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A Quick Take On The Honomichl Top 50 Market Research Firms for 2010

MRWeb posted an analysis of the Honomichl Report. I can’t find the full report or whole list of the 50 anywhere yet so this looks like a sneak peek. Here is the article courtesy of MRWeb and I’ll give my take on the back-end.

After two years of revenue declines, income from the purchase of marketing, advertising and public opinion research services in the US was up 4.7% from 2009 to 2010, according to industry authority Jack Honomichl’s 38th annual report.

Research industry revenues dropped by 2.2% in 2008 and 3.3% in 2009: but in 2010, Honomichl says the sector enjoyed a ‘significant turnaround’ with an 8.7% increase in full-time employees.

While this did not offset the estimated 11.1% staff cuts made during 2008 and 2009, the report refers to anecdotal evidence which suggests that recruitment has ‘continued apace’ into 2011.

As usual, findings are based on input from the 50 largest US-based research organizations, which submitted market research-only revenues from operations in the US for the year 2009-2010.

As in previous years, CASRO (the Council of American Survey Research Organizations) provided supplementary data for those of its member firms not included in the Top 50 list, and total revenue for this group was $755m – up 3.3% from 2009.

Adding these figures to Top 50 revenues of $8.5 billion (an increase of 4.9%), the 2010 analysis is based on 199 firms, with revenues of $9.2 billion in the US.

This year’s list includes seven new players: ICF International appears because it acquired Macro International (an ORC International unit). Vision Critical comes in at number 27 this year, while Market Force Information now takes 21st place as a result of a three-firm merger.

Meanwhile OTX – which was ranked number 20 last year – does not appear on this year’s list following its acquisition by Ipsos (currently in 7th place). A further six firms – CMI, Savitz Research, RDA Group, StrategyOne, Bellomy Research and The Link Group – have dropped off this year’s list because of revenue declines.

Public Opinion Strategies LLC jumped 14 positions on the list to 35th place, following a 135.9% rise in US research revenues to $27.6m, while multi-screen measurement specialist Rentrak (which remained in the 43rd slot) reported a 45.8% hike in US revenue to $ 21.3m during the period. Morpace rose from 36th to 31st place, reporting a 46.4% increase in US revenue to $32.5m.

Two major companies do not release details on subsidiaries and their revenues have been estimated: Kantar (which retained second place) and J.D. Power and Associates (which fell to the 12th slot from the 10th last year because of a 10.4% drop in US research revenue).

*IMS Health was taken private in 2010, so its revenue total is estimated

The Honomichl Top 50 is compiled by Jack Honomichl and his associate Larry Gold, and published by the American Marketing Association magazine, Marketing News.

The story is obviously that revenues are up and growth is occurring; that is good news for us all, although after 2 down years in a row, I’m not sure how much that is to truly crow about. I have not done the analysis comparing to 2007-2008 numbers yet but I suspect we’re only marginally ahead of pre-recession levels or maybe still slightly down overall. Also there is still an employment gap to fill where the industry has shed more jobs than it has produced so far in the recovery. That is certainly in-line with other sectors of the U.S. economy.

It’s hard to tell much from just the Top 10; I expect minor jockeying for position primarily driven by M&A activity by the majors. Of course the mainstay revenue drivers for virtually all of these  firms is their tracking and syndicated data products; they are money-making machines and will ensure their ranking for the time being.  What is interesting here is the position of Symphony IRI, who just completed a large funding round; watch them grow organically next year driven by new product introductions.

MRWeb is reporting Vision Critical and 6 other firms joining the ranks of the Top 50, but only lists 3; it will be interesting to see who is on the list now. Anyone want to bet me on who they will be? I can tell you this much; almost without a doubt they will appear on the GRIT Top 50 Innovation list. Once the full Honomichl 50 list is published I’ll do an analysis comparing the two.

My primary concern regarding the Honomichl list is that as our competitive landscape changes I don’t think it’s keeping up with new entrants who don’t consider themselves MR firms per se but certainly would fit within the category with a little bit of tweaking of the definition. Will SurveyMonkey be on the list? What about Alterian or Radian 6? Clarabridge, Shopkick or even the looming (potential competitor) giants of Google or Facebook? I doubt it, but yet these firms clearly are making inroads into the MR space in big ways.  In order for us to have a truly accurate read on the industry we’re going to have to start considering including them in our sector analysis or else our view will be hopelessly distorted.

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