The Nielsen Company today announced that it has signed a definitive agreement to acquire IAG Research, Inc. for a purchase price of $225 million. IAG is a privately held company based in New York that measures consumer engagement with television programs, national commercials and product placements.
The acquisition will be effected through a merger of IAG with a wholly-owned subsidiary of Nielsen in which IAG stockholders will receive cash for their IAG shares. The transaction is subject to Hart-Scott-Rodino review and other typical closing conditions. Nielsen currently intends to finance the transaction through the issuance of notes, existing facilities and cash on hand.
Nielsen said it expects to complete the acquisition in the second quarter of 2008. The executive team of IAG has agreed to join Nielsen following the merger.
IAG Research conducts research with viewers to measure the effectiveness of advertising and program engagement across television and the Internet. Its clients include major advertisers, advertising agencies, Internet providers, telecommunications services, television and cable networks and other content providers.
IAG will add a new dimension to Nielsen's media business and will be the cornerstone for a new analytics practice that will provide our clients with even greater insights and clarity, said David L. Calhoun, chairman and CEO of The Nielsen Company. We are excited by the energy the IAG team will bring to the multiple opportunities they will have at Nielsen. Overlaying their perspective with the vast array of industries and technologies we touch gives us an opportunity to bring greater clarity and creativity to our work on behalf of clients.
We are excited to be joining The Nielsen Company, where IAG will be able to enhance the services it already supplies to clients said IAG co-founders and co-CEO Alan Gould and Ken Orkin. By working within Nielsen we will also be able to make the company's services available to a wider base of clients. In an increasingly fragmented media landscape, we believe strongly that advertisers and media companies need the insight that Nielsen and IAG can provide together.
The effectiveness of Web ads, particularly in the paid-search category, has proved easier to track. As a result, pressure is growing on Madison Avenue to demonstrate the value of traditional ads. As people start to experience some of the benefits of the Internet and the measurement afforded to them, they are looking to find similar tools to measure their offline spend as well, says Jeff Horing, a managing director at Insight.
Many of the big ad-holding companies, including WPP Group and Interpublic Group, have been putting more resources into ad measurement. WPP Chairman Martin Sorrell, for example, has been a vocal proponent of using econometrics, a statistical analytical method, to determine how factors such as advertising affect sales of a product.
IAG specializes in measuring viewers response to ads both how well viewers recalled the ad and how much they liked it. The firm has a panel of 1.4 million people it regularly surveys via the Internet. Each person is questioned a few times a week about specific TV programs. Respondents are paid a small fee.
Advertisers might use the surveys to see if consumers recall ads for one brand of soda better than those of a rival, or if they liked ads on a particular network or program better than another. When General Electric's NBC Universal tested the use of one-minute commercial breaks on its USA cable channel recently, IAG tracked viewers recall of specific elements in the ads shown, says Alan Wurtzel, president of research for NBC Universal.
At a time when marketers are seeking information beyond ratings, We are hoping to provide our clients with other ways to look and to see whether or not the money they have spent has been effective, Mr. Wurtzel says.
IAG charges a fee for its data, typically under a one- to three-year contract. IAG's revenue has doubled every year for the past four years and it is profitable, says a person familiar with the company.
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