News notes
New York-based NetRatings, Inc. and The NPD Group, Inc., Port Washington , N.Y., announced jointly that they have settled the lawsuit filed by NetRatings in March 2003. The lawsuit alleged that NPD infringed on NetRatings’ computer use tracking patent (United States Patent No. 6,115,680) and breached a license agreement entered into by the parties in 2002. As part of the settlement, NetRatings and NPD have agreed on the scope of a license of NetRatings’ patented technology to NPD for specific market research activities. Under the license, NPD may continue to utilize the technology for its MusicWatch Digital service and will have the right to continue development of other digital tracking services, provided that they do not compete with certain aspects of NetRatings’ business. Additional terms of the settlement were not disclosed.
Nielsen Media Research, Taylor Nelson Sofres and BBM Canada have settled their patent litigation, which was scheduled for trial beginning in April. The action dealt with allegations that the picture-matching technology (or PMT) used by BBM Canada for its television ratings service and supplied by Taylor Nelson Sofres infringed on Nielsen’s Canadian Patent 2,150,539. The Nielsen Patent concerns a method of metering television usage by reading codes and creating signatures associated with television programming viewed in homes.
The action also dealt with allegations that statements made by Nielsen Media Research concerning PMT were false and misleading.
Under the settlement, BBM will continue to use PMT in Canada and has acquired a license to use Nielsen’s patent to serve its members’ requirements. The patent license is limited to the patent rights and does not include any transfer of hardware or software. The issue of the statements made by Nielsen Media Research concerning PMT was also resolved.
All parties expressed satisfaction at having arrived at a fair result, enabling them to devote their resources to meeting client and member needs.
Figures released by the British Market Research Association (BMRA) reveal that British research industry revenues grew by 3.9 percent in 2003 to a value of £1.22 billion. Overall, the domestic sector, which makes up 79 percent of the market for U.K.-based market research companies, grew by 6.8 percent on the previous year.
These figures are an indication of the continued support for market research by U.K. businesses and organizations, which are increasingly looking to market researchers to deliver a more holistic, strategic service. “We believe the strong domestic performance reflects continued strong public sector spending and general economic recovery,” says Peter Jackling, chairman of the BMRA. “Looking forward, we expect the domestic market to hold up well at least until the next U.K. general election. However, we remain cautious with our forecasting for international work. Continued sterling strength, uneasiness about global security and speculation about the 2004 U.S. presidential election results may dampen spending among some of the multinationals.”
A cautious approach to forecasting the future of the international sector is reinforced by the results of the BMRA’s survey, which revealed a decline in the international market (comprising 21 percent of the market) by 5.6 percent on the previous year. “Obviously, the decline in the international market is disappointing,” Jackling says. “However, the improvement in the U.K. market is very positive news, representing a growth of almost 4 percent in real terms. Overall, we anticipate continued growth above inflation in 2004, but it may not be a smooth curve.”
Speaking on the general mood of the market research industry, a number of industry figures shared this cautious optimism. “The mood for 2004 is more positive and upbeat,” says Stephen Factor, managing director, TNS UK . “But this is against a background where the last couple of years have not been easy. There has been a little more growth - as we came to the end of the year things were picking up. So we are increasingly more optimistic and the mood for 2004 is very positive.”
Steve Hales, managing director, Synovate UK , says, “We are optimistic. Things have freed up compared with the beginning of last year. People are looking forwards rather than backwards. We continue to have growth plans and are optimistic about research in the U.K. and Europe.”
Cris Tarrant, managing director, BDRC, adds, “It’s difficult to plan business at the moment. On the one hand, people are taking a long time to make up their minds and are deferring decisions about projects. On the other hand, there is a lot of ‘I must have it now’ purchasing. It all points to the schizophrenic nature of the business.”
Syracuse University ’s S.I. Newhouse School of Public Communications will receive a grant from BIGresearch, Worthington , Ohio , for the firm’s syndicated Simultaneous Media Usage Study (SIMM) data. The grant will be used in Newhouse’s media master of science program curriculum.
The grant, valued at $120,000, will allow students the opportunity to illustrate how understanding consumers’ media usage patterns can increase the media industry’s return on investment in both content and advertising.
On-Line Communications, Inc. has closed its Richmond, Va., call center. In a statement, the company said it found the cost of maintaining its quality standards in the Richmond market too high. On-Line will continue to operate its remaining Midwestern facilities in a hub-and-spoke system and is looking to expand into other Midwestern geographic areas. For more information contact Nancy Hayslett (Arizona) at 800-369-1265, Frank Markowitz (New Jersey) at 800-825-6878 or Ed Sugar (California) at 800-313-1582.
VNU announced in April that the United States District Court for the Southern District of New York has entered a new scheduling order in the antitrust lawsuit by Information Resources, Inc. against VNU’s business unit, ACNielsen. The lawsuit was filed in July 1996. The original scheduling order was signed by the court on May 21, 2003. In January of this year, the court vacated the scheduling order because IRI had failed to provide adequate discovery. A trial date of April 18, 2005 has now been set under the new scheduling order signed by the court.
