Market Research in the US Industry Report - gsa.gov

WWW.IBISWORLD.COM Market Research in the US May 2019 1

IBISWorld Industry Report 54191Market Research in the USMay 2019 Anna Miller

Numbers game: Consolidation and increases in nonemployers have shifted the industry landscape

2 About this Industry2 Industry Definition

2 Main Activities

2 Similar Industries

3 Additional Resources

4 Industry at a Glance

5 Industry Performance5 Executive Summary

5 Key External Drivers

7 Current Performance

9 Industry Outlook

11 Industry Life Cycle

13 Products and Markets13 Supply Chain

13 Products and Services

15 Demand Determinants

15 Major Markets

17 International Trade

18 Business Locations

20 Competitive Landscape20 Market Share Concentration

20 Key Success Factors

21 Cost Structure Benchmarks

22 Basis of Competition

23 Barriers to Entry

23 Industry Globalization

24 Major Companies24 Nielsen Holdings PLC

25 IQVIA Holdings Inc.

26 WPP PLC

26 Ipsos Group SA

27 Operating Conditions27 Capital Intensity

28 Technology and Systems

28 Revenue Volatility

29 Regulation and Policy

29 Industry Assistance

30 Key Statistics30 Industry Data

30 Annual Change

30 Key Ratios

31 Industry Financial Ratios

32 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]

This report was provided toSeattle Pacific University (2134504200)by IBISWorld on 16 December 2019 in accordance with their license agreement with IBISWorld


Companies in this industry systematically gather, record, tabulate and present marketing and public opinion data. Examples of industry services include political polling, sampling and statistical services,

broadcast media rating services and market analysis services. Operators that conduct experimental or scientific research in fields such as economics or engineering are not included in this industry.

The primary activities of this industry are

Broadcast media rating

Marketing analysis or research

Opinion research

Political opinion polling

Public opinion polling

Statistical sampling

54161 Management Consulting in the USEstablishments in this industry provide advice and counsel on marketing strategies.

54181 Advertising Agencies in the USEstablishments in this industry conduct in-house market research to create advertising campaigns.

54183 Media Buying Agencies in the USEstablishments in this industry purchase advertising time and space from media providers. Companies in this industry also plan individual campaigns and monitor the results of advertising placements.

54184 Media Representative Firms in the USEstablishments in this industry are independent representatives that sell media time or space for media owners and are generally the agents between media owners and media companies.

54186 Direct Mail Advertising in the USEstablishments in this industry distribute advertising materials (e.g. coupons, flyers and samples) or specialty items by mail.

Industry Definition

Main Activities

Similar Industries

About this Industry

The major products and services in this industry are

Automated digital and electronic research services

Group discussions and focus groups

Market research by phone

Mobile and smartphone online quantitative research services

Online quantitative research services

Online research community services

Online traffic and audience measurement services

Other research methods

Provided to: Seattle Pacific University (2134504200) | 16 December 2019


About this Industry

For additional information on this industry

www.ama.org American Marketing Association

www.esomar.org European Society for Opinion and Marketing Research

www.insightsassociation.org Insights Association

www.research-live.com Research Live

Additional Resources

IBISWorld writes over 1000 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com



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SOURCE: WWW.IBISWORLD.COM

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Revenue Employment

Revenue vs. employment growth

Products and services segmentation (2019)

25%Online quantitative

research services9%Mobile and smartphone online quantitative research services

18%Automated digital and

electronic research services

6%Group discussions and focus groups

6%Market research by phone

13%Other research methods

12%Online traffic and audience

measurement services

11%Online research

community services

Key Statistics Snapshot

Industry at a GlanceMarket Research in 2019

Industry Structure Life Cycle Stage Mature

Revenue Volatility Medium

Capital Intensity Low

Industry Assistance Low

Concentration Level Low

Regulation Level Light

Technology Change Medium

Barriers to Entry Low

Industry Globalization Medium

Competition Level High

Revenue

$22.8bnProfit

$1.7bnWages

$8.4bnBusinesses

43,530

Annual Growth 19–24

2.3%Annual Growth 14–19

2.1%

Key External DriversResearch and development expenditureConsumer spendingTotal advertising expenditureCorporate profitBusiness sentiment index

Market ShareNielsen Holdings PLC 16.2%

IQVIA Holdings Inc. 8.0%

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FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30




Key External Drivers Research and development expenditureResearch and development (R&D) expenditure represents total funds spent by companies or the federal government on research performed in the United States, including marketing research. Increases in R&D spending contribute to increases in demand for industry services. Both R&D spending and industry revenue are closely linked to

fluctuations in corporate profit, which dictates the amount of funding available for such activities. In 2019, R&D expenditure is anticipated to increase.

Consumer spendingConsumer spending typically serves as a proxy for the health of consumer markets. As a result, sales tend to rise when consumer spending increases,

Executive Summary The Market Research industry in the United States has experienced strong growth over the five years to 2019, encouraged by the growth in research and development (R&D) and internet advertising expenditure, which have driven demand for industry services. Corporate profit is anticipated to increase an annualized 2.2% over the five years to 2019 and it has contributed to an annualized 3.0% increase in R&D expenditure and an annualized 1.9% increase in total advertising expenditure during the same period. Generally, growth in these types of expenditures

increases demand for industry services since market research is involved in both the advertising and development process. Overall, IBISWorld estimates that revenue for the Market Research industry is expected to grow an annualized 2.1% over the five years to 2019 to reach $22.8 billion. In 2019 alone, revenue is anticipated to grow 2.7%. However, over the past five years, industry profit is expected to decline.

During the current period, acquisitions among the industry’s largest players were common. Major advertising agencies have also increasingly acquired market

research companies to pursue value-added services in this complementary industry. The industry remains dominated by nonemployers, which are estimated to constitute 89.1% of all industry operators. The growing use of the internet by consumers and advertisers has driven market research providers to adjust services and has enabled new companies to enter the industry. It has increased demand for market research services as companies have increasingly sought to leverage the growing amount of online data to understand their consumers to a progressively specific degree.Over the five years to 2024, revenue

for the Market Research industry is anticipated to continue growing. Industry revenue is expected to rise an annualized 2.3% to $25.5 billion over the next five years. Instituted interest rate hikes and increases in commodity prices are projected to put slight downward pressure on corporate profit growth, which typically has a relatively direct downstream impact on advertising and R&D expenditure. Nonetheless, growth in total advertising expenditure is anticipated to remain steady due to growing consumer spending and increasing demand for digital marketing services. As online commerce continues to grow, adopting online data tracking and analytics processes will be integral to success for industry operators.

Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

During the current period, acquisitions among the industry’s largest players were common



Industry Performance

Key External Driverscontinued

prompting businesses to raise their marketing budgets when launching new products and services. Consumer spending is expected to grow in 2019.

Total advertising expenditureTotal advertising expenditure represents the sum of measured US advertising expenditure. Market research services are often used throughout the campaign management process as it helps businesses understand what will resonate most with its specific customer groups. Therefore, an increase in advertising expenditure drives demand for market research services. In 2019, total advertising expenditure is expected to increase.

Corporate profitCorporate profit represents profit earned across all industries in the United States. As corporate profit increases, businesses are more likely to invest in additional

advisory services such as market research. Furthermore, sales typically grow alongside corporate profit and, therefore, increased profit creates demand for corporate information used for generating sales leads. Corporate profit is expected to rise in 2019, creating a potential opportunity for the industry.

