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Nfo Worldwide, Inc. Business Information, Profile, and History

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2 Pickwick Plaza
Greenwich, Connecticut 06830
U.S.A.

Company Perspectives:

The mission of NFO Worldwide, Inc. (NFO) is to remain on the leading edge of information technology and at the forefront of international market research. The company combines niche market expertise, innovative research methods, and entrepreneurial spirit to gain strategic and practical insights into the buying habits, attitudes, needs, and behaviors of consumers and professionals. NFO provides clients with information related to their specific industry in order to help them develop superior products, design better brands, and implement more effective marketing strategies. NFO continually invests in people and state-of-the art technology in order to implement the best available information and expertise in the preparation of its reports. NFO encourages the creativity of all employees and rewards their contributions.

History of Nfo Worldwide, Inc.

NFO Worldwide, Inc. is the largest custom market-research firm in the United States and the ninth largest marketing research organization in the world. The company was founded in Toledo, Ohio, by Howard Trumbull in 1946 as National Family Opinion, a private market-research company. Sold to London-based AGB in 1982 and&mdash part of AGB&mdashø British publishing mogul Robert Maxwell in 1988, the company bought itself back in 1991 and was incorporated as NFO Research, Inc. In 1993 the company went public and was listed on the NASDAQ; in 1997 NFO began trading its shares on the New York Stock Exchange. The company, renamed NFO Worldwide, Inc., premiered panel research and is now the world's largest panel-based research firm. It is a leading provider of custom and syndicated marketing information to the largest companies in the United States and to the international business community. Through its pre-recruited consumer panel and other specialized databases, NFO offers access to more than 550,000 U.S. households (over 1.4 million people) and some 100,000 European households. With operations in 24 countries around the world, NFO uses its market-research expertise, extensive consumer panels, and niche-market knowledge to provide market insight and marketing counsel to over 2,300 clients in key market segments. These clients include 44 of the largest Fortune 500 companies, 23 of the top 25 U.S. bankholding companies, 18 of the nation's 20 largest pharmaceutical firms, most of the top U.S. manufacturers of packaged goods, high technology businesses, healthcare companies, leisure and travel firms, and telecommunications companies. In 1997, for the second consecutive year, Forbes Magazine named NFO Worldwide to its list of the 200 Best Small Companies in America.

The Early Years: 1946-64

When the austere days of World War II came to an end, Americans began to spend their wartime savings for the new products and conveniences rapidly showing up in a booming economy. Howard Trumbull, a Toledo, Ohio, salesman of assorted glass containers for Owens-Illinois, Inc., realized that consumers had to choose from an increasing variety of brands; furthermore, manufacturers needed to understand consumer needs and preferences. In 1937 Howard tested this insight at Owens-Illinois by introducing a radical method of market research: he organized a panel of 500 families to give their opinions on each of the company's glass products. According to Leil Lowndes's The NFO Story, Howard's "Homemakers Guild," as he called the world's first consumer panel, "premiered the concept of 'quota sampling,' by surveying a panel of people demographically matching the U.S. population to forecast the behavior of the population as a whole." Previously, almost all market research had been done by universities that based their results on very expensive samples of probabilities. Howard's research gave the company a marketing tool for convincing customers of the value and use of its products.

Howard, however, envisioned a still more effective application for market research. Convinced that his "quota" concept was more reliable than "random probability" sampling, he thought that consumer panels could help manufacturers not only to sell their products but also to improve them and design new ones in accordance with consumers' expressed wishes. Consequently, in 1946, Howard, Clara (his wife), and Jack (his son) invested their savings to set up a market-research company, National Family Opinion (NFO). An initial background survey was mailed to 18,000 families. An unheard of 40 percent return rate allowed the Trumbulls to set up a panel of 1,000 families representing the nation by geographic division, population density, age, and income.

Howard created benefits, salary guarantees, and hospitalization plans for his employees, and instilled in the company his ethics of complete confidentiality. Furthermore, Howard realized that "the lady of the house" would be the one to answer, or put aside, NFO panel surveys. Using the pseudonym Carol Adams, Clara dealt with panelists, sent out newsletters and "woman-talked" the company into critical mass; astonishingly, returns from surveys often reached 98 percent. While Carol Adams earned the respect and loyalty of panelists, Howard won contracts from some of America's largest businesses. By the late 1950s, NFO had 15 panels of 75,000 families, was billing almost $800,000 a year, and was ready for new ventures. By 1964 NFO had 30 panels consisting of 85,000 families, almost $2 million in billings, and profits of $131,000. Howard retired and son Jack Trumbull took over the presidency of the company.

