Our Take: Omnicom Group Acquires Communispace

After months of speculation, Omnicom Group officially announced today that it acquired Communispace. This announcement came on the heels of Omnicom’s Friday announcement of the acquisition of The Modellers, a research firm specializing in advanced analytics and predictive modeling. 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 it has built a strong business by being an innovator around how to use communities, paired with stellar client services. It is 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 more than $40 million in revenue it was on track to bring in for 2010. This reflects the value of the team and the client relationships it brings 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 organizational structure to expand globally. This also offers the flexibility of spreading its training and "secret sauce" across other parts of the Omnicom umbrella, allowing it 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 it 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 quaint — 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 "conglomeratization" 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 organization is a difficult path to navigate. Expect these services to remain separate for the short term, likely with 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.

Comments

Right on target

Good analysis, Tamara. I am wondering if Diane Hessan, who has grown Communispace into the "800 pound gorilla" you accurately say it is, will end up in charge of more of Omnicom's DAS business.

If you want to stay my friend, though, please stop using words like "conglomerization." Sounds like a nasty chemical process.

Great synopsis

Thanks Tamara! There are indeed growing pressures to integrate different data sources - across research methods, social media and more - and perhaps more importantly for ways to make sense of it all. I'm looking forward to seeing how this turns out. FWIW, the word "conglomerization" isn't all bad ;)

Oh nooes

Kelly, surely you'll join me in fighting excessive wordcoinification.

LOL

"wordcoinification" may be the final straw...
;)

good points!

Well, I was going to say that: A larger role within DAS would be a good path to more closely integrate some of the businesses as well. With a company like Communispace becoming a part of the fold, there is great potential to more quickly move from insights to execution given proper alignment.

But, given where this conversation has headed, I'll instead say this: Supercalifragilisticexpialidocious-ication. There, I think I got all the wordcoinification out of my system!

Great read on things!

Great analysis Tamara, and agreed 100% on the implications. I especially agree that we're going to see similar deals coming from the major consultancies and/or possibly from one of the big social networks or tech firms.

One thing that occurs to me is that traditional MR agency clients continue to migrate to new partners that can help them use innovative approaches to integrate social media strategies, insights, business intelligence, etc... It appears that agencies are moving aggressively to fulfill this need. As that trend continues, we'll see more M&A activity from the agency side.

agree

Lenny, I agree. There is a lot of energy right now around consolidating different streams of data. That's where we think the future of MR is headed. As you point out, though, companies beyond traditional MR firms are going to be heavily involved in this shift as well.

Online survey market/spending

Hi Tamara,

In one of your previous articles you mentioned: "While companies today spend more on online surveys than on any other methodology, two issues have become especially clear: 1) panelist engagement is falling, and 2) panels are thin on hard-to-reach groups such as youth, multicultural consumers, and business executives."

Is there any chance you can please direct me to the online survey spending data? I am trying to figure out the size of the online survey market.

Thanks you!