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.