Business sentiment indexThe business sentiment index gauges the overall health of the business environment by reviewing production levels, inventory levels, supply deliveries and employment levels. Data is sourced from the Institute of Supply Management’s United States Business Confidence Index. Overall, depressed business sentiment results in lower spending on discretionary services such as market research. The business sentiment index is anticipated to decrease in 2019, posing a potential threat to the industry.

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Current Performance

Companies in the Market Research industry gather, analyze and present data on public opinions and consumer behavior and attitudes. Industry services include political polling, sampling and statistical services, broadcast media rating services and market analysis services. Over the five years to 2019, revenue for the Market Research industry is expected to grow at an annualized rate of 2.1% to $22.8 billion, including a projected increase of 2.7% in 2019 alone. During the current period, the industry benefited from a series of positive economic and consumer trends. Increases in disposable income and consumer spending have boosted corporate profit margins, which has encouraged companies to invest in research and development (R&D) activities and expand their advertising budgets. Companies use marketing

research services to inform the development of new products, the formulation of strategic growth plans and the creation of advertising campaigns, among other uses.

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Demand drivers and trends

The level of expenditure by US businesses or the federal government on R&D activities underlies industry revenue growth. Over the five years to 2019, IBISWorld estimates that total research and development expenditure will increase an annualized 3.0% to $381.0 billion. Marketing research services are often used during the development of new products, advertising campaigns and the formulation of corporate strategies. As a result, an increase in R&D activities drives demand for industry services.

Likewise, since market research services are used throughout the advertising process, an increase in total advertising expenditure typically drives revenue growth for the Market Research industry. During the period, total advertising expenditure is expected to grow an annualized 1.9% and, therefore, has also contributed to industry growth. Notably, internet advertising has increased as a share of total advertising expenditure. IBISWorld estimates that internet advertising has grown at an annualized rate of 11.0% during the current period, representing 18.5% of total

advertising spending in 2019. This has increased demand for market research services, as companies have sought to understand their target markets and how to reach them amid the internet’s highly fragmented nature.The level of corporate profit underlies

growth in advertising and R&D expenditure. Typically, growth in advertising and R&D expenditure closely follows fluctuations in corporate profit, with total expenditures higher during periods of high or growing corporate profit. Since advertising and R&D are discretionary expenditures for most businesses, they are generally the first areas to be reduced when revenue or profit declines. Therefore, industry growth during the five-year period to 2019 is also, although more indirectly, a result of growing corporate profit, which is expected to increase an annualized 2.2% during the same period. In 2019, profit, measured as earnings before interest and tax, for the industry is expected to account for 7.5% of revenue, down from 8.8% of revenue in 2014.




Growth opportunities Opportunities for market researchers to measure online audiences have significantly increased over the past five years. The rapid expansion of new media is providing market researchers with innovative ways to interact with and study consumer opinions. Many companies now enable consumers to provide ratings, comments and feedback for products online. As more consumers use social networking sites, companies have gained additional means of engaging consumers in conversations about products. The ability to directly converse with customers can improve a company’s understanding of their clientele’s wants and needs. Many industry players have acquired or invested in companies that specialize in new media and related technology. Over the five years to 2019, more individuals have turned to the variety of available media platforms to connect with others and conduct purchases. Consequently, market research companies that have invested in technology to measure and analyze the habits of online users have fared better than those that have continued to rely on traditional methods.

The internet has also fragmented demographic markets by enabling people with increasingly specialized interests to interact. According to the Pew Research Center, about 88.0% of adults had internet access at home, work, school or through mobile devices in 2016 (latest data available). This marks an increase from 83.0% in 2012. Given this expansive audience, market researchers have been able to target specific consumer groups through improved online advertising metrics. Market researchers have increasingly used page views, click-through rates and other metrics to gain a deeper understanding of target markets, market size and the type of consumers who constitute their clientele.

The expansion of new media is providing market researchers with new ways to interact with consumers

Deconsolidation of industry

During the current period, the increasing demand for market research services has driven growth in the level of industry participation. Over the five years to 2019, the number of industry enterprises is expected to increase at an annualized rate of 1.7% to 43,530 operators. The rising number of industry enterprises is expected to drive employment growth for the industry during the current period, with industry employment anticipated to increase an annualized 0.3% to 139,741 individuals during the same period. Despite enterprise growth, the total market share held by the industry’s top four operators is estimated to have increased slightly during the period, up from 26.1% in 2014 to 31.7% in 2019.

The level of merger and acquisition activity among industry operators was high over the past five years, which has contributed to the industry’s slight consolidation. WPP PLC (WPP), Nielsen Holdings plc (Nielsen) and Ipsos Group SA are just a few of the companies who have engaged in acquisition activity during the current period. WPP is estimated to have conducted 10 acquisitions, while Nielsen is estimated to have conducted 15 acquisitions during the same period thus far. Major player, IQVIA Holdings Inc., was formed through a 2016 merger between Quintiles Transnational Holdings Inc. and IMS Health Holdings Inc.




Industry Outlook

Over the five years to 2024, revenue for the Market Research industry is expected to continue growing. Continued increases in consumer spending and corporate profit are expected to support spending on research and development (R&D) and advertising expenditures. The decision by

the Federal Reserve to suspend interest rate hikes will likely help reduce uncertainty and encourage continued investment. All things considered, over the five years to 2024, revenue for the Market Research industry is forecast to grow an annualized 2.3% to reach $25.5 billion.

Drivers of demand Growth in corporate profit is anticipated to decelerate but remain steady, growing at an expected annualized rate of 1.2% over the five years to 2024. Demand for goods and services is anticipated to drive growth in corporate profit but is also expected to be offset by increases in the price of a range of commodities and recent interest rate hikes. As a result, overall growth in profitability is expected to slow slightly. IBISWorld expects this slowdown in corporate profit to influence R&D expenditure somewhat, which is expected to decelerate slightly during the period as well. Over the five years to 2024, R&D expenditure is expected to grow at an annualized rate of 2.5%.

Growth in total advertising expenditure is expected to increase slightly during the outlook period. Total advertising expenditure is projected to increase an annualized 2.0% over the five years to 2024. Growth in corporate profit will continue to encourage businesses to increase their advertising budgets as profit margins expand and consumer spending continues its upward climb. As more companies aim to reach consumers online, total advertising revenue is anticipated to be increasingly

driven by robust internet ad spending. As a result, this is expected to drive demand for market researchers with expertise in online consumer behavior.Over the next five years, the business

sentiment index is projected to decrease at an annualized rate of 1.2%. IBISWorld anticipates the index to remain above 50.0, indicating a healthy business environment. Nonetheless, political uncertainty has swayed confidence levels and the effects of the Federal Reserve’s instituted interest rate hikes have created uncertainty for businesses. When the level of uncertainty among businesses increases, spending on discretionary services, including market research, tends to decline. Therefore, a decrease in the business sentiment index has the potential to temper growth for the industry’s primary external drivers and, therefore, potentially temper growth for the Market Research industry as well.

Growth in total advertising expenditure is expected to increase slightly

New media, new opportunities

The United States’ increasingly fragmented consumer markets are expected to continue to highlight the importance of market research and drive demand for industry services. Fragmented consumer markets and social media platforms will likely continue to encourage companies to

change the way they market their products and services to consumers. Social networking and user-generated content are expected to continue to aggregate particular interest groups and, therefore, help marketing teams define consumer segments. However, the continued changes to marketing tactics




New media, new opportunitiescontinued

spurred by new forms of media will require industry operators to adapt their practices to continue providing clients with actionable, accurate and specific insights. As a result, technology and methods that analyze and track consumer behavior and preferences online will likely continue to improve. Moving forward, companies that can provide data analysis and insights across a broad range of media platforms will be the most successful, as marketing efforts continue to become increasingly integrated.