The Middle Years: 1965-81

To beat the competition for new clients, Jack took to the air. Within a few hours, instead of days, he flew to old and prospective clients to offer first-person service. His tireless investment of energy paid off--major companies joined the roster of loyal NFO clients. Furthermore, a new product developed from a survey conducted for the Conference Board of New York; in the survey NFO panelists gave their opinions about various issues facing the U.S. public. This project evolved into a monthly report called The Consumer Confidence Survey. In 1990 the U.S. Department of Commerce referred to the survey as the Consumer Confidence Index, a leading economic indicator of the U.S. economy. In 1968 six companies chose NFO to operate the largest job in its history and one of its first syndicated studies, titled the "Consumer Purchase Panel Study."

Over the years NFO moved from recording survey answers on handwritten cards to storing consumer data in a Honeywell computer. In 1970, to avoid the threat caused by the postal workers' strike to its mail-dependent business, NFO used telephone interviewing to stay in contact with its 55 panels. The emergency measure became a permanent feature of the company's operation. In the meantime Jack lured his son-in-law, Bill Lipner--a record-breaking salesman at Honeywell&mdashø join NFO. By 1978 Bill was vice-president of marketing and was leading the company into new technology, including a PBX phone system and the installation of computer terminals.

NFO revenues amounted to $10 million in 1980, $14 million in 1981, and more than $18 million in 1982. The rapid growth of the company, however, had triggered debt. Jack had led NFO for 39 years and thought the time had come for new leadership and new ownership. Sir Bernard Audley, head of London-based AGB, one of the three largest market research companies in the world, had frequently indicated a desire to buy NFO. Jack Trumbull, assured that AGB would provide NFO with the financial expertise and help needed for its development, retired in 1982 after selling the family company to Bernard Audley.

Rise and Fall of Foreign Ownership: 1982-91

The first change that Bernard Audley made was to promote Bill Lipner to president/CEO. From the start, both leaders recognized the complementary strengths of their respective companies. AGB, present in all the major European countries, Australia, and New Zealand, opened up international markets for NFO and brought improvements and substantial financial expertise to the U.S. company. NFO, on the other hand, was a steadily growing business, had the potential to be very profitable, operated with a first-rate professional staff, was relatively free from debt, and had an impressive list of loyal blue-chip clients. NFO exported new research technologies and techniques to AGB. Bill and his team were receptive to AGB's disciplined financial management and streamlined NFO's operations. By 1987 NFO had less than 15 percent of AGB's total employees but produced more than 50 percent of the London company's worldwide operating income.

NFO continued to explore applications of new technology. Substantial enhancements were brought to computer and mail operations, and a computer-assisted telephone interviewing (CATI) system was installed. NFO, one of the first firms to use VCRs for market research, began to test the effectiveness of clients' television commercials by sending videotapes to panelists with VCRs. This experiment evolved into a continuing NFO project later called "Screen-Test." NFO also was the first to develop surveys of telephone Yellow Pages as an advertising medium. Soon after the 1984 deregulation of the telephone industry, the newly formed telephone companies competed aggressively for usage and advertisers. NFO entered the fray by offering the National Yellow Pages Monitor (NYPM), by which the success of the Yellow Pages as an advertising medium was rated from user surveys. NYPM became--and remained--"the leading provider of syndicated audience measurement and information for the entire Yellow Pages $10-billion industry," according to The NFO Story. In addition to this NYPM subscription service, NFO inaugurated a service called Active Intermedia Measurement (AIM), which could determine the influence exerted by newspapers, magazines, catalogs, radio, TV--and even coupons--on consumers' decisions.

For a while the partnership was good for both companies. However, AGB's attempt to improve television rating in the United States slowly clouded the corporate climate. AGB was the premier television-rating service in 14 countries, most of which were in Europe. The British firm wanted to crack the U.S. market for television rating by providing more accurate results than those obtained by the Nielson diary method then in use. AGB distributed "people meters" by which individual family members could record the names of the programs they were watching. Telephone lines then brought the information to AGB's central computer bank in Maryland.

