Appreciate your comments – do you think Japanese companies are more profitable than US compared around the same revenue? Any insight you have would be appreciated.

Thanks.

Merrill

Revenue per employee can be an indicator of productivity, but it can also be an indicator of outsourcing. I don’t know if this is the case, but of the Japanese firms subbed work to suppliers — perhaps affiliated — more than the comparison firms did, that would raise their ration. I have seen large US companies keep their field force “off payroll” by using rented employees, even when it is more costly than hiring them directly.

Now for the specifics.

Dentsu Research is a subsidiary of Dentsu (one of the largest ad agencies in the world). Dentsu Research was created as the research arm of Dentsu and therefore does all of their MR (no sales expense). Also, while they are full service they also have full implementation capabilities — in-house panels, a hall testing facility, telephone int’g facilities, FG facilities, online int’g, etc. It sounds like they may sell many of these services (as profit centers) in addition to using them for their own internal purposes. My guess is that the revenue per employee statistic includes many more lower level (and lower paid) employees (responsible for their operations) than higher level (full service). All of their work is in Japan although I don’t know that this has anything to do with their high revenue per employee. Note that their revenue was down 10% in 2007. FYI — Dentsu Research used to be my client at E&L. I was their go-to person for any research they wanted to do in the U.S. Any interest in approaching them in this regard? My contact there retired years ago and that’s when my work with them ended.

Video Research and Arbitron are completely syndicated. Nothing more needs to be said.

Nikkei Research is a bit more like Dentsu without the parent company. While they are full service, they have heavy internal operations — panels and interviewers (telephone and in-person) which are likely separate profit centers. Again, lower paid (interviewer) employees in the headcount. They also do a lot of library research (which they refer to as desk research). Maybe they’ve created syndicated reports from some of this.

Your thoughts?

Sherri

The answer is very simple:

1) Mainly syndicated (as is Arbitron)
2) Mainly panel based
3) Japanese research market prices – about double those of the rest of the world.

To get a like for like, you need to halve their revenue per employee figures to take account of pricing and then compare to Nielsen Media, Arbitron, MRI and TNS Media.

They are also, amazingly, not very profitable!

Hope this helps,

Simon.

Simon Chadwick
Partner
Cambiar LLC

Dentsu Research $467,000
Video Research $431,800
Nikkei Research Not listed on the top 25 global list
Arbitron $311,500

Merrill