As marketing research becomes increasingly centered on online data collection, the size and breadth of data

available to market research companies is expected to continue growing rapidly. As more commerce and entertainment activity takes place on digital and online platforms, the volume of consumer information will grow rapidly. In addition, companies will expect increasingly granular data, down to individual transactions. As a result, the growing challenge for marketing research companies moving forward will be how to select the right data, then analyze and present it in a way that is useful to clients; useful in the sense that it provides insight that leads to actionable decision making.

Industry structure New operators are expected to continue to enter the industry over the next five years. Growing internet advertising spending will create space for niche companies who specialize in market research services that measure and evaluate online audiences and consumers. As a result, companies that specialize in online market research technologies are anticipated to emerge and drive growth in the number of new enterprises. Over the five years to 2024, the number of industry enterprises is projected to grow an annualized 2.2% to 48,462 operators. Employer enterprises are expected to continue expanding their

workforces. This trend, alongside growth in nonemploying enterprises, is expected to cause industry employment to rise at an annualized rate of 2.0% to 154,450 employees during the same period. Industry profit is anticipated to increase slightly over the next five years since revenue growth is projected to outpace growth in total wage expenditure.

Employer enterprises are expected to continue expanding their workforces



Industry PerformanceThe industry has market acceptance, as businesses will need to learn about their customers

The industry is experiencing M&A activity as major players acquire other companies

Major players have integrated the operations of their brands

Life Cycle Stage




Industry Life Cycle The Market Research industry is in the mature phase of its life cycle. Industry services are completely accepted in the marketplace, as businesses will continually seek to understand their customers and target markets to gain a competitive edge. New media presents opportunities for industry expansion, but industry firms will likely experience decreased revenue from other media sources. Over the 10 years to 2024, industry value added (IVA), which measures the industry’s contribution to the overall economy, is expected to increase an annualized 2.0%. Comparatively, US GDP is expected to grow at an annualized rate of 2.2% during the same period. Typically, an industry growing in line with the overall economy is considered mature.

Despite mergers and acquisitions, new companies will continue to enter the industry. Over the 10 years to 2024,

IBISWorld expects that the number of market research firms will increase at a moderate annualized rate of 1.9%. As is the case with mature industries, merger and acquisition activity has been common among operators. Especially among larger players that tend to acquire smaller companies with complementary services or capabilities. This has caused a slight increase in the industry’s level of market share concentration. Lastly, industry operators have put an increasing amount of focus on rationalizing brands and service offerings to increase operational efficiencies. This is partly a result of the industry’s maturity, in which limiting costs through efficiency gains becomes more important to maintaining a competitive edge. However, it is also driven by the increasing convergence of advertising and marketing services with data and consumer analytics and research.

This industry is Mature



Products and Services The Market Research industry can be broadly divided into two forms of measurement and interpretation: quantitative research and qualitative research. According to ESOMAR’s 2017 Global Market Research report, an estimated 70.0% of US research spending is currently dedicated to quantitative research. An estimated 18.0% of research spending is dedicated to qualitative research and

another 13.0% is spent on other research methods.

Quantitative market research servicesIn this industry, quantitative market research is used for the collection and analysis of data to measure consumer responses to a particular product, issue, campaign or related phenomenon. The quantitative process often starts as a survey, poll or questionnaire and the data

Products & MarketsSupply Chain | Products and Services | Demand Determinants Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES

32541a Brand Name Pharmaceutical Manufacturing in the US Pharmaceutical companies use market research for clinical research trials relating to new product development.

32541b Generic Pharmaceutical Manufacturing in the US Pharmaceutical companies use market research for clinical research trials relating to new product development.

33611a Car & Automobile Manufacturing in the US Automobile manufacturers use the industry’s services to research what consumers want and how to market their products.

51111 Newspaper Publishing in the US Publishers use industry services to learn about readership and circulation information, as well as political and consumer attitude polling.

51512 Television Broadcasting in the US TV networks use market researchers for audience ratings and profiling, as well as measurement of advertising effectiveness.

54161 Management Consulting in the US Management consultants use market research to advise businesses, nonprofits and public-sector agencies.

54181 Advertising Agencies in the US Advertising agencies use the industry’s services to measure audiences and effectiveness of an existing or planned advertising campaign.

92 Public Administration in the US Government organizations use market research to gauge public opinion.

KEY SELLING INDUSTRIES

51711c Wired Telecommunications Carriers in the US Wired telecommunications carriers supply communication equipment and services for research.

51711e VoIP in the US VoIP providers supply communication equipment and services for research.

51821 Data Processing & Hosting Services in the US This industry provides market researchers with data processing services.

53112 Commercial Leasing in the US The commercial leasing industry provides market research companies with office space.

Supply Chain



Products & Markets

Products and Servicescontinued

is measured using statistical, mathematical or numerical analysis. Over the last decade, quantitative research has changed significantly with the application of new technology and the ability to link various databases.

Online quantitative research services constitute the largest method for this segment with an estimated 25.0%. The internet, among other benefits, provides researchers the opportunity to target and engage with very specific populations and consumer groups. Automated digital and electronic research services (18.0%), online traffic and audience measurement research services (12.0%), mobile and smartphone quantitative research services (9.0%) and market research by phone (6.0%) are also popular quantitative research methods offered by industry operators.

Qualitative researchQualitative research methods aim to explain how and why consumers make decisions. Online research community services (11.0%), group discussions and focus groups (6.0%) and ethnography (1.0%) are all contained within this segment. Focus groups are generally a diverse group of consumers assembled to participate in a discussion about a

product, service, advertisement, concept, packaging design or campaign. By conducting a focus group, researchers are aiming to more deeply understand consumer perceptions, opinions, beliefs, attitudes and decision-making processes. Online communities are similar to focus groups; however, individuals are targeted online and participate in research-related activities over an extended period of time. Research using online communities is typically done in a private online venue versus in person, as would be the case for a focus group.

Many researchers contend that the primary benefit to qualitative research methods is the ability to provide insights into emotional responses that cannot be obtained from statistical analysis. Nonetheless, the popularity of focus groups declined in the mid-1980s as sales data from bar codes became readily available. Over the five years to 2024, the creation of new digital tools and methods that gather opinions from millions of people on social media in short periods of time has further driven down the popularity of focus groups. Nonetheless, qualitative research will always be a necessary supplement to quantitative research methods as it provides necessary context to statistical trends.

Products and services segmentation (2019)

Total $22.8bn

25%Online quantitative research services9%

Mobile and smartphone online quantitative research services

18%Automated digital and

electronic research services

6%Group discussions and focus groups

6%Market research by phone

13%Other research methods

12%Online traffic and audience

measurement services

11%Online research

community services




Products & Markets

Major Markets

Media and entertainment providersClient businesses in the media and entertainment markets are estimated to

generate 23.6% of the Market Research industry’s revenue in 2019. Clients in this segment are most often aiming to

Demand Determinants

Businesses are the major downstream purchasers of the Market Research industry’s services. Therefore, the industry is dependent on corporate profit margins, which influences spending on advertising and market research. The outsourcing of government research projects and recurring political events, like presidential elections, help shelter this industry from shifts in the business or economic cycle.

