Compete, which started out in 2000 as an Idealab company, raised over $40M in funding to date, incurred $4.5M losses for the last year off $15M revenues and had hard time lately to compete with Quantcast has its exit day today. Compete has been acquired by the market research leader Taylor Nelson Sofres (TNS) for $75M plus another earn-out $75M through out 2008-2010 if certain conditions are met. Total acquisition price could possibly reach $150M. Compete.com calls that brilliant in their blog, which might be true taking into consideration that they have clearly lost the battle with Quantcast in the free traffic measurement space online. According to Compete’s own stats, it attracts about the same number of U.S. visitors a month as Alexa (727,000 for Compete versus 758,000 for Alexa), but Quantcast is the leader with more than double that (1.9M uniques). The deal and its price tag could also be called brilliant for Compete when compared to the comScore’s current market capitalization – $570M.
Since 2006 Compete tried almost everything on the PR front to gain popularity, create buzz, and increase its service awareness, but it had little to no success at all. In many aspects Compete’s traffic measurement, just like Alexa btw, is way inaccurate and incomplete when compared to quantified sites at Quantcast and perhaps TNS decided to buy the third or forth in the market due to a possible higher price Quantcast is currently looking for (or being not for sale) and the current market value comScore has. Both of them have been M&A targets for a while although no public facts are available as to whether TNS has been one of the suitors for either of the companies mentioned. By comparison, in 2007 Experian Group Ltd. paid $240 million to acquire another leading Web intelligence company, Hitwise Pty Ltd., which made money and had annual revenues of roughly $40 million. In other words, at a price tag of $75 million TNS is offering roughly 5 times Compete’s revenue, and it will pay 10 times sales if the target reaches the financial milestones stipulated under the earn-out clause. Experian paid a multiple of only 6 times sales for Hitwise.
One of the company’s latest developments was the partnership they made with Ask.com to provide compete data for sites on ask.com’s binoculars.
TNS is acquiring Compete primarily from a consortium of private venture capital companies. Compete is said it will continue to operate as a stand-alone company, but it has already identified stellar new product opportunities to develop with the TNS media intelligence and custom research teams.
In additional to Idealab, Compete’s other investors include Charles River Ventures, Commonwealth Capital Partners, North Hill Ventures, Split Rock Partners, and William Blair Capital Partners. Total funding to date is $43M. Their investors were undoubtedly probably hoping for a much better outcome, but a solid double is better than nothing.
This acquisition brings together the global market information strength of TNS with Compete’s digital intelligence products and capabilities. Digital intelligence combines data on user behavior and interactions on the internet with demographic and competitive information, to help businesses and marketers make critical, strategic and tactical business decisions.
Through this acquisition, TNS will provide clients with new and valuable insights into how online consumer behavior affects purchasing decisions, enabling clients to improve their marketing effectiveness, both online and offline. Together, TNS and Compete will provide consumer, brand and media research and measurement services that will help businesses succeed in the digital marketing environment.
Compete conducts continuous analysis of internet clickstream data from close to 2 million people, weighted to match the US online population. This information is used to measure how consumers consider, engage with and buy a client’s products or services online, relative to those of its competition. This ability to analyze online behavior before a purchase is made enables Compete to advise clients on how to target online communications to individual consumers, to influence both their online and offline purchasing behavior.
As internet usage and e-retailing increases, clickstream data is expected to become a significant information source around which market research and analysis is based. Recent estimates suggest that the US market in which Compete operates will grow from $325 million in 2007 to $500 million in 2009. (Morgan Stanley research and Jupiter Research estimates of on-demand US web analytics market)
TNS will apply Compete’s ability to profile, measure and segment the online behavior of consumers to its own 6th dimension access panels. This will start in the US, where TNS has a fully managed access panel of more than one million people and will then be extended across its network. This will give TNS an unmatched ability to provide insight based on online and offline behavior and on consumer attitudes.
David Lowden, Chief Executive of TNS, said: “This acquisition is an important move for TNS that builds on our ability to help clients understand consumer behavior in the new and highly complex digital world. Compete has built a world-class digital intelligence capability that delivers multiple perspectives on how consumers engage with brands online. Its strength lies in its ability to provide competitive analysis of individuals’ online behavior, a rapidly growing section of the market that has enormous potential.
