The 90s merger mania

For those who have only become market researchers in this century, it is possible to assume that the custom side of the industry, at the UK, European and world level, has always been dominated by a dozen or so large corporates with subsidiaries that were market leaders in most of the top 50 or so countries.

However, at the end of the 1980s, apart from a few syndicated MR specialists (Nielsen, IMS, and to a lesser extent AGB), market research was characterised in all of the major countries by modestly sized independent agencies.  RBL was the exception, but this had been built by, and for, Unilever.

The overwhelming bulk of all ad hoc research was done at the national level by national companies, and when multi-country/international work was commissioned it was mostly given to a ‘lead’ agency that would subcontract to others on a country-by-country basis.  Networks of such agencies (e.g. The Gallup International Association) did exist, but they were almost entirely composed of small agencies, each with their own methods and standards. 

During the 70s and 80s, the UK played a leading role in winning and coordinating these internal studies, and it was estimated at the time that between 50% and 65% of all such work worldwide passed through the UK.

However, by the end of the 80s/early 90s a number of trends were in place:

•          Big multi-national clients (e.g. FMCG, pharma companies, automotive) were demanding more, much more, inter-country consistency in terms of: methods, quality, delivery.
•          Multi-national client headquarters also wanted to have a greater say (i.e. control) in what market research data they obtained from their country subsidiaries.
•          So, the volume of such projects was becoming an ever more important element of agency income.
•          Some agencies (e.g. Millward Brown, TNS, Kantar) had, and others were planning to, become publicly listed companies – so they had motivation/pressure to grow at a much faster pace (making acquisitions).

This combination of factors drove the bigger custom research agencies into a scramble to build/buy/merge with other big agencies in other big market research markets.

The prize was to have the biggest, best network of agencies in all major markets. This would allow: standard methods, consistent quality and central reporting across the KPI’s that multi-national clients had defined for themselves.

Starting as a modest flow of acquisitions in the first half of the 90s, it became a buying frenzy in the second half, with the top agencies making 50 or more acquisitions each year. As an example, in 1998, the top seven custom agencies (TNS, NFO, Kantar, GfK, Infratest Burke, Market Facts and Ipsos) spent almost $1billion on nearly 50 acquisitions, and TNS alone spent $376m on 10 acquisitions (covering 25 countries) in the 12 month period.

By 2000 all these companies were among the top 10 worldwide and dominated custom research in most of the major countries around the globe.

As noted, one of the reasons for building international networks was to provide consistent, high quality surveys across the globe.  A consequence of this was that the multi-national, custom shops during the latter half of the 90s saw the benefit of ‘branding’ their methods/solutions to the most frequently asked market research questions – including new product testing, CSM and ad effectiveness.

Again, before the 90s there were only a few international branded ad hoc products.  For example:

•          Bases (later bought by AC Nielsen)
•          Millward Brown’s Advanced Ad Tracking Services
•          Infratest Burke’s TRI*M
•          RBL’s in house solutions

Again, RBL was early into this area, but as the big agencies started to buy and build their own brands, they soon became the leading ‘branded/ business solutions’ providers.  Many of these brands still exist today.

This ability to promise consistent quality and offer tried/tested solutions internationally meant that the big agencies acquired an ever increasing share of the regular work from the top 50 research buyers. The likes of P&G, Unilever and Ford concentrated their MR spend with these big agencies – the losers being the local, one market agencies. This in turn forced them to look to be bought by, or linked to, one of the large agency networks, which increased what the US trade magazine Inside Research dubbed ‘merger mania'. 

As we entered the new millennium, these agencies became so big that they started to absorb each other: TNS bought NFO; GfK bought NOP; and Ipsos bought Synovate. And later, WPP bought TNS (for circa $1.5 billion).

Also, the internet started to become the data collection method of choice, which disrupted the value of worldwide field forces, a major strength of these mammoth agencies; but this is the part of the story for the next decade, and for someone else to tell. 

Tony Cowling is president of TNS