Providers of entertainment and media, advertising and financial services, as well as manufacturers of pharmaceuticals, clothing, cosmetics, cars, food and other consumer goods all depend on the Market Research industry. Demand from this segment is primarily determined by the amount of product research and development initiatives undertaken by such companies. Broadly, research and development is any work directed toward the innovation, introduction and improvement of products and processes. For most businesses, this is critical to ensuring the long-term success of a

company and assists businesses in adapting to changing marketplaces. Typically, research and development expenditure is tied to corporate revenue and profit and moves closely with the overall economy and the level of consumer spending. Therefore, when consumer spending increases, expenditure on research and development activities rise, stimulating demand for industry services.

In the political sphere, market research is necessary for a variety of areas, including political polling and the analysis of the public’s views on controversial issues and bills. Normally, governmental bodies collect and analyze a lot of their own research. However, it is also not uncommon for federal, state and municipal governments to contract out research activities to private companies. For example, various health and regulatory agencies commonly outsource market research services to design, tailor or measure the effectiveness of a public health or public information campaign.

Major market segmentation (2019)

Total $22.8bn

23.6%Media and entertainment providers7.5%

Government and nonprofit organizations

21.7%All other clients

3.8%Automotive

manufacturers

3.8%Financial services

19.8%Pharmaceutical companies

12.3%Consumer nondurable product producers

7.5%Advertising agencies




Products & Markets

Major Marketscontinued

quantify their audience size and understand the preferences of their viewers. This research includes collecting ratings and viewer data for audiences of TV programs, advertisements, internet sites and mobile platforms, among others. For clients in this segment, industry services ultimately enable them to maximize consumer satisfaction.

Recently, demand for online media viewership data has been on the rise; this has grown from merely measuring the number of unique hits on a website to include data on the consumption of online media such as streaming radio and TV, as well as music and video downloads. Measuring the effectiveness of internet advertising has become a priority because the number of internet users is increasing and, as a result, the volume of expenditure on online advertising has increased accordingly.

Pharmaceutical companiesIn 2019, IBISWorld estimates that pharmaceutical clients represent 19.8% of revenue for the Market Research industry. The high level of competition among pharmaceutical companies, particularly between generic manufacturers and brand-name manufacturers, makes branding and marketing an especially important aspect in driving pharmaceutical sales. Market research enables pharmaceutical companies to understand physician and patient attitudes, behaviors and perspectives surrounding its products. As a result, it assists companies in understanding how to position new products effectively and how to strategically present their brand to increase prescriptions from physicians and increase its favorability among consumers.

Consumer nondurable product producersProducers of nondurable products are estimated to account for 12.3% of

industry revenue in 2019. This segment includes products such as food, beverages, confectionary items, over-the-counter (OTC) medicines, tobacco and cigarettes, cosmetics and hygiene products to name a few. Producers of consumer nondurables generally operate in a highly competitive marketplace, competing for customers who are presented with a wide variety of products to select. As a result, producers in this segment leverage industry services by using their understanding of the marketplace to manufacture, package and distribute products that will appeal to their identified target markets.

Government and nonprofit organizationsIn 2019, 7.5% of industry revenue is estimated to be from government agencies and nonprofit organizations. Government organizations use market research in various ways, including measuring public opinion to profile an electorate, a particular demographic segment or a party’s supporters or opposition. Organizations also employ industry operators to gauge public response to political advertising and information campaigns, as well as measuring audience sizes for such initiatives. Market research firms also conduct political opinion polling, both on behalf of political parties and for media use. Over the past five years, this market segment has experienced periods of heightened demand in line with presidential elections and other high-profile events such as the Olympics.

Advertising agenciesIn 2019, market research services provided to advertising agencies is estimated to account for 7.5% of total industry revenue. Advertising agencies often use market research during the advertising development process. Industry services enable advertising firms to identify and



Products & Markets

International Trade Trade does not occur in the Market Research industry due to the service-based nature of market research firms. However, many of the industry’s largest companies

have increased their global presence, expanding into countries with strong growth potential. See the industry globalization section for more information.

Major Marketscontinued

analyze the consumer markets of their clients, thus enabling them to craft more effective and well-informed campaigns. Following an advertising campaign, industry services also help advertisers evaluate its success and potential failures, providing insight moving forward.

All other clientsIndustry services are used by a wide variety of other businesses and sectors throughout the United States. Industry services are also used by clients in financial services, automotive manufacturing, wholesale and retail, consumer durables, telecommunications, utilities and research.



Products & Markets

Business Locations 2019

MO1.4

West

West

West

Rocky Mountains Plains

Southwest

Southeast

New England

VT0.2

MA3.5

RI0.2

NJ4.3

DE0.2

NH0.6

CT2.0

MD2.1

DC1.0

1

5

3

7

2

6

4

8 9

Additional States (as marked on map)

AZ1.7

CA18.2

NV0.9

OR1.1

WA2.1

MT0.0

NE0.5

MN2.5

IA0.4

OH2.9 VA

2.5

FL6.3

KS0.5

CO2.4

UT1.0

ID0.5

TX5.8

OK0.4

NC2.3

AK0.1

WY0.1

TN1.2

KY0.9

GA2.9

IL5.9

ME0.5

ND0.1

WI1.1 MI

2.2 PA4.1

WV0.1

SD0.1

NM0.2

AR0.4

MS0.1

AL0.3

SC0.8

LA0.2

HI0.3

IN1.2

NY9.8 5

67

8

321

4

9


Mid- Atlantic

Establishments (%)

Less than 3% 3% to less than 10% 10% to less than 20% 20% or more

Great Lakes



Products & Markets

Business Locations The Market Research industry tends to have a higher concentration in the West and Mid-Atlantic regions. Many market research companies locate themselves in proximity to the headquarters of major clients. For example, media and advertising agencies both follow similar geographic distribution patterns.

IBISWorld estimates that the West region accounts for an estimated 22.6% of total establishments. California has a dominant presence in the region, accounting for 18.2% of total industry establishments. California’s demand for market research is due to the large number of media and advertising companies located in the state. Media and advertising companies are among the largest business segments for market research and are expected to continue to be within the next five years.

IBISWorld estimates that the Mid-Atlantic region accounts for 21.5% of industry establishments. Within the region, New York and New Jersey have an especially large number of operators, accounting for 9.8% and 4.3% of total US establishments, respectively. New York has an especially high concentration of

advertising companies given its portion of the country’s population. Moreover, New York City is also home to many media, advertising and entertainment clients which contributes to the concentration of establishments in the region. Industry establishments are also attracted to the area since it is a major hub for financial and business services.

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Distribution of establishments vs. population




Key Success Factors Firms who have the ability to quickly adopt new technologyResearch firms that can adopt new market research techniques and technology can provide clients with more effective and measurable results.

Access to skilled and flexible workforceResearch projects are often done on a contract basis with time-sensitive deadlines. A skilled and flexible workforce, capable of working efficiently for extended periods of time and covering many areas of operations is essential.

Provision of relevant resultsEffective monitoring of results during each stage of the research process

will ensure that the final results are both reliable and relevant to a client’s needs.

Good project management skillsSuperior project management personnel can ensure that projects meet time and quality requirements within a prescribed budget.

Development of a symbiotic relationship with another industryProviding service to companies with an ongoing need for market research, such as advertising agencies and consumer goods manufacturers, will lead to steadier streams of revenue for market research firms.

