You could say NetRatings has married well. In March, the littlest of the Web ratings contenders partnered with the godfather of the ratings business, Nielsen Media Research. Now, Nielsen NetRatings has the backing of one of the world's largest media-information conglomerates.
Dutch publishing and information giant, VNU, paid $US2.7 billion for TV-audience-ratings firm Nielsen Media Research yesterday, specifically citing the Nielsen NetRatings Web-audience ratings service as part of the strategic rationale for the purchase.
"Nielsen NetRatings is poised as an early leader in Internet-audience monitoring, a market that is experiencing dramatic growth driven by Internet advertising expenditures," VNU said in a statement.
Nielsen Media Research recorded $402 million in revenue during 1998. The firm is best known as the producer of TV ratings in the U.S. and Canada. In March, Nielsen launched its Web-audience rating service through a joint venture with Milpitas, Calif.-based NetRatings, in which it has an equity stake.
"The Nielsen NetRatings service is a very important part of our strategy for the future," says Anne Elliot, VP of marketing communications for Nielsen Media Research. Elliot would not comment on rumors that Nielsen would increase its ownership of NetRatings in the near future, saying, "We have an equity stake in the company and have options to increase that stake."
NetRatings' VP of marketing, Tim Meadows, says today's acquisition is good news for the future of the Nielsen NetRatings service. "There's a lot of potential synergies there," says Meadows, referring to the strength of VNU's domestic marketer client base and its presence abroad.
Indeed, VNU's international holdings could help Nielsen NetRatings gain a foothold in the nascent Web-audience measurement field in Europe. There, the company will meet a familiar competitor, Media Metrix, the leading U.S. online audience measurement service, which already produces online audience ratings in Sweden and today named Seth Segel VP of worldwide development. Segel will manage Media Metrix's efforts to grow its Web measurement business abroad through alliances in France, Germany and the U.K.
VNU USA, a wholly owned subsidiary of Netherlands-based VNU NV, paid $37.75 for each share of Nielsen Media Research common stock and assumed another $200 million in Nielsen debt. The purchase price represents a 17 percent premium over Friday's closing price per share of $32.13.
With revenue of $2.8 billion and more than 15,000 employees around the world, VNU is highly involved in the media-information business in the U.S. The firm owns Competitive Media Reporting, ad-pricing guide SRDS, and geodemographic marketing service Claritas. In addition, VNU publishes more than 150 magazines in Europe and dozens of trade publications in the U.S., including Adweek, Billboard, the Hollywood Reporter and Progressive Grocer.
Though concerned about reduced competition in the advertising intelligence field (VNU now owns the only two U.S. players, Competitive Media Reporting and Nielsen's Monitor Plus), Jim Spaeth, president of the Advertising Research Foundation, calls the merger "a neutral event." Spaeth says VNU regularly buys media and information companies around the world but doesn't seem to have an overarching strategy that ties them together.
"Nielsen Media is a phenomenally profitable company," says Spaeth. "VNU follows this industry very closely, recognized a good deal and bought it."