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OPINION8 February 2011

Community buy-in

News Opinion

Yesterday’s big news was Omnicom’s purchase of online community firm Communispace. Here, Forrester analyst Tamara Barber looks at what lessons the acquisition has for the MR industry and what it means for the future of Communispace.

After months of speculation, Omnicom Group officially announced this week that it acquired Communispace. This announcement came on the heels of Omnicom’s Friday announcement of the acquisition of The Modellers, a research firm specialising in advanced analytics and predictive modelling. Acquired through the firm’s Diversified Agency Services (DAS) group, these two companies will sit among the likes of other niche market research firms such as M/A/R/C Research and Hall & Partners’ brand and communication research. This announcement is significant because, in the context of the MR industry it:

  • Confirms the importance and value of client relationships. Communispace is the 800 pound gorilla of market research online communities (MROCs), and they have built a strong business by being innovators around how to use communities, paired with stellar client services. They are especially adept at catering to large brands with significant research budgets and deep partnerships with vendors. While financial terms were not disclosed, my bet is that Communispace was able to garner a price tag well above the over $40 million in revenue they were on track to bring in for 2010. This reflects the value of the team and the client relationships they bring on board.
  • Opens up global expansion possibilities. Clients are putting more pressure on community vendors to come to the table with truly global capabilities. With Omnicom resources and personnel, Communispace will have the budget and organisational structure to expand globally. This also offers the flexibility of spreading their training and ‘secret sauce’ across other parts of the Omnicom umbrella, allowing them to scale up or scale down services based on demand. Although the Communispace business continued to do well during the recession, this access to resources will make them even more agile in economic ups and downs.
  • Speaks to client pressures to integrate different data sources. By acquiring two companies that are fully at different ends of the research spectrum – one being highly qualitative and the other very classically quant – the announcements reflect the need that clients are feeling to be able to mesh both kinds of data together. Going forward, the reliance on traditional methods will be significantly enhanced by newer methods such as those used in communities.
  • Highlights the continued trend toward ‘conglomeratisation’ of research vendors. While WPP has greater inroads into traditional MR with companies like TNS, Kantar, and Millward Brown under its umbrella, this recent news demonstrates the strength of new market research methods and the way in which large marketing and research companies are going to access innovation in this space. With the economy turning around, expect to hear of more deals from big players – including management consultancies – snapping up specialist research agencies.

The big question that remains is: how well will Communispace – and The Modellers for that matter – integrate into other Omnicom businesses? Typically this kind of integration within such a large organisation is a difficult path to navigate. Expect these services to remain separate for the short term, with likely some ad-hoc integration as the need arises. However in the long term, formal integration of the community model across other business lines at Omnicom – rather than continued organic growth through new clients and new talent acquisition – will be the most profitable path to growth.

Tamara Barber is an analyst at Forrester Research where she serves, and contributes to the Forrester blog for Market Insights professionals: http://blogs.forrester.com/market_insights

2 Comments

9 years ago

Tamara's analysis makes a lot of sense from a macro point of view. However, traditionally Omnicom has left its research purchases as independent entities, with little (observable) integration between them or other entities within DAS. So, the question is: does this represent a change of direction by DAS/Omnicom, in which case Tamara's reasoning would be sound; or has Omnicom just bought up another two juicy money spinners? We shall see!

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9 years ago

I agree with Anonymous above, Omnicom as a holding company typically leaves these disparate. That said, buying these two particular companies does leave the door open for some sort of integration. As for the money spinners, Communispace is known to not be overly profitable due to their high labour costs. Regardless, interesting indeed.

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