Market Share Concentration

The Market Research industry exhibits a low level of concentration. The combined revenue of the four largest industry operators accounts for an estimated 31.7% of total industry revenue. The industry largely comprises smaller companies; an estimated 74.5% of industry enterprises employ fewer than 10 people. Over the five years to 2019, growing demand for market research services facilitated a rise in the number of firms operating in the industry. During the period, the number of market research companies is estimated to increase at an annualized rate of 1.7% to 43,530 operators. Nonetheless, the high level of merger and acquisition activity among industry operators has slightly increased its level of market share concentration.

Across marketing and advertising-related industries, merger activity has been on the rise as major international advertising agencies have acquired

complementary businesses such as PR agencies and marketing firms. For example, in 2017 Nielsen Holdings PLC completed its acquisition of Gracenote Inc., a software company that provides metadata on music, video and sports content. In 2018, Ipsos acquired Synthesio, a company that provides social listening tools and audience insights to measure the impact of social and mainstream media conversations.

This industry is made up of a few major national and international firms, a large number of regional firms, and various small, sole practitioners. Sole practitioners are often industry professionals that do consultant work and can be subcontracted by larger players to provide specialist insights or skills. Although sole practitioners account for an estimated 89.1% of all firms operating in the industry, they generate less than 10.0% of total revenue.

Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization

Level Concentration in this industry is Low

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:



Competitive Landscape

Cost Structure Benchmarks

The Market Research industry is labor-intensive, a defining characteristic of service-based industries. As a result, wage expenditures constitute the largest cost component for industry operators, followed by purchases. Profit tends to be relatively high, although it has experienced downward pressure over the five years to 2019 due to rising wage costs.

WagesWages are expected to account for 36.7% of total industry revenue in 2019, representing the largest cost for operators in the Market Research industry. The industry primarily relies on skilled, well-educated employees with a wide range of personal and professional responsibilities, which include interacting with clients, writing proposals, and designing surveys. Skilled employees are also needed for data processing and analysis. Over the past five years, wages as

a share of revenue have risen, having been lower in 2014 at 35.8%. This is a result of an annualized 0.3% increase in industry employment and an estimated annualized increase of 2.3% in the average wage. The increased use of data and market research across all industries has driven demand for labor and put upward pressure on the average wage.

PurchasesPurchases are expected to comprise 16.2% of total industry revenue in 2019. These purchases include everything from obtaining rooms, gathering materials and paying out participants of focus groups. Purchases may also include any expensed purchases of software, computers and other related office equipment. Over the past five years, purchases have remained relatively stable as a proportion of revenue.

Sector vs. Industry Costs

n Profi tn Wagesn Purchasesn Depreciationn Marketingn Rent & Utilitiesn Other

Average Costs of all Industries in sector (2019)

Industry Costs (2019)

0

20

40

60

Perc

enta

ge o

f rev

enue

80

100


11.7 7.5

33.3

3.1 2.01.216.2

36.7

29.9

4.1 1.61.010.1

41.6




Basis of Competition Internal competitionCompetition in the Market Research industry is high. Firms compete on a variety of factors, including price and quality of services. Work in the industry is often done through contracts, with projects being held to stringent time and budget constraints. A large number of small and mid-sized research firms offer similar services and therefore compete on price. However, other significant and relevant factors include the quality of both the market research team and the results obtained as they relate to providing relevant marketplace insights for clients. The availability of services (including value-added services) is

important, as is the quality of service, the survey and sampling techniques used and their appropriateness. Larger companies, aside from leveraging their name recognition, have extensive data gathering systems and infrastructure in place, enabling them to accurately obtain large amounts of information at lower costs, making them more competitive.

External competitionExternal competition for industry operators comes from advertising agencies that operate their own market research division or subsidiary and from companies that perform market research themselves instead using the services of

Cost Structure Benchmarkscontinued

ProfitIn 2019, the Market Research industry’s profit, measured as earnings before interest and tax, is estimated to represent 7.5% of industry revenue. During the period, profit has declined, having been higher in 2014 at 8.8%. As the largest cost component for industry operators, growth in total wage expenditure is a primary factor in determining profit growth. Over the five years to 2019, total wage expenditure is expected to increase an annualized 2.6%. Average wages for the industry have increased, partly because the statistical and technological complexity of the industry has increased and because such employees are currently highly sought after. As a result, industry revenue growth has been outpaced by growth in total wage expenditure, thus putting downward pressure on profit margins.

DepreciationDepreciation includes the costs associated with the use of buildings, equipment and any other capitalized expenses, including any computer systems and office equipment with a

relatively high investment cost. Depreciation is expected to account for 1.2% of industry revenue in 2019.

MarketingMarketing costs, which includes the cost of promotions and advertising, is anticipated to account for 2.0% of industry revenue in 2019.

RentRent costs are estimated to account for 2.0% of total revenue in 2019. This presents a slight decrease from 2.1% in 2014. Like all costs, rent can vary widely between operators; some firms have offices in high-profile locations to be in proximity with their clients.

UtilitiesUtility costs are estimated to account for 1.1.% of total revenue in 2019 and have not changed significantly during the period. This cost component is not central to industry operations.

OtherOther costs are estimated to account for 33.3% of total revenue in 2019.

Level & Trend Competition in this industry is High and the trend is Steady




Industry Globalization

While there are a large number of small market research firms operating on a regional and national basis, some of the largest US-based operators have established a network of clients worldwide. For many companies, a significant and growing portion of revenue is coming from international clients. US companies that operate globally include Nielsen Holdings PLC, IQVIA Holdings Inc. and IRI. Kantar, a subsidiary of WPP PLC, and Ipsos are large foreign-owned companies with a

notable presence in the Market Research industry in the United States. However, even for companies that only serve national or regional clients, increasing e-commerce has meant an increasingly global consumer base for the clients they serve. As consumer markets for businesses have become increasingly globalized, this has by default incorporated a consideration and increased understanding of international consumer markets among industry operators.

Barriers to Entry Barriers to entry in the Market Research industry are low. Initial start-up and long-term capital costs in this industry are low. Initial capital investments are limited to acquiring the appropriate statistical analysis software, computer equipment and in some cases an office space, although this is not required. Further, the industry is not subject to any regulations from the government or industry associations. This makes it easier for new participants to enter the industry, since they do not have to adhere to any requirements that pose significant cost or operational challenges.

The low capital intensity of the industry attracts a large number of nonemployer operators, which is evidenced by the industry’s low level of

market share concentration. Generally, industries with lower barriers to entry have a larger number of nonemployer industry operators. Due to the low barriers to entry, individuals are able to participate in the industry, despite not having a large access to capital typical of large companies.

Basis of Competitioncontinued

an industry operator. The increasing sophistication and volume of data available on consumer purchasing trends and behavior has decreased external competition for industry operators. As services and products are increasingly purchased over the internet, this has increased the amount of data available on

consumers. Likewise, to process the increasing volume of data, methods for marketing research have become increasingly sophisticated. As a result, companies have increasingly relied on the specialized services of marketing research firms rather than conducting such research themselves.

