News notes
Little Rock, Ark.-based research firm Flake-Wilkerson Market Insights has been named one of American’s entrepreneurial growth leaders by Inc magazine for the second year in a row. To be eligible for this year’s Inc 500, companies had to be privately held and independent through their fiscal year 2001, have had at least $200,000 in sales in the base year of 1997, and their 2001 sales had to have exceeded their 2000 sales. Flake- Wilkerson was named #123 on the list for 2001, and #346, for 2002. For the 2001 list, the firm achieved sales growth of 2,010 percent from 1996- 2000. From 1997 to 2001, the firm had sales growth of 646 percent.
Alameda, Calif., research firm Margaret Yarbrough & Associates has a new company e-mail address: info@myarbrough.com.
Acquisitions
Paris-based Ipsos Group has signed agreements by which it will acquire a significant equity in Japanese market research company Lyncs Incorporated, and Chinese market research company Feng & Associates Marketing Services (FAMS).
Germany-based GfK Group has acquired 51.4 percent of the shares in Institut Français de Recherche (IFR). IFR specializes in market research on retail prices and shelves structure, in consumer electronics, IT and domestic appliances segments in Europe and Asia. The company has 81 full-time staff members and generated sales of EUR 11.4 million in 2001.
Separately, GfK, which to date has been represented in Turkey by its subsidiary, Procon GfK, has acquired Strateji Mori, a company specializing in ad hoc research. The company will trade under the name Strateji GfK. The company has 14 full-time employees and generated sales of nearly EUR 1 million in 2001.
Alliances/strategic partnerships
The Arbor Strategy Group (ASG), a marketing firm based in Ann Arbor. Mich., has announced an affiliation of its NewProductWorks (NPW) new products research center in Ann Arbor with Packaging & Technology Integrated Solutions (PTIS), a packaging and technology consulting firm based in Kalamazoo, Mich.
Exeter. N.H.-based research firm TideWatch Partners and Saskatoon, Saskatchewan-based data collection firm Itracks announced a partnership agreement which will integrate the market research abilities of TideWatch with Itracks’ research technology.
London-based Millward Brown has signed a licensing agreement with Centum Research in Zagreb. Centum Research is a recently established Croatian research agency offering both qualitative and quantitative expertise. It was founded by former Coca-Cola researcher Mladen Simunic.
Separately, Millward Brown has appointed Integral in Austria as its licensee, bringing the total number of countries in which it now has operations to 35. Vienna-based Integral was founded in 1987.
Association/organization news
Ted Vonk. director of business development at Dutch research firm NIPO, has been appointed as the new director general of ESOMAR. He will join the organization early next year and formally take over from acting Director General Mario van Hamersveld after an introductory period on April 1, 2003, Van Hamersveld will stay involved in ongoing industry project initiatives and will continue to provide advisory services to ESOMAR.
Britain’s Market Research Society (MRS) has announced new guidelines on employee research, aimed at reinforcing the MRS Code of Conduct in this sensitive area of research. Developed in conjunction with the MRS Employee Research Group (formerly the Human Resource Interest Group), the guidelines are intended to provide comprehensive and up-to-date guidance to everyone involved in the field of employee research. The new guidelines expand on the MRS’ Code of Conduct to cover a range of issues fundamental to employee research, including protecting the employer-employee relationship, maintaining staff anonymity, and respecting the workplace culture. Importantly, the guidelines provide directions on new techniques now commonly practiced in employee research, in particular online surveying and gathering e-mail responses.
The guidelines emphasize that the key principles of the MRS Code of Conduct - confidentiality, anonymity, honesty, and respect - remain central to conducting employee research. Considerable importance is placed on the need to guarantee transparency at all times, keeping both the employee and the employer informed of the research process, what it involves and what it aims to achieve. In addition to reinforcing the MRS Code of Conduct, the guidelines also reiterate the fact that all personal employee data is covered by Britain’s Data Protection Act 1998 and that anyone involved in the research process is also bound by these laws. Copies of the new Employee Research Guidelines are available on the code and guideline section of the MRS Web site at www.mrs.org.uk.
