Buy the Numbers: Consolidation continues as spending rises 9.3 percent.

Spending for marketing, advertising, and public opinion research services within the U.S. increased 9.3 percent in 1999, according to Jack Honomichl, publisher of Inside Research, a Barrington, IL-based newsletter.

That puts total spending on marketing-related research in 1999 at $5.35 billion. Of that, promo estimates 25 percent, or $1.34 billion, funded promotion-related research.

Full-service marketing giants in the U.S. and Europe continued their voracious acquisition strategies last year. “We’re seeing a melding of service firms,” and for one major reason, Honomichl observes. “Agency and media-buying conglomerates want research components.”

Among the notable deals in ’99 was The Interpublic Group of Companies’ $280-million purchase of NFO Worldwide, Greenwich, CT. “Expanding our market-research re sources has been a strategic priority for Interpublic, and in NFO we believe we have found an excellent partner for our agencies and their clients,” said Philip Geier, Jr., chairman of New York City-based Interpublic, in a statement after the deal closed in April.

The sentiments and strategies were similar when London-based Aegis Group snapped up Market Facts, Arlington Heights, IL, one year earlier for $297 million, and when M/A/R/C, Inc., Irving, TX, was bought by New York City-based Omnicom Group in October for $116 million. Honomichl expects the feeding frenzy to continue in 2000 and beyond. “They’re all looking for revenues coming from the non-agency side of things,” he says.

Industry leader ACNielsen, Stamford, CT, saw worldwide revenues rise seven percent in 1999 to $1.53 billion, with U.S. revenues jumping 13.8 percent to $659 million. Nielsen retained 25 of its 26 clients whose accounts were up for review last year, and picked up several new ones including Land O’ Lakes, Heinz U.S.A., Lever Brothers, Mott’s, and Reynolds Metals.

The company launched several new services in 1999, including Retail Warehouse Solutions, an information-management tool specifically designed for retailers such as recently signed drug chains CVS and Rite Aid. Nielsen also launched Category Planner, which uses the Internet to enable marketers to access a large database for cross-category analyses, and ACNielsen eRatings.com, a joint venture with NetRatings, Inc. The latter service, which measures Internet audiences and advertising, will be offered in the U.S., Canada, and other countries. Nielsen bought 80 percent of NetRatings for $12.5 million.

Nielsen also took full ownership of Market Decisions, a provider of controlled market and in-store testing. And partnering with St. Petersburg, FL-based Catalina Marketing, Nielsen introduced Shopper*Direct to interface with retailers’ frequent-shopper databases.

Chicago-based Information Resources, Inc., Nielsen’s closest competitor, reported a 6.8-percent increase in worldwide revenues to $546.3 million and a 10-percent rise in U.S. revenues to $436.3 million. But the company’s net earnings fell 18.4 percent to $25.7 million.

Those results came under the watch of ceo Joe Durrett, who took the reins last May. The dip in earnings, along with the loss of several U.S. clients, may be what prompted Durrett late last year to impose Project Delta, a company-wide effort to cut costs and improve productivity. IRI said it will reduce its U.S. staff by 10 percent over the course of 2000, and will compensate for the reduction by automating certain data collection, processing, and delivery functions and eliminating low-value work.

Earlier this year, IRI launched CPGNetwork.com, the next generation of the company’s existing InSite Reporting service. Internet-based CPGNetwork.com is designed to provide clients data-driven analyses, alerts, and performance indicators via their Web browsers.

IRI also introduced e-SCAN, an Internet tracking service that identifies where brand and category buyers go on the Web, as well as what Web consumers actually buy when they shop at retail. The goal of the program is to provide clients with quantifiable, consumer-driven insights into the e-commerce world. In the process, e-SCAN will track the effectiveness of Web-based marketing efforts in building brand loyalty.

“The research industry is going through a transformation, and traditional companies are trying to get into it,” says Honomichl, as he ponders his annual list of the top 50 research firms and the rapidly increasing ways the Internet is being used to gather and disseminate information.

“Some of the very large spenders are putting more and more money into dot.com surveys,” Honomichl observes. “It’s been coming like a tidal wave, and this year the wave hits the shore. Some research companies are right in the middle of it, and others are trying to figure it out. Like any other technological innovation, some companies say `I won’t play the game.’ But by the time they wake up, they could be wiped out.”

Stand by your browsers for updates.

– Promotion research spending rose 9.3 percent to $1.34 billion.

– Consolidation continues as agency holding companies buy research firms.

– Dot-com surveys have exploded.

– New packaged goods tracking services are utilizing the Internet.