Barriers to Entry checklist

Competition HighConcentration LowLife Cycle Stage MatureCapital Intensity LowTechnology Change MediumRegulation and Policy LightIndustry Assistance Low


Level & Trend Barriers to Entry in this industry are Low and Steady

Level & Trend Globalization in this industry is Medium and the trend is Steady



Player Performance With operations in more than 100 countries, Nielsen Holdings PLC (Nielsen) is one of the largest market research companies in the world. The company specializes in monitoring purchases of consumer goods and measuring media performance, including box office receipts, TV ratings and radio and internet usage. The business is divided into two segments: Watch, the company’s media audience measurement and analytics business; and Buy, the company’s consumer purchasing measurement and analytics business. According to its most recent annual report, Nielsen employs about 46,000 individuals worldwide. In 2018, Nielsen generated $6.5 billion in total company revenue.

Nielsen generates revenue relevant to the Market Research industry through services provided to US clients from both its Buy and Watch segments. Currently,

revenue from US clients constitutes more than half of the total company revenue. Nielsen’s Watch segment provides viewership data and analytics for media and advertising companies across media platforms, including TV, radio and online and mobile platforms. This segment is estimated to account for 52.0% of total company revenue. The Buy segment tracks billions of sales transactions per month in more than 100 countries, providing retail transaction measurement data and consumer behavior information and analytics. This data is primarily provided to clients in the consumer packaged goods industry. The Buy segment is estimated to represent 48.0% of total company revenue.

Financial performanceOver the five years to 2019, Nielsen’s industry-relevant revenue is expected to

Major CompaniesNielsen Holdings PLC | IQVIA Holdings Inc. | Other Companies

75.8%Other

Nielsen Holdings PLC 16.2%

IQVIA Holdings Inc. 8.0%


Major Players(Market Share)

Nielsen Holdings PLC (US industry-specifi c segment) - fi nancial performance*

YearRevenue

($ million) (% change)Operating Income

($ million) (% change)

2014 3,415.0 N/C 700.0 N/C

2015 3,606.0 5.6 761.0 8.7

2016 3,626.0 0.6 730.0 -4.1

2017 3,730.0 2.9 743.0 1.8

2018 3,697.0 -0.9 31.0 -95.8

2019 3,695.9 0.0 383.6 1,137.4

*Estimates SOURCE: ANNUAL REPORT AND IBISWORLD

Nielsen Holdings PLC Market Share: 16.2% Industry Brand Names The Nielsen Company



Major Companies

Player Performance IQVIA Holdings Inc. (IQVIA), formerly known as Quintiles IMS Holdings Inc., was formed through the 2016 merger of Quintiles Transnational Holdings Inc. and IMS Health Holdings Inc. IQVIA provides information, technology solutions and contract research services to clients in the healthcare sector. As of 2018, the company has more than 58,000 employees and operates in over 100 countries. IQVIA is organized into three operating segments: Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions. In 2018, total company revenue for IQVIA was $10.4 billion.

The company generates industry-relevant revenue through services provided to US clients through its Technology & Analytics Solutions segment. This segment consists of

national and sub-national information products, nonidentified patient-level data, reference information data and workflow analytics and consulting services. The national and sub-national information offerings provide performance metrics related to sales of pharmaceutical products, prescribing trends, medical treatment and promotional activity across multiple channels. These performance metrics are provided on a national, regional, zip code and individual prescriber level. In addition, the Commercial Solutions segment provides healthcare specific market research and consultative services to assist during the drug development process.

Financial PerformanceOver the five years to 2019, industry-relevant revenue for the company is

Player Performancecontinued

increase an annualized 1.6% to $3.7 billion. However, industry-relevant operating income is projected to decrease at an annualized rate of 11.3% to $383.6 million during the same period. The company has continued to invest in the development of new products, most recently its Connected System and Total Audience products. In addition, Nielsen

has made several strategic acquisitions during the current period to foster long-term growth for the company. The decline in operating profit is primarily attributable to a 95.8% decrease in 2018, in which the company recorded $1.4 billion in impairment charges and also incurred substantial charges relating to its ongoing strategic review.

IQVIA Holdings Inc. (US industry-specifi c segment) - fi nancial performance

YearRevenue

($ million) (% change)Operating Income

($ million) (% change)

2014 339.5 N/C 24.7 N/C

2015 382.1 12.5 28.5 15.4

2016 468.3 22.6 39.2 37.5

2017 1,524.6 225.6 104.5 166.6

2018 1,778.9 16.7 126.6 21.1

2019 1,828.5 2.8 127.7 0.9

SOURCE: ANNUAL REPORT

IQVIA Holdings Inc. Market Share: 8.0%



Major Companies

Ipsos Group SA (Ipsos) is a French advertising, consulting and market research company that was established in 1975. According to the company’s 2017 annual report, it operates in 89 countries and employs 16,660 employees throughout the world (latest data available). Ipsos is organized into four segments: Ipsos Connect (media and advertising research), Ipsos Marketing (marketing research), Ipsos Public Affairs (opinion and social research) and Ipsos Loyalty (client and employee relationship management). In 2018, the company generated $1.9 billion in total revenue.

The company operates in the Market Research industry through Ipsos Marketing, Ipsos Public Affairs and Ipsos Connect. Ipsos Public Affairs focuses on understanding and identifying shifts in

attitudes and opinions, evaluating company reputations, conducting political polling and identifying the behavior of individuals as citizens. Ipsos Marketing is more consumer focused, with research activities focused on segmenting markets, supporting brands in developing innovation, assisting brands in optimizing their strategy and market position as well as understanding consumer purchasing behavior. Lastly, Ipsos Connect is dedicated to media and advertising research activities including measuring media audiences, testing communication campaigns and their content and measuring the performance and effectiveness of brand communications. In 2019, the company is expected to generate $717.6 million in revenue from its US industry-relevant operations.

Other Company Performance

WPP PLC (WPP) is a global advertising and marketing services company headquartered in the United Kingdom. The company provides advertising, media investment management, data investment management, public relations, brand consulting, healthcare communications, specialist communications and digital consulting. WPP operates in the Market Research industry through its Data Investment Management segment, formerly known as the Consumer Insight segment. This segment includes the Kantar Group and many other specialist brands that

conduct market research to generate consumer, media and marketplace insights. The Kantar Group is a global advertising and marketing services company composed of nine specialized operating brands: Kantar Consulting, Kantar Health, Kantar IMRB, Kantar Media, Kantar Millward Brown, Kantar Public, Kantar TNS, Kantar Worldpanel and Lightspeed. The Kantar Group employs an estimated 30,000 individuals throughout its operations in 100 countries. Industry-relevant revenue for WPP is expected to total $1.0 billion in 2019.

Player Performancecontinued

projected to increase at an annualized rate of 40.0% to $1.8 billion. Industry-relevant operating income is expected to be $127.7 million in 2019. The 2016 merger and subsequent reorganization of the merged company’s operating segments have rapidly grown the

company’s industry-relevant revenue during the current period, resulting in several years of high growth. In 2017, revenue for the Commercial Solutions segment increased a reported 50.3%, a result of constant currency revenue growth, according to the company’s 10K.

WPP PLC Market Share: 4.4%

Ipsos Group SA Market Share: 3.1%

Other Company Performance



Capital Intensity The Market Research industry has a low level of capital intensity. On average, for every $1.00 spent on labor, industry operators spend an estimated $0.03 on capital investments. Like other service industries, market research is labor intensive, requiring employees with a high degree of knowledge. There is particular emphasis on skill and knowledge in designing sample surveys and questionnaires and conducting statistically appropriate analyses of the results. Workers in this field are generally well-educated, holding at least a college degree.