AGB, however, had underestimated the difficulty and expense of applying its rating method to U.S. television viewers. For instance, wiring and servicing an adequate number of American households was an appalling task; America had more TV channels than other countries and required more tracking of data over a wide geographic expanse. Soon, AGB was losing over a million dollars a month. Eventually, NFO profits could not make up for AGB's losses and Bernard Audley was forced to sell. In 1988 Robert Maxwell, chairman of London-based Maxwell Communications, bought AGB--and NFO.

Maxwell carefully watched the bottom line. Bill Lipner and his team managed to lead the company through a freeze on hiring and capital resources--without missing a deadline. NFO continued to honor its commitments and even won important new clients. In 1989 the company created "Nuestra Familia Opina," a Hispanic panel designed to reflect the needs, values, attitudes, and past consumer experiences of one of the fastest market segments in the United States. Clients reacted well to marketing research among the Hispanic Panel; each year brought a growing number of studies.

In July 1991, when London's Financial Times began to investigate Maxwell's financial position, it became obvious that the whole conglomerate was going downhill. When Maxwell, trying to get out of his financial difficulties, offered Bill Lipner the position of heading the American operation, Bill thanked him for the honor and said "I want my family business back." Bill negotiated Maxwell's asking price of $100 million down to $34 million, but the wily British financier stipulated payment in cash within 21 days. Bill and a group of investors met the deadline: on September 21, 1991, NFO was again privately owned and independent.

U.S., Public, Global Company: 1991 and Beyond

After a decade of British ownership, NFO's first full year of operation as an independent American company foreshadowed the worldwide triumphs in store for the once relatively obscure Ohio company. NFO achieved its targets and invested its profits in itself. Bill and his team designed research methods based on new technology, and devised new ways of giving clients better service. The operations department created new graphics and software programs, including a program that reduced a major client's tabulation time from 16 days to three. Spurred by a newfound possibility of unleashing their creativity, a group of euphoric employees began to test more effective methods for recruiting panelists and improving the quality and consistency of questionnaires.

NFO Research, Inc. went public on April 8, 1993, and was listed as NFOR on the NASDAQ. Bill Lipner, according to The NFO Story, said: "We are now free to pursue our strategic vision independently and to build this business." That same year NFO struck a marketing agreement with Connecticut-based ASI, Inc. The blending of ASI's sophisticated copy-testing techniques with NFO's recognized ability to survey targeted samples of consumers gave NFO-ASI clients the best possible assessment of their advertisements in print or on television.

This acquisition was a harbinger of the way Bill and his team would lead NFO into becoming a leading, diversified, marketing information company. NFO evolved by strengthening its core panel-research business with the addition of new clients, products and services; pioneering new advances in technology; acquiring complementary companies in niche markets; and expanding to markets outside the United States. To reinforce relationships with existing and newly contracted clients, NFO opened regional offices in major metropolitan areas close to these clients and dedicated itself to strategic acquisitions that would increase and complement NFO services.

NFO innovations, acquisitions, and alliances dominated the 1990s. NFO had established a HealthMed division in 1992 to survey consumer attitudes. The success of this division led the company to secure a leading position in the healthcare/pharmaceutical business by extending research to doctors and insurance companies through the 1996 purchase of client Migliara/Kaplan Associates, Inc. (M/K), the nation's largest custom pharmaceutical-market researcher. And to secure a place in the financial services niche, in January 1994 NFO acquired Florida-based Payments Systems Inc. (PSI), which specialized in syndicated research for about 100 clients in financial services, 22 of them among the top U.S. banking and holding companies. PSI was already active in international markets and had surveyed European households in 11 countries to assess consumer attitudes toward the use of payment cards and other financial cards. In three years PSI tripled its revenue and brought NFO to the forefront of research in the retail financial industry.

NFO then acquired Advanced Marketing Solutions, Inc. (AMS), a leading provider of expert computer software systems for marketing research. NFO was a leader in gathering data; AMS was a leader in squeezing the data into a valuable sales tool for clients. The combined expertise of the two companies yielded a new product, dubbed SmartSystem, to help NFO clients synthesize data into reports and fact-based sales proposals that made salespeople instant experts in their customers' businesses. Then, during 1995 NFO began to explore and experiment with the interactive technologies, systems, and procedures that became the interactive NFO//net.source panel for market research; this panel evolved into the world's largest research panel representative of interactive consumers.

It consisted of more than 75,000 interactive households and over 150,000 interactive consumers. A 1997 alliance with Yahoo!--the acknowledged leader in Internet navigation services--allowed NFO to deliver insight into consumer attitudes, behavior, and preferences on the Internet and the World Wide Web.