New accounts/projects
Yahoo!, Universal McCann, Optimedia and Deutsch are the newest subscribers to WebRF, a reach and frequency media planning tool for Interact audience measurement from Nielsen//NetRatings and Interactive Market Systems (IMS).
Opinion Research Corporation, Princeton, N.J., announced that its social research business has been awarded $18 million in new contracts or contract additions. These contracts, for the National Science Foundation, the Center for Substance Abuse Prevention, the National Eye Institute, the Department of Education and the University of South Carolina, are mostly for periods of at least two years.
The company has won two contracts totaling $6.8 million with the National Science Foundation for the Survey of Federal Funds for Research and Development and Federal Science and Engineering Support to Universities, Colleges, and Nonprofit Institutions; and for the Survey of Research and Development Expenditures at Universities and Colleges. The Center for Substance Abuse Prevention awarded the company a $2.5 million contract to create and operate a Program Evaluation Center for the Minority Substance Abuse and Human Immunodeficiency Virus (HIV) Prevention Initiatives. The University of South Carolina awarded a $350,000 contract to conduct the National Weight Loss/Activity Survey. Finally, the Department of Education and the National Eye Institute together added $8.3 million to two current contracts.
New companies/new divisions/relocations
New York-based NOP World has formed a new business venture, RoperNOP Consulting. Headquartered in Waltham, Mass., the firm will offer research-based consultancy services in brand strategy, customer-centric business solutions and analytic CRM. It will be led by Richard Hermon-Taylor.
C&R Research, Chicago, has opened LatinoEyes, a Miami-based firm which will serve as the company’s U.S. Hispanic and Latin American research division. LatinoEyes will be headed by Silvia Cazoll.
Wilton, Conn.-based Greenfield Online has formed a new health care research group to serve the needs of marketing research companies that work with end-clients in the managed care, pharmaceutical and medical device industries. David Reiss will spearhead the new division as managing director, healthcare.
Focus and Phones, Inc. of Columbus, Ohio has joined the Assistance in Marketing Research Services Network, a single-source network of data collection facilities around the country. The company will now be known as Assistance in Marketing/Columbus.
Joy Scott, former CEO and cofounder of Scott-Levin Associates, Inc., has formed J. Scott International, Inc., a new company to provide qualitative research to the health care sector.
New York-based Ebony Marketing Research, Inc. has opened a new office in New World Tower, 100 N. Biscayne Boulevard in Miami’s business district. The South Florida facility includes a full complement of focus group/conference rooms, client viewing rooms and lounge, and test kitchens.
Company earnings reports
SKOPOS UK has announced details of the last six months of operation, from April 2002 through September 2002. Revenues, growth and profit all improved in this period, and the UK division of SKOPOS exceeded its annualized revenue target in October, three months ahead of schedule, and went into the black in August 2002 (four months ahead of schedule). Darren Noyce joined as managing director of SKOPOS UK in April and the division was effectively re-launched from this date. Today the company has eight staff at its office in Chiswick, London.
Rochester, N.Y.-based Harris Interactive reported that revenue and earnings were ahead of expectations for the first quarter of fiscal 2003 that ended September 30. The company achieved revenue of $30.3 million, up 16 percent from $26.2 million, (on a pro-forma basis, combining reported revenue from Total Research and Harris Interactive) for the same period a year ago. Interact-based revenue for the quarter was up 37 percent for the same period a year ago.
A 1.7 percent increase in sequential quarterly revenue drove net earnings to $1.0 million or $0.02 per share, versus a net loss of more than $3.0 million in the prior year period, and a net profit of $169,000, or $0.00 per share, reported in the fourth quarter of fiscal 2002. Net operating cash generated for the quarter (EBITDA) was $2.2 million. At September 30, cash and marketable securities stood at $25.5 million, and the company remained essentially debt-free. Looking ahead to the second quarter of fiscal 2003, Brace Newman, Harris Interactive CFO, stated, "We believe that this sales momentum will carry into the second fiscal quarter, and we expect to generate $31-$32 million in revenue, and $0.03 and $0.04 per share in net earnings."
