UBM Confirms Interest in NFO

Although it has yet to decide whether to make a formal bid, United Business Media has confirmed its interest in the US market research agency NFO, part of the Interpublic empire.

According to Malcolm Wall, UBM's chief operating officer, the company is 'running a rule over the company. We have not yet decided whether to bid or not. In terms of whether we are the only bidder you will have to ask them, we don't know. We know this sector pretty well. We do believe this is a sector we can add value to by making bolt on acquisitions. And this is an opportunity that has come along that we are evaluating'. It is believed that NFO would fit well with UBM's interests, already owning the NOP research group.

UBM has recently announced a 24% decrease in underlying profits for 2002, hit hard by the advertising recession and is predicting another difficult year ahead.

Revenues at NOP World increased by 9.3% to £213.0 million for 2002. Adjusting for the effects of acquisitions and foreign exchange, underlying revenue decreased by 10.6%. Profits decreased by 25.4% to £17.9 million or by 21% on an underlying basis. The UK operations, the U.S. continuous media and the automotive businesses performed strongly and contributed all of the profits in 2002. The healthcare and custom businesses in the U.S. experienced sharp downturns in revenue which has necessitated extensive cost reduction programmes. Profit margins reduced from 12.3% to 8.4%.

NOP World Health was particularly impacted by the major market research trend to rapid growth in online data collection. At Market Measures / Cozint (MMC) this grew from $7 million in 2001 to over $30 million in 2002. Much of this has been cannibalistic, as traditional forms of data collection in the core custom business have switched over to the Internet which has had the effect of reducing the margin on custom research. Nonetheless these margins should improve in the longer term as more volume is processed through increasingly automated systems. At the same time as this transformation was taking place, the pharmaceutical industry experienced slower growth, fewer product approvals from the FDA and an increasing number of patent expiries. This reduced market research expenditures in areas which supported new product development and led to clients taking lower cost options. The effect in 2002 of these changes has been a decline in underlying revenues in the old MMI business, a reduction in margin on custom research and considerable investment in next-generation product.

MMC has responded to these challenges and opportunities by moving online faster, increasing the number of syndicated studies and developing a new generation of sales force effectiveness tracking methodologies. A major new product in this arena is Scripdriver, a marketing science product which not only quantifies sales and prescription data but analyses that data and adds insight. Utilizing methodologies already successful within AFI, Scripdriver links promotions, brand health and patient dynamics to provide a complete picture of the prescribing decision process. All results are reported online. Scripdriver completed concept testing with clients at the end of 2002 and is set for launch in early 2003.

Although NOP's UK revenues were in line with last years, profit increased due to strong revenue performances from the Business and Healthcare divisions and margin improvements in both Automotive and Mystery Shopping.

Mediamark Research (MRI) maintained its impressive growth record with improved revenue and profits and success in renewing all of its multi-year contracts.

RoperASW's revenues were reduced by client budget pressures and competitive pricing. Profitability was reduced by the investment in new product introductions including the U.S. online Panel and LifeMatrix.

Both Allison-Fisher (AFI) & NOP Auto U.S., achieved increased revenues and profits. AFI's strong syndicated sales and new additional custom business boosted topline growth. NOP Auto's U.S. revenue was boosted by the opening of a new office in California.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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