Many advertisers are “running blind” into using the internet as market research companies struggle to understand consumer behaviour, the chief executive of Taylor Nelson Sofres said on Monday.
David Lowden said: “There are challenges in our industry in terms of the quality of internet research and it is something the users have confronted the industry about.”
Mr Lowden said: “A number of our clients are saying to us – ‘Listen, we are spending x million pounds on the internet, but we don’t know if we are getting a good return on it. Should we spending x million pounds-plus or x million pounds minus?’.
“A lot of clients are simply running blind into the internet.”
There has been no sign of companies reducing budgets for market research and TNS, whose clients include Procter & Gamble, Unilever and Microsoft, reported 2007 results that were in line with expectations and said it had built a good order book for the first part of this year.
“In tough times, people need to be even more certain that they are making the right decisions with their advertising spend,” Mr Lowden said.
Revenues for the 12 months ending December 31 showed TNS made £1.07bn, in line with analysts’ predictions and up from £1.004bn, while pretax profit rose, adjusted to take account of restructuring costs and amortisation, by 9.1 per cent from £84.5m to £92.2m.
The adjusted earnings per share were up 21 per cent from 12.7p to 15.4p, while the dividend for the full year increased by 20 per cent from 4.6p to 5.5p.
One analyst, who asked not to be named, said: “There are still concerns about the exposure to a consumer downturn, and in particular how that will affect their custom research business in the US.
“But they make a strong case that advertisers cannot use a scattergun approach in such a massive market as the internet represents.”
TNS also announced the acquisition of Compete, a digital analysis company that monitors consumer behaviour on the web, for $75 million in cash and further payments of up to $75 million, dependent on meeting targets, which Lorna Tilbian of Numis described as “demanding”.