CBS’ The Late Late Show With Craig Kilborn incorporated FocusVision video transmission technology into one of its new segments, which featured Kilborn interviewing visitors at the MGM Grand Hotel promenade in Las Vegas from his studio in Los Angeles . In the initial four-minute transmission on February 20, the credit “Video Transmission by FocusVision” appeared on the screen while Kilborn quizzed passers-by, challenging them to make him laugh with a funny face. Kilborn, a favorite among young viewers, said to his first interviewee “Hey, you’re on FocusVision, that’s why you look so cool.”
Acquisitions
Research International has expanded its global network with the signing of new associate members UMG in the Ukraine and NOVADIR in Lisbon .
Germany-based GfK has acquired Decision Shop in Bosnia-Herzegovina. The new company, which will trade under the name GfK Bosnia Herzegovina, provides ad hoc research services. GfK Bosnia Herzegovina also supplies information services from the ConsumerScan panel.
Separately, GfK has acquired a 100 percent stake in m2A, a French firm specializing in veterinary research. GfK had already purchased a 35 percent holding in the French company two years ago, and has now taken over the company ahead of schedule. With a staff of eight, the firm generated sales of EUR 1.5 million in 2003.
Netherlands-based VNU has purchased the remaining stake in its two European-based radio airplay-monitoring businesses, Music Control and Aircheck. Together they represented a total revenue of EUR 6.5 million in 2003.
Music Control is a radio airplay-monitoring business based in Germany and Ireland. Prior to the purchase, VNU owned a minority stake in the company. Music Control operates throughout Europe and in Scandinavia, Greece and Mexico. Its major clients are record labels, recording industry associations and radio stations.
Aircheck is a radio airplay-monitoring business operating in the Netherlands. Aircheck monitors the airplay output of 20 radio stations. Prior to the purchase, VNU owned a majority stake in the company. Both businesses will remain part of Nielsen Entertainment, which is part of VNU’s Media Measurement & Information Group.
Alliances/strategic partnerships
Hong Kong research firm SoHealthAsia and Seattle-based Global Market Insight have entered into an agreement to develop online market research services with medical professionals in Asia. A series of trials for Web-based omnibus services is underway amongst physicians in Hong Kong.
United Research China, a full-service market research company in the People’s Republic of China, is the newest member of the Harris Interactive Global Network.
Seattle-based research firm NetReflector, Inc., and Driva Solutions, a Bellevue, Wash., consulting firm, have formed an alliance to offer a scorecard solution called Agent Performance Management based on customer satisfaction measurement to help domestic and global corporations optimize individual agent and overall contact center performance.
Marketing Systems Group/ GENESYS, Fort Washington , Pa., and Common Knowledge Research Services, Dallas, have announced their collaboration to enhance and expand the Your2Cents Online Opinion Panel, which was developed by Common Knowledge beginning in 1995. GENESYS, a provider of samples to the research community, will add full-scale Internet panel operations to its existing line of targeted e-mail, RDD, listed household, business, mail, and area probability samples. Common Knowledge will add GENESYS’ sampling capabilities, as well as market presence, to its offerings. In addition, the two partners are co-developing a series of mixed-mode data collection methodologies.
Association/organization news
The Marketing Research Institute International, Rocky Hill, Conn., has named career researcher Larry A. Constantineau president, succeeding Michael J. Naples. Constantineau will lead the Institute’s efforts to grow enrollments in its distance-learning course, Principles of Marketing Research.
New accounts/projects
U.K.-based research firm ESA has been retained by Iceland, a U.K. food retailer, to provide mystery shopping services for the third consecutive year. The contract, worth over £160,000, is to monitor the quality of the shopping experience in Iceland ’s stores and to check availability of products. All of Iceland ’s 755 stores will be visited on a regular basis by ESA’s IQCS mystery shoppers drawn from the company’s panel of 3,000.
New companies/new divisions/relocations/expansions
Research Resolutions has moved to 18333 Preston Rd., Suite 425/MB #7, Dallas, Texas, 75252. Phone 214-239-3939. Fax 214-239-3808.
Company earnings reports
The final figures for financial year 2003 for Nuremberg, Germany-based GfK Group show that the firm increased its sales by 6.4 percent from EUR 559.4 million to EUR 595.3 million. With an increase in earnings before interest and taxes (EBIT) after income from participations of 38.9 percent from EUR 50.0 million to EUR 69.5 million, GfK improved its margin from 8.9 percent to 11.7 percent.
The GfK Group provides services in its five business divisions: consumer tracking, non-food tracking, media, ad hoc research and the new business division, healthcare, which was set up in mid-2003.
During financial year 2003, the consumer tracking division continued its positive growth trend. Sales rose from EUR 86.0 million to EUR 89.8 million. 6.2 percentage points were attributable to organic growth, with business from the Benelux countries providing the main impetus. There was no acquisitions-related growth. Currency effects reduced sales growth by 1.8 percent.