Fairfield, Conn.-based IMS Health reported diluted earnings per share from recurring operations of $0.27 for the quarter ended September 30, equal to last year’s third quarter and consistent with guidance. Revenue for the 2002 third quarter grew to $361.8 million, up 8 percent constant dollar year-over-year and 10 percent on a reported basis. Constant-dollar growth eliminates the impact of year-over-year foreign currency fluctuations. Net income from recurring operations was $76.7 million, a 6 percent decline from the year-earlier quarter. Recurring results for the 2002 third quarter exclude certain pre-tax gains and charges totaling $8.6 million, consisting primarily of net gains from investments, hedge gain (loss) phasing and net SAB 51 gains. On a U.S. GAAP basis, net income was $82.3 million, a 7 percent decline over third-quarter 2001, and EPS was $0.29, equal to last year’s third quarter.
Opinion Research Corporation, Princeton, N.J., reported record third quarter revenues and a 25 percent increase in third quarter earnings per share for the three months ended September 30, 2002. Revenues were a third quarter record $43.3 million, an increase of 3 percent compared to $41.9 million in the third quarter of 2001. Earnings per share for the quarter were $0.15, an increase of 25 percent compared to $0.12 in the third quarter of 2001. Third quarter 2001 EPS referred to above reflects the retroactive application of FASB Statement 142; actual third quarter 2001 EPS were $0.00.
For the third quarter, EBITDA (earnings before interest, taxes, depreciation and amortization) was $3.7 million, compared to $3.7 million in the third quarter of 2001. Compared to December 31, 2001, the company’s borrowings have been reduced by $5.0 million during the first nine months of 2002.
Operating income was $2.5 million in the third quarter of 2002 as compared to $2.5 million in the third quarter of 2001. Net income was $891,000 in the third quarter of 2002 as compared to $740,000 in the third quarter of 2001.
For the first nine months of 2002, revenues were $130.6 million compared to $132.9 million in the first nine months of 2001. EBITDA for the first nine months of 2002 was $11.2 million compared to $13.3 million in the first for the first nine months of 2002 was $7.8 million compared to $9.8 million for the first nine months of 2001. Operating income for the first nine months of 2001 referred to above reflects the retroactive application of FASB Statement 142; actual operating income for that period was $7.0 million.
Arbitron Inc., New York, announced results for the third quarter 2002 (ended September 30), reporting revenue of $69.6 million, an increase of 6 percent over revenue of $65.6 million during the third quarter of 2001. Earnings before interest and taxes (EBIT) for the quarter were $29.0 million, compared with EBIT of $26.2 million during the comparable period last year. Net income for the quarter was $15.4 million, compared with $12.9 million for the third quarter of 2001, an increase of 20.0 percent.
Cost and expenses for the quarter increased by 4.8 percent, from $38.0 million in 2001 to $39.9 million in 2002. Interest expense declined $1.1 million from 2001 as a result of continued significant reductions in debt.
Net income per share for the quarter increased by 18.6 percent to $0.51 (diluted), compared with $0.43 during the comparable period last year. Effective January 1, 2002, the Company discontinued the amortization of goodwill in accordance with generally accepted accounting principles. Had the company been required to adopt this accounting effective as of January 1, 2001, net income and net income per share (diluted) for the three months ended September 30, 2001 would have been $13.3 million and $0.45, respectively.
For the nine months ended September 30, revenue was $192.0 million, an increase of 9.0 percent over the $176.1 million reported for the same period last year. EBIT was $71.6 million, compared to $66.3 million in 2001. Net income for the nine months was $36.3 million or $1.21 per share (diluted), compared with $33.9 million or $1.15 per share (diluted) last year. Had the discontinuation of amortization of goodwill been in effect in 2001, net income and net income per share (diluted) for the nine months ended September 30, 2001 would have been $35.1 million and $1.19, respectively.