In December 1997, NFO Interactive--a division of NFO Worldwide--and Jupiter Communications, LLC--a media research firm specializing in analysis of how the Internet and other technologies were changing traditional consumer industries--formed an alliance to offer clients a range of solutions to business development needs. In a unique product, Jupiter/NFO offered corporations a combination of national sampling of consumer behavior and spending habits, online panel research, and business analyses. The companies scheduled a report for public release in March 1998.

Furthermore, NFO strengthened its presence in the travel and leisure industries through the 1996 acquisition of Los Angeles-based Plog Research, Inc., which conducted custom and syndicated research for major travel and leisure industries. By 1998 Plog operated a fulltime-telephone interviewing facility based on NFO-developed software and was conducting a major study for a sports company. For this study, NFO's research methodology--based on an innovative concept known as "participant observation"--was used in the United States and in five other countries.

In the meantime, many NFO clients had expanded into European markets, and wanted the same kind of panel-based research data about European consumers as NFO gave them about U.S. consumers. To tap the full potential of this continent, NFO searched for a partner that could offer in-depth understanding of European consumers. To this end, NFO entered into a joint venture with Paris-based IPSOS, S.A., the fifth largest marketing research company in Europe and the eighth largest in the world. The partners operated "IPSOS-NFO Select Panels of Europe" in Germany, France, England, and Italy. And in July 1997, the company acquired The MBL Group Plc, a worldwide group of companies providing planning, feasibility studies, research, and consulting in management and marketing. London-based MBL was the parent company of 19 companies in 17 countries located in Europe, the Middle East, Africa, India, Southeast Asia, Australia, and the Americas. This purchase made NFO the largest U.S.-based custom market research firm and the ninth largest market research organization in the world.

To reflect its broadened global reach and the scope of its expanding service offerings, in September 1997 NFO Research, Inc. changed its name to NFO Worldwide, Inc. From then on, the name "NFO Research, Inc." applied only to NFO's original panel-based research business. By year-end 1997 NFO Worldwide had taken major steps toward achieving its goal of being the leading multinational marketing information company. Then, on December 9, 1997, NFO began trading its shares on the New York Stock Exchange under the symbol NFO.

Since becoming an independent company in 1991 and going public in 1993, NFO had built a strong financial foundation. By year-end 1995 revenues topped $73 million, increased 49 percent to $109 million by year-end 1996, and stood above $190 million at the end of 1997. NFO had grown into a world leader in formulating concepts and in gathering and analyzing complex data; the market-research company had become a veritable extension of its clients' organizations.

As 1998 got underway, NFO Worldwide acquired two companies, MarketMind Technologies Pty. Ltd. and Ross/Cooper/Lund, Inc., to accelerate its growth in the $400 million global continuous-tracking market. Australia-based MarketMind's tracking and data-integration system delivered continuous interactive information to help marketers manage their brands more effectively. The MarketMind system was licensed in 20 countries and supported hundreds of brands. The research-based consulting firm of Ross/Cooper/Lund, a U.S. MarketMind licensee, conducted large-scale studies to help clients diagnose brand communications and optimize media budgets. Next came NFO's purchase of Toronto-based CF Group Inc., the largest marketing and research organization in Canada. The Canadian company operated three divisions within Canada: Canadian Facts, Applied Research Consultants and Burke International Research. CF's capabilities for data collection, especially its Canadian Family Opinion panel similar to that of NFO's National Family Opinion US, enabled the companies to offer their respective clients seamless cross-border execution of panel-based research.

In short, at the approach of a new millennium, NFO Worldwide, Inc. continued to acquire companies and to form alliances relevant to its diversification and its global presence, to offer improved and innovative services to clients, to grow as a fiscally sound enterprise, and to remain on the cutting edge of interactive, innovative market research information.

Principal Subsidiaries: Access Research, Inc.; Advanced Marketing Solutions, Inc.; ASI, Inc.; CF Group Inc. (Canada); Chesapeake Surveys; CM Research Ltd (New Zealand); IPSOS-NFO (France); MarketMind Technologies Pty. Ltd. (Australia); The MBL Group Plc (Great Britain); Migliara/Kaplan Associates, Inc.; NFO Research, Inc.; Plog Research, Inc.; Prognostics; PSI Global; Ross/Cooper/Lund; The Spectrum Group.

Principal Divisions: NFO Interactive; InfoCom; NYPM (National Yellow Pages Monitor).

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