Tom H. C. Anderson - Next Gen Market Research

Are there any new/interesting marketing research suppliers out there?How many highly profitable Next Generation Marketing Research companies are there?

There are obviously a lot more market research companies than those listed in the Honomichl 50 or even on the AMA or ESOMAR websites. The Honomichl report only shows the 50 larges firms who “provide financial information on a confidential basis to the Council of American Survey Research Organizations (CASRO)”. CASRO is yet another Market Research Organization that I haven’t considered a good ROI (membership cost range $1,075-$22,575). I should have mentioned them in yesterdays post about marketing associations though.

I always wonder about the large firms that I know of who are not on the list because they do not submit to CASRO. Seems that this is a flaw that should be addressed somehow?

The Honomichl list is interesting to me for only two reasons. It’s interesting to see which new firms pop up at the bottom of the list. These are likely to be more interesting companies than the ones at the top. They are likely to have had large fast growth, so it’s very interesting to check out their websites and see what products and services they offer.

The second reason I like the list is that you can get a sense of how profitable various Market Research firms are overall and relatively to each other. For instance, if we look at the 2007 list we have at #1 ACNielsen with $1.97 billion in US Research Revenue, if you divide this number by the number of US Full-time employees you get $173K of revenue earned per employee. Looking down the list to 6th position you find TNS U.S. with $355.1 million in US revenue and 2,626 full time employees which would mean they are actually less profitable than ACNielsen per employee (only $135K per employee).

This is unusual though, usually as you go down the list firms are making more per employee than at the top of the list. Makes you wonder about the value of economies of scale. After the Internet it’s a brand new model For instance last on the list #50 is RTi-DFD Inc. also here in Stamford CT (the market research capital of the world). RTi, while only having $12.7 million in revenues also only counts 43 full time employees, so their output per employee is $295K/employee, much better than either ACNielsen or TNS. What I’ve typically found by looking at the list over the past few years is that smaller well run companies are able to generate at least $250K per employee.

Anyway, I digress. Doing a search in Google on “marketing research consultancy” turns up over 22,700,000 hits (when I did this in 2005 there were only 6,000,000 hits). So how many market research companies are there really? Are smaller companies much more profitable than larger companies as suspect based on the above and my own experience?

It would be interesting to hear if there are any new smaller companies doing any interesting work?

- Tom H. C. Anderson