The non-food tracking division saw a sales increase of 21.4 percent from EUR 137.3 million in 2002 to EUR 166.7 million in 2003, of which 18.0 percent came from organic growth. This was the highest organic growth rate of all the GfK divisions. Acquisitions contributed 6.9 percentage points to the rise in sales. Currency effects reduced sales growth by 3.5 percent.
Despite a drop in sales, GfK increased its operating profit in the media division by 23.6 percent to EUR 7.5 million. The margin rose from 9.9 percent to 12.8 percent, which is mainly attributable to consistent cost management.
Following above-average sales growth in 2002, both organic and by acquisition, GfK’s ad hoc research division achieved further organic growth of 1.3 percent in 2003. Growth from acquisitions amounted to 0.9 percent. Operating profit from the ad hoc research division showed an increase of 20.4 percent to EUR 15.4 million (2002: EUR 12.8 million). The drop of 4.1 percent owing to currency effects was offset by organic growth of 22.6 percent. The margin increased from 5.7 to 7.0 percent. Restructuring of business activities in the U.K., Sweden and Italy combined with active cost management and the key account management system for major clients all contributed to this result.
Sales in the healthcare division rose by 37.7 percent from EUR 35.8 million to EUR 49.3 million. The growth was entirely due to additions, primarily the acquisition of V2 GfK on July 1, 2003. In terms of organic growth, sales were unsatisfactory with a drop of 17.4 percent. This is mainly due to the fact that Martin Hamblin GfK in the U.K. and Martin Hamblin Research in the U.S. failed to perform as expected. However, by the end of the year, the number of orders and sales growth in these companies had improved. Currency effects reduced sales from this business division by 7.7 percent. Operating profit rose by 25.6 percent from EUR 5.0 to 6.3 million. Once again the newly acquired V2 GfK made a major contribution. With regard to organic growth, GfK recorded a drop of 46.2 percent, mainly due to the unsatisfactory growth in operating profit from Martin Hamblin GfK and Martin Hamblin Research. Currency effects reduced operating profit from this business division by 5.2 percent. The margin was 12.7 percent (2002: 13.9 percent).
For the first quarter 2004, Arbitron Inc., New York, reported revenue of $76.6 million, an increase of 7.3 percent over revenue of $71.4 million during the first quarter of 2003. Costs and expenses for the first quarter increased by 7.7 percent, from $40.2 million in 2003 to $43.4 million in 2004. Earnings before interest and taxes (EBIT) for the quarter were $31.9 million, compared with EBIT of $29.9 million during the first quarter last year.
Interest expense for the quarter declined 32.8 percent, from $3.6 million in the first quarter 2003 to $2.4 million in the first quarter 2004, due to reductions in the company’s long-term debt.
Net income for the quarter was $18.1 million, compared with $16.1 million for the first quarter of 2003, an increase of 12.3 percent. Net income per share for the first quarter 2004 increased to $0.57 (diluted), compared with $0.53 (diluted) during the comparable period last year.
In the first quarter 2004, Arbitron reduced its long-term debt by $20 million from $105 million to $85 million.
FIRM (Future Information Research Management) announced record first quarter revenues of $3 million. In the United States the company’s first quarter revenues grew by 70 percent (globally the figure increased by 46 percent) for the same period in 2003, delivering profitability.
The increased revenues are the result of increased demand from the market research community for FIRM’s Confirmit Survey & Reporting software. The company secured a number of new contracts in Europe, the United States and Asia Pacific and has strengthened its sales forces in all regions.
Rochester, N.Y.-based Harris Interactive released its financial results for the third quarter of fiscal 2004. Revenue for the quarter was $35.4 million, up 10 percent versus $32.1 million of revenue for the same period a year ago. This includes $0.3 million in revenue from Novatris, the Paris-based online research firm that Harris Interactive acquired in March. Worldwide sales bookings accelerated at the end of the quarter to set a record high, above the $40 million mark.
Traditional revenue for the fiscal third quarter slid 18 percent to $13.7 million from $16.8 million a year ago. This decline was largely offset by a 42 percent increase in worldwide Internet-based revenue to $21.7 million, or 61 percent of the total revenue for the quarter, versus $15.3 million of Internet revenue, or 48 percent of the total reported for the same period last year. HI Europe Internet revenue for the quarter was $0.9 million, or 14 percent of the European revenue total, sequentially about even with the prior quarter.
Pre-tax income for the quarter was $2.6 million, or $0.05 per share, equal to pre-tax income of $2.6 million or $0.05 per share for Q3 of fiscal 2003. Pre-tax income per share, a non-GAAP financial measure, is calculated as income before taxes divided by the weighted average diluted shares outstanding, and is reconciled to GAAP net income per share in the attached financial summary.
In accordance with GAAP requirements, the company recorded an income tax provision of $997,000 for the third fiscal quarter. That provision, a non-cash expense, produced after-tax net earnings of $1.6 million or $0.03 per diluted share. A tax provision was not booked in Q3 of fiscal 2003, thereby preventing a comparison of net income with a year ago.