The US Market, and the Major Firms Worldwide

In the US, the number of supplier companies is clearly much higher than in any other state. Even given the UK's status as the no.1 country for MR spend per capita, the US economy is 5 or 6 times larger and it's no surprise that there are (we think) at least 4,000 such companies Stateside. No directory lists more than a couple of thousand of them - one on the WorldOpinion site run by SSI used to have more than 4k which is a reasonable basis for our supposition.

US publication AMA Marketing News publishes two 'Gold' reports each year, authored by Diane Bowers, consultant to the Insights Association; and named after the late Larry Gold. The US Top 50 report ranks companies based on that part of their revenue which is derived from the US, and is referenced extensively below. The Global Top 25 report uses global revenue figures, and shows that as of 2015 the US was home to just over half the world's largest research firms:

No. of companies from each country in the Global Top 25 in 2015

Source: the 2016 AMA Gold Global Top 25 report

Some large US companies are still very much focused on the domestic market (for example Westat and Abt SRBI), but over the last ten years most American firms have extended their overseas operations. According to the Gold report, the Top 50 US-based companies in 2015 turned over $10.5bn in the States, equivalent to 48% of their total worldwide revenue of $21.8 billion.

This year's edition of the Global Top 25 report is not published until August / September, while the companion US Top 50 report is out now, so we'll give a bigger selection of stats from the latter below. In 2015, the Global Top 25 shrunk turnover in dollars, but grew it in local currency. Its employment of full-time research professionals grew by 2,700 (around 2%) to 135,352.

According to the 2017 version of the AMA Gold US Top 50 report, the Top 50 companies in terms of US revenue in 2015 turned over $10.55bn in the country, equivalent to 46.4% of their total worldwide revenue of $22.75bn. These Top 50 companies provide profiles and annual summaries of trends and events to the AMA each year.

The Gold US Report also includes results from 152 other significant US-based firms who in 2016 were members of trade body the Insights Association, formed by the recent merger of MRA and CASRO. The 152 had total US revenue of $1,032m in 2016 - about 72.5% of their worldwide revenue of $1,424m. Clearly and logically, most smaller and medium-sized firms do a smaller proportion of their business abroad than do the largest firms.

The report's 202 companies had just over 40,000 full-time US employees in 2016, the highest figure on record and up 8.4% on the previous year. Between them, they grew total revenue in real terms at 4.4% in 2016 and at 4.7% the previous year - the highest two figures in more than ten years. After hitting the rocks in 2009, the industry made a slow recovery in the succeeding years and this has speeded up only since 2014. The 2016 growth figure is around 4% ahead of the US national GDP growth rate.

The impressive 2016 growth was helped by nineteen Top 50 companies experiencing double-digit increases in revenue in 2016, while a further sixteen companies grew in single figures and revenue at thirteen companies was flat or declined compared with 2015. There were three companies that achieved 50% or more annual growth in 2016.

Mergers, along with scope changes, account for many of the big movers in the top 50: in the 2016 report, Wood MacKenzie (see above under UK) were new in the list at number 17, while restructured and merged Cello Health joined it at number 38. In 2017, location-level CEM specialist Market Force is new at no.25, while global online panel company MACROMILL (comprising Tokyo-based Macromill and Netherlands-based MetrixLab), comes in at no.29. Meanwhile some major firms were not listed this year: comScore bought Rentrak, and promptly got mired in accounting problems which have prevented figures being published for the combined entity - exit two of last year's top 50; and automotive-focused J.D.Power was acquired and its new owner has declined to publish a breakdown showing its revenue.

As the employment and turnover figures above would indicate, revenue per employee dipped back this year. Among the top 50 firms there was a 6.8% increase in employment, and revenue per employee fell from a high of $304k in 2015 to $287k. However this seems to represent a year of retrenchment and team-building rather than a problem, given that the total is still well above the mean of $241k in 2011 and fully one third higher than the $215k recorded in the pre-crisis year of 2006.

The top ten firms are very dominant, with global revenue of $19.85bn, or 87.2% of the total for the Top 50 (NB these are the top ten by global revenue, similar to but not identical to the top ten by US revenue). In order, the global top ten are Nielsen, Kantar, QuntilesIMS, Ipsos, GfK, IRI, Westat, Wood Mackenzie, dunnhumby and The NPD Group. NB comScore and J.D. Power also made the 2015 top ten but are not listed this year for the reasons given above.

The top five global companies in 2015 (Nielsen, Kantar, IMS Health, Ipsos and GfK) accounted for 76% of the global Top 25's revenue, but employed 82% of the people. Of these, Nielsen, Kantar and IMS Health had offices in more than 100 countries in 2015; Ipsos and GfK in 87 and 74 countries respectively.

ESOMAR provides estimates of the share of total world MR revenue taken by its own top 6, again showing the importance of the big firms.

Market share of top 6 firms (%)

Source: ESOMAR Global MR 2016

No. 1 is Nielsen, which alone accounts for more than 34% of the top 50's total US 2016 annual revenue and around 22% of the total non-US. Nielsen's revenue in 2016 was $6.31bn, Kantar's $3.85bn, QuintilesIMS $3.30bn, Ipsos $1.96, GfK $1.68 and IRI $1.03, with the rest around $0.5bn or less.

The top of the industry shows both continuity and a fair degree of change - it's possible for new firms to break into the ranking but also for companies to stay there a long, long time. Of the top 25, Nielsen was founded in 1923; GfK in 1934; ORC International in 1938; 8 more in the 1950s and '60s; 7 in the '70s and '80s; 3 in the '90s and 4 in the 21st Century - though they may be new configurations of older companies, eg Cello Health.

MR also has a very long tail, with a huge number of one man and one woman bands, and lots of agencies with between two and twenty staff in all the major economies - the UK has a particularly rich tradition of this, and a very active organisation promoting 400 such providers in the ICG - www.icg.co.uk .

This has led some commentators to predict - on a regular basis - the demise of the medium-sized agency. Large companies, they say, are continually buying up those below them, creating huge conglomerates; while working for oneself is an increasingly fashionable and convenient option and the stats suggest it's on the rise. Ergo, the middle is bound to die out. Frankly, although both the first two things are true, we think anyone who reaches this conclusion should be faintly ashamed to be in MR. What do you think happens to successful small agencies, and do you think the fact large ones tend to pay lots of money for medium-sized is a *disincentive* to building the latter? There are perhaps slightly fewer medium-sized firms than there were twenty years ago, but there are still plenty, and we suspect there will continue to be.

Other Countries

More discussion of MR in China, India, EU, Canada, ANZ, SE Asia, LatAm, Middle East and Africa will follow.

Thanks to:
Global Market Research 2016, the 28th annual industry study undertaken by ESOMAR, in cooperation with BDO Accountants & Advisors.

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All articles in the 'About the Industry' section written by Nick Thomas of MrWeb during July - October 2017, and © MrWeb Ltd 2017. Thanks to GRIT, ESOMAR, the AMA and the MRS for stats and tables used.

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