“TNS will enhance this offering by putting it together with the understanding of consumer attitudes and behavior that we gain from our access panels. We will use our network to offer this powerful combination to clients across the globe. In the longer term, we will look at the opportunities to add further value by using our Worldpanel, Retail & Shopper and audience measurement capabilities to integrate data on purchasing and viewing behavior with internet search and shopping behavior. We believe this will allow TNS to develop new syndicated and custom products, unique in our industry.”
Donald McLagan, Chairman and CEO of Compete, said: “We welcome this exciting opportunity to join one of the world’s most respected market information and insight groups. Whether consumers buy online, or simply research online as they reach a purchasing decision, the marketing platforms they encounter bring major opportunities for brands. Companies need to understand how the internet affects consumer preferences, attitudes, knowledge, understanding and motivation. They also need help in maximizing the new online sales and marketing opportunities to target their prospective customers more effectively. For the first time, we have given clients the opportunity to measure their effectiveness across all their marketing programmes. This ability will be greatly enhanced when we are part of TNS.”
More about Compete
Compete, Inc. is a provider of analytics, research, and business intelligence. Compete gathers web behavior information from users who sign up at their site, then analyzes these data to create customized reports for client companies. Compete also offers a free web analytics tool for the general public at Compete.com.
Compete was founded in 2000 and is based in Boston, Massachusetts. It analyses internet clickstream information received from its own panel and from internet service providers. Compete uses proprietary data methodologies to normalize this data, making it representative of the entire US online market place. It specializes in the telecoms, media, automotive, financial services and travel industries, with a sector-based organization mirroring that of TNS. It also has expertise in the field of online search evaluation. Current management will remain with the company. Clients, who include some of the world’s best-known brands, are engaged on a subscription basis, with analysis provided weekly or monthly. The company has won a range of awards, including the Deloitte Technology Fast 50 two years in a row, the US Advertising Research Foundation David Ogilvy Award and the AdAge Power 150. Bill Gross is the company’s founder who had previously helped create the search engine that became Overture and later was acquired by Yahoo!.
Compete has several competitors in enterprise-level web analytics and market research, including Nielsen/NetRatings, Hitwise, comScore, Amazon’s Alexa and Quantcast.
More about TNS
TNS is the third-largest market research firm across the globe (Honomichl)
TNS is the biggest provider of online market information in the world
TNS does more custom market research than any other firm worldwide
TNS Media Intelligence is the top-ranked ad spend measurement company
The TNS 6th Dimension access panels reach over two million consumers globally
The 1960s saw the creation of five of the market research companies that are at the heart of the Taylor Nelson Sofres (TNS) group today:
- Intersearch in the USA in1960
- AGB in UK in 1962
- Sofres in France in 1963
- Frank Small Associates in Australia in 1964
- Taylor Nelson in UK in 1965
- But the very first seeds had been sown in the USA in 1946, when NFO (National Family Opinion) opened for business.
In the 60s, 70s and 80s, all these companies grew significantly, introducing a wide and increasingly sophisticated range of research solutions and using the latest technological developments. And as they and their clients grew, they started to create their international networks:
Sofres opened offices in six European countries, the US and 12 countries in Asia Pacific
Taylor Nelson and AGB each developed a UK network of offices and began to acquire businesses in Europe
NFO grew to become the by-word for managed access panels in the USA
It soon became clear that brands were becoming global, and brand owners would need global market information partners.
In the 1990s, the market research industry started to consolidate, as major clients demanded an increasingly international service.
NFO made a series of acquisitions around the world and the companies that now form TNS responded to the changing market by joining forces, enabling them to deliver consistently high quality services to customers around the world.
- Sofres acquired Secodip (1992)
- Taylor Nelson joined with AGB (1992)
- Sofres combined with FSA (1995)
- Sofres acquired Intersearch (1997)
- Taylor Nelson AGB and Sofres merged (1997)
- TNS acquired NFO (2003)