The industry is expected to continue to embrace technologies such as web-use tracking and passive data monitoring to track consumer behavior. In addition, more industry operators are expected to

use global positioning system and radio-frequency identification technology to monitor purchases. However, such

Operating ConditionsCapital Intensity | Technology & Systems | Revenue VolatilityRegulation & Policy | Industry Assistance

Capital Intensity

0.5

0.0

0.1

0.2

0.3

0.4

SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity

Capital units per labor unit

Market Research

Professional, Scientific and

Technical Services

Economy

Level The level of capital intensity is Low



Operating Conditions

Revenue Volatility The Market Research industry exhibits a medium level of volatility. The industry is closely linked to corporate spending on advertising and overall corporate profit, which are both vulnerable to fluctuations in the business cycle. Therefore, industry revenue typically falls when the economy weakens, and corporate clients pull back on marketing spending. However, the volatility caused by fluctuations in corporate profit, advertising and research expenditure is somewhat offset by revenue from government sources that use industry services for recurring events such as federal and local elections.

In addition to corporate profit and advertising expenditure, revenue also closely follows fluctuations in research and development (R&D) expenditure and the business sentiment index. In 2014, following two consecutive years of decline, industry revenue grew 5.7% due to similarly strong growth in the level of corporate profit and growth in R&D expenditure. Following that, revenue declined 0.5% in 2015 only to increase 4.5% the following year. In 2015, a decrease in corporate profit and a large decrease in the business sentiment index contributed to the decrease in revenue. Similarly, growth in R&D expenditure

Technology and Systems

Larger operators in the Market Research industry are continuing to explore new technology, in some cases combining resources to invest in research and development. A portion of this research and development investment will go toward measurement techniques for new media. Online technology continues to expand into areas such as radio, TV, video, gaming and music. It is also becoming increasingly important to measure internet audiences for online advertising. An emerging segment of the industry focuses on the measurement of online media; however, developments in offline media such as interactive and video-on-demand TV also require investments in measurement devices and technology. Furthermore, market research companies are using new technology to

more accurately interpret blogs, online comments and Facebook postings.

Online recruitment of consumers for market research samples is increasing. Consumers register their socioeconomic and demographic profile with market research companies, and these details are matched with the needs of market researchers. The responses of consumers to various products and services are collated via online surveys and further analyzed by the market research company. The service usually requires the payment of a fee to respondents for completing the survey. Increasingly, companies are adopting gamification to optimize frequency and quality of online survey responses. Gamification is the application of typical elements of game playing to create a more engaging survey experience and thus encourage more responses.

Capital Intensitycontinued

investments will likely be undertaken primarily by the industry’s larger players. Further, adoptions of such technology are not expected to increase the level of capital intensity significantly, as human labor will

remain critical to operations and the level of capital investment will remain small in relation to other capitally intensive industries such as manufacturing and agricultural production.

Level The level of technology change is Medium

Level The level of volatility is Medium



Operating Conditions

Industry Assistance The Market Research industry receives no special forms of assistance from the government. However, it does receive indirect support from industry associations. Examples include the Insight Association, ESOMAR and the American Marketing Association and Research Live. These organization provide support direct support to its

members through business management services, networking events and published industry research. In addition, such organizations indirectly benefit the industry as a whole through lobbying services which work to promote the interests and visibility of the Market Research industry with lawmakers and consumers.

Regulation and Policy There are no direct regulations or licenses for operating in the Market Research industry. The industry receives support from the Insights Association, which is a product of a 2017 merger between the Council of American Survey Research Organizations and the Marketing Research Association, two of the largest industry associations at the time. The Insights Association provides networking, industry

resources and acts as a representational voice to industry operators. The organization invests in advocacy, education, certification and direct support activities for its members. In addition, the association establishes and reinforces best practices and professional standards. Other important industry associations and resources include ESOMAR, the American Marketing Association and Research Live.

Revenue Volatilitycontinued

and in the business sentiment index has supported growth in industry revenue throughout the remainder of the period.

Level & Trend The level of Regulation is Light and the trend is Steady

Level & Trend The level of Industry Assistance is Low and the trend is Steady



Key StatisticsRevenue

($m)

Industry Value Added

($m)Establish-

ments Enterprises Employment Exports ImportsWages ($m)

Domestic Demand

Research and devel-opment expenditure

($b)2010 20,622.0 8,717.6 35,206 34,201 128,574 -- -- 6,861.5 N/A 341.42011 20,894.6 8,619.6 35,376 34,367 133,972 -- -- 7,136.1 N/A 340.42012 19,721.8 8,844.1 36,849 35,829 131,429 -- -- 6,733.8 N/A 341.92013 19,479.0 8,741.0 39,079 38,088 132,742 -- -- 6,637.3 N/A 351.82014 20,591.7 9,447.7 40,945 39,968 137,531 -- -- 7,368.0 N/A 358.02015 20,488.7 9,311.2 41,685 40,838 134,655 -- -- 7,405.7 N/A 366.02016 21,413.6 9,703.7 41,055 40,411 132,625 -- -- 7,926.4 N/A 377.02017 21,212.9 9,665.5 41,591 41,009 132,043 -- -- 7,883.7 N/A 380.92018 22,188.5 10,093.3 42,965 42,337 136,666 -- -- 8,177.1 N/A 384.72019 22,790.7 10,342.3 44,164 43,530 139,741 -- -- 8,368.6 N/A 381.02020 23,252.7 10,546.2 45,223 44,593 142,363 -- -- 8,528.1 N/A 390.82021 23,706.8 10,735.7 46,153 45,520 144,909 -- -- 8,683.5 N/A 400.82022 24,219.9 10,944.6 47,033 46,388 147,567 -- -- 8,848.4 N/A 410.82023 24,788.6 11,186.9 47,969 47,304 150,625 -- -- 9,036.7 N/A 420.72024 25,481.7 11,486.1 49,153 48,462 154,450 -- -- 9,270.8 N/A 431.1Sector Rank 14/35 15/35 22/35 22/35 18/35 N/A N/A 15/35 N/A N/AEconomy Rank 351/694 240/694 164/694 143/694 234/694 N/A N/A 190/694 N/A N/A

IVA/Revenue (%)

Imports/ Demand

(%)

Exports/ Revenue

(%)

Revenue per Employee

($’000)Wages/Revenue

(%)Employees

per Est.Average Wage

($)

Share of the Economy

(%)2010 42.27 N/A N/A 160.39 33.27 3.65 53,366.15 0.062011 41.25 N/A N/A 155.96 34.15 3.79 53,265.61 0.052012 44.84 N/A N/A 150.06 34.14 3.57 51,235.27 0.052013 44.87 N/A N/A 146.74 34.07 3.40 50,001.51 0.052014 45.88 N/A N/A 149.72 35.78 3.36 53,573.38 0.062015 45.45 N/A N/A 152.16 36.15 3.23 54,997.59 0.052016 45.32 N/A N/A 161.46 37.02 3.23 59,765.50 0.052017 45.56 N/A N/A 160.65 37.16 3.17 59,705.55 0.052018 45.49 N/A N/A 162.36 36.85 3.18 59,832.73 0.052019 45.38 N/A N/A 163.09 36.72 3.16 59,886.50 0.052020 45.35 N/A N/A 163.33 36.68 3.15 59,903.91 0.052021 45.29 N/A N/A 163.60 36.63 3.14 59,923.81 0.052022 45.19 N/A N/A 164.13 36.53 3.14 59,961.92 0.052023 45.13 N/A N/A 164.57 36.46 3.14 59,994.69 0.052024 45.08 N/A N/A 164.98 36.38 3.14 60,024.60 0.05Sector Rank 23/35 N/A N/A 16/35 19/35 15/35 15/35 15/35Economy Rank 172/694 N/A N/A 475/694 87/694 553/694 267/694 240/694

Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data.

