IRI, is a matter of both time and volume. Until 1994, a weekly schedule for sales data generally was the minimum turnaround.

"Data have grown a hundredfold in the past three years," says David J.S. Flaschen, new president-chief operating officer at Nielsen North America.

In September 1994, Nielsen entered into a minority partnership with Efficient Market Services, acquiring daily reporting skills. Prior to this deal, IRI's service was faster than Nielsen in turnaround data delivery.

The Nielsen-EMS deal generates data from 15,000 stores.

IRI is pressing its Catalina Information Resources unit (it obtains daily reports on consumer purchases) to get daily readouts from 1,300 stores serviced by IRI's InfoScan syndicated scanner tracking service. It hopes to expand soon to 8,600.

New applications of software are fueling the computer engine-like IRI's conversion to Windows and Nielsen's new numeric codes, enabling them to more easily link beyond the maturing U.S. market.

The international reach of research companies also is reflected in the trend to broaden client services.

Research executives have different takes on the role of researcher as consultant. "It's not our job to help identify strategy for a client, but it is our job to identify and match customers to strategy and to help execute the strategy," says B.J. Walsh, VP, Walsh International/PMSI.

D.G. McMullen, president-CEO of Marketvision Research, believes corporate downsizing is causing companies to outsource .*.*. "not just to summarize the research but to help implement, to address the barriers."

Broader help is a part of company policy at Nielsen/IMS. "We want to help much more on a consulting basis. We want to be much more pro-active," says Mr. Okun.

"We're part of the client family; it's a new kind of relationship," adds Jerry Rosenberg, chairman, Data Development.

There's no rest for Kato. R. Craig Endicott contributed to this story.

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