Chicago-based Information Resources, Inc. reported results for the quarter ended September 30, announcing net income of $0.9 million or $0.03 per share. This compares to a net loss of $0.5 million or $0.02 per share, including restructuring and other charges, for the third quarter of 2001. Excluding these charges, IRI reported net income of $2.1 million or $0.07 per share for the third quarter of 2001.
Consolidated revenue of $140.6 million was 2 percent better than prior year. U.S. revenue was $104.2 million, or 1 percent lower than last year, while international revenue increased 10 percent to $36.4 million. The international increase was due to the favorable impact of currency over the prior year.
For the nine months ended September 30, the company reported net income, before restructuring and other charges and the cumulative effect of an accounting change for goodwill, of $3.3 million or $0.11 per share. This compares to net income, before restructuring and other charges, of $3.6 million or $0.12 per share for the nine months ended September 30, 2001. In accordance with the new accounting rules for goodwill, the company performed an impairment test in the second quarter to determine the fair value of the goodwill recorded on its books. Based on this test, the company wrote off all of its goodwill in order to comply with the new accounting rules. The result was a $7 million or $0.24 per share charge recorded in accordance with Generally Accepted Accounting Principles (GAAP) as the cumulative effect of an accounting change in the financial statements. GAAP required this charge to be taken in the first quarter of 2002. Including the impact of the goodwill charge, as well as restructuring and other costs, the company reported a net loss of $8.2 million or ($0.28) per share for the nine months versus a net loss of $4.2 million or ($0.14) per share for the prior year.
Consolidated revenue of $413.5 million for the nine months ended September 30 was $1.9 million lower than the prior year. U.S. revenue of $309.0 million was 2 percent lower than last year while international revenue of $104.5 million was up 4 percent over last year. Excluding the impact of currency, international revenue increased 1 percent over the prior year.
News spotlight
U.S. research sector grew 4 percent in 2001
According to a global market research study from ESOMAR (the European Society for Opinion and Marketing Research), revenues of the U.S. research industry reached about $6.159 billion and accounted for 39 percent of the total world market in 2001. The EU accounted for 37 percent of the world market.
The sector grew by 4 percent over the previous year, a slower growth rate than the previous three years. As determined by the market research newsletter, Inside Research, the highest U.S. growth in the past decade was in 1997 at 12.6 percent. It declined each year thereafter, with 1998 at 11.6 percent, 1999 at 10.1 percent and 9 percent in 2000. The recession has meant that most corporate market research departments are not increasing their spending and growth is projected to be flat.
Over the past several years the research industry has experienced a major consolidation, driven by both globalization and the stability of research as a business. In America as well as abroad, many research companies have become research conglomerates via acquisitions, driven by the need to offer similar services across borders.
Of the 50 largest U.S. market research firms in 2001, the majority derived some of their revenue from work conducted outside the U.S., which represents 39 percent of their total revenue. U.S.-based businesses authorize a major share of worldwide spending, making the U.S. even more important as the center for buying and selling of research worldwide than its world spending share would indicate.
The Internet has transformed research in the U.S. and will continue to do so. In 2002 nearly 20 percent of the U.S. survey research market will be conducted online, reaching 35 percent within two years. So far the main transforming effect on the Internet on research is generally lower cost and faster turnaround.
Getting close to and better understanding what motivates the consumer may be a worldwide issue but it has taken more importance in America as markets become saturated and new ones are increasingly hard to find. In 2001, 42 percent of research was syndicated research, representing mostly large syndicated service firms where clients are under contract. Qualitative research grew by 5 percent over the previous year, and in 2001 it was estimated to account for 18 percent of total research spending.
Who is buying research? According to Inside Research, packaged goods account for 28 percent of research spending, followed by media and advertising, which account for 21 percent. Pharmaceutical and health care companies are also large clients, accounting for 21 percent of research spending. Other key sectors which commission and use research in the U.S. are automotive companies and financial services.