Revenue (%)

Industry Value Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)Wages

(%)

Domestic Demand

(%)

Research and devel-opment expenditure

(%)2011 1.3 -1.1 0.5 0.5 4.2 N/A N/A 4.0 N/A -0.32012 -5.6 2.6 4.2 4.3 -1.9 N/A N/A -5.6 N/A 0.42013 -1.2 -1.2 6.1 6.3 1.0 N/A N/A -1.4 N/A 2.92014 5.7 8.1 4.8 4.9 3.6 N/A N/A 11.0 N/A 1.82015 -0.5 -1.4 1.8 2.2 -2.1 N/A N/A 0.5 N/A 2.22016 4.5 4.2 -1.5 -1.0 -1.5 N/A N/A 7.0 N/A 3.02017 -0.9 -0.4 1.3 1.5 -0.4 N/A N/A -0.5 N/A 1.02018 4.6 4.4 3.3 3.2 3.5 N/A N/A 3.7 N/A 1.02019 2.7 2.5 2.8 2.8 2.3 N/A N/A 2.3 N/A -1.02020 2.0 2.0 2.4 2.4 1.9 N/A N/A 1.9 N/A 2.62021 2.0 1.8 2.1 2.1 1.8 N/A N/A 1.8 N/A 2.62022 2.2 1.9 1.9 1.9 1.8 N/A N/A 1.9 N/A 2.52023 2.3 2.2 2.0 2.0 2.1 N/A N/A 2.1 N/A 2.42024 2.8 2.7 2.5 2.4 2.5 N/A N/A 2.6 N/A 2.5Sector Rank 13/35 19/35 8/35 8/35 18/35 N/A N/A 19/35 N/A N/AEconomy Rank 172/694 243/694 102/694 102/694 204/694 N/A N/A 212/694 N/A N/A

Annual Change

Key Ratios

Industry Data




Apr 2017 - Mar 2018 by company revenueApr 2014 - Apr 2015 - Apr 2016 - Apr 2017 - Small Medium LargeMar 2015 Mar 2016 Mar 2017 Mar 2018 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios

Current Ratio 1.6 1.7 1.5 1.2 1.0 1.4 1.2Quick Ratio 1.4 1.5 1.2 1.0 0.8 1.3 1.1Sales / Receivables (Trade Receivables Turnover) 6.7 6.2 6.5 7.4 8.5 6.8 4.7

Days’ Receivables 54.5 58.9 56.2 49.3 42.9 53.7 77.7Cost of Sales / Inventory (Inventory Turnover) n/c n/c n/c n/c n/c n/c n/c

Days’ Inventory n/a n/a 0.4 0.4 0.4 0.4 0.4Cost of Sales / Payables (Payables Turnover) 15.8 15.2 15.3 16.5 17.3 19.3 6.0

Days’ Payables 23.1 24.0 23.9 22.1 21.1 18.9 60.8Sales / Working Capital 15.2 11.9 14.0 21.2 -999.9 13.5 16.5

Coverage Ratios

Earnings Before Interest & Taxes (EBIT) / Interest 11.0 11.9 8.3 5.1 1.0 44.5 6.9

Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt 2.7 4.3 5.8 n/a n/a n/a n/a

Leverage Ratios

Fixed Assets / Net Worth 0.3 0.3 0.4 0.6 -5.9 0.2 0.8Debt / Net Worth 1.9 1.9 2.3 4.6 -8.7 1.3 13.7Tangible Net Worth 20.8 16.5 21.5 -8.1 -29.1 22.5 -2.5

Operating Ratios

Profit before Taxes / Net Worth, % 41.0 47.5 43.7 52.8 5.8 60.8 n/aProfit before Taxes / Total Assets, % 14.8 14.1 12.9 7.6 0.2 29.1 18.5Sales / Net Fixed Assets 41.1 38.7 38.4 43.6 42.4 81.3 33.7Sales / Total Assets (Asset Turnover) 3.0 2.8 2.9 2.9 3.1 2.9 1.9

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 54.0 48.0 55.2 53.3 62.1 36.2 n/aCash after Operations 3.2 3.9 6.0 4.3 -0.5 4.9 n/aNet Cash after Operations 4.5 3.9 4.6 3.6 -0.1 4.7 n/aCash after Debt Amortization 0.5 0.4 1.7 n/a -0.8 0.6 n/aDebt Service P&I Coverage 4.3 3.9 4.5 1.0 -0.5 n/a n/aInterest Coverage (Operating Cash) 8.5 15.4 7.8 1.9 -2.0 n/a n/a

Assets, %

Cash & Equivalents 21.6 19.5 19.8 20.0 24.8 19.1 8.7Trade Receivables (net) 39.7 41.7 41.1 36.6 30.4 43.0 42.4Inventory 1.1 1.2 2.1 2.2 3.4 1.4 0.3All Other Current Assets 6.8 4.9 6.3 6.5 7.8 3.7 7.8Total Current Assets 69.2 67.3 69.4 65.3 66.4 67.2 59.2Fixed Assets (net) 12.1 14.9 12.1 12.8 15.8 10.8 8.5Intangibles (net) 10.1 7.4 10.6 13.0 10.0 8.2 28.4All Other Non-Current Assets 8.7 10.4 7.9 8.9 7.8 13.8 4.0Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0Total Assets ($m) 745.1 574.2 1,709.7 1,155.3 59.1 180.5 915.7

Liabilities, %

Notes Payable-Short Term 14.0 9.5 10.1 19.4 34.0 5.3 3.8Current Maturities L/T/D 2.3 1.7 1.8 2.9 4.8 1.0 0.9Trade Payables 13.0 13.4 11.9 10.7 8.6 12.0 14.1Income Taxes Payable 0.2 1.0 0.4 0.6 1.1 n/a 0.5All Other Current Liabilities 22.0 21.4 26.8 33.9 32.3 42.6 24.3Total Current Liabilities 51.4 46.9 51.0 67.5 80.8 60.9 43.5Long Term Debt 11.4 17.3 10.6 20.4 28.9 3.1 26.1Deferred Taxes n/a 0.1 n/a 0.1 0.3 n/a n/aAll Other Non-Current Liabilities 6.3 11.7 6.3 7.1 9.2 5.2 4.6Net Worth 30.9 23.9 32.1 4.9 -19.1 30.7 25.9Total Liabilities & Net Worth ($m) 745.1 574.2 1,709.7 1,155.3 59.1 180.5 915.7

Maximum Number of Statements Used 79 57 64 52 26 16 10

Industry Financial Ratios

Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects.Note: For a full description of the ratios refer to the Key Statistics chapter online.



Jargon & Glossary

BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.

ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.

ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.

EXPORTS Total value of industry goods and services sold by US companies to customers abroad.

IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.

INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.

INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.

INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.

LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.

NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.

PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.

VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.

WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.

Industry Jargon

IBISWorld Glossary

FOCUS GROUP A type of qualitative research using a group of individuals to discuss a concept, product, service or advertisement.

QUALITATIVE RESEARCH A method of research used to understand why and how individuals make choices about particular products and services.

QUANTITATIVE RESEARCH Research that involves questionnaires and scales to understand the needs, wants and opinions of individuals.


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