New York - Recently, Integrity Research has commented on the trend towards greater consolidation in the research industry. Here is another example of this trend. Earlier this month, infoUSA announced that it will buy Guideline Inc. in a transaction valued at $41.6 million, or $1.35 per share.
Founded in 1969, Guideline (formerly known as FIND/SVP) is a leading provider of customized market research. Guideline primarily serves institutions and corporations by conducting ad hoc market studies and providing industry and product-level intelligence. Guideline also owns Intota, an expert network providing connections to experts in a range of scientific, technological, and business topics.
In contrast, infoUSA is, essentially, a provider of sales leads and mailing lists, selling contact information to direct marketers, corporations, and individual salesmen. The company was founded in 1972 by Vinod Gupta, who began by compiling a list of all US home dealers. In order to get the data, Gupta asked Northwestern Bell for all 4,800 US phone books. Gupta and his wife then spent 90 days copying 13,000 dealer names by hand. Gupta paid $14,000 to transfer the data to computer punch cards – his first electronic database. He gave the list to his then employer (a mobile home maker), but wisely retained ownership rights, selling the list 120 times in the first year for $400 each.
Now, infoUSA's 12 major databases include 130 million e-mail addresses and details on consumer purchases and hobbies, which can be analyzed to find a consumer's likely income, mortgage, political and religious affiliations, lifestyle, and shopping habits. infoUSA netted $33 million on $435 million in revenue last year; most of this revenue comes from selling the data it gathers to large corporations, including AT&T, American Express, Bank of America, Dell, Microsoft, Yahoo, Google, and CNN. infoUSA's retail product, Salesgenie.com, burst onto the national scene earlier this year, in a $3 million ad (click to watch video) that was widely panned as the most amateurish thing broadcast during this year's Super Bowl (next to the Bears' offense).
Guideline is hardly the first company targeted by infoUSA's ongoing acquisition strategy. infoUSA has strengthened its data holdings by acquiring 28 outfits in the last ten years, spending $741 million and racking up $260 million in debt. The acquisitions include such niche outfits as American Church Lists, a database of 380,000 religious institutions and their congregations.
All of this suggests an interesting vertical strategy – Guideline's analytical expertise combined with infoUSA's immense data hoard and contact lists could create a consolidated market research powerhouse. As data itself become increasingly commoditized, infoUSA benefits from the merger by increasing its presence in potentially more value-added fields. Nevertheless, it remains to be seen whether such consolidation actually benefits the research firm being acquired. It will be interesting to watch whether Guideline will retain an independent corporate identity and client base in spite of being owned by infoUSA.
Posted at 10:28 am by Ronit Bhattacharyya
Permalink
