Taylor Nelson Sofres, the world’s third largest market research company according to one measure, has acquired Compete, a company that tries to measure the traffic and types of people that visit certain web sites, for $75m (£37.8m).
TNS, based in London, apparently made the statement as it announced revenue growth today.
What’s eye-opening is the relatively low purchase price, considering how important traffic analysis technology has become these days and because venture capitalists had pumped $43 million into the company over the past eight years. For money to be tied up that long, investors typically expect to get a better return. Charles River Ventures, Idealab, Split Rock Partners and William Blair Capital Partners were backers of the company. However, if Compete meets certain revenue targets, it could bring up to an additional $75 million between 2008 and 2010, according to the deal.
Compete analyzes the internet clickstream data of almost two million people, weighted to match the US online population. That information is used to measure how visitors click on a company’s Web site, and for paying customers, Compete would also measure more details about how people engaged with the client’s web site.
However, Compete has never really been a reliable source of information, and has been overshadowed by stronger players such as Comscore, or newcomers like Quantcast, which have placed a tracker directly on Web sites to measure traffic — something that Compete always shied away from, inexplicably citing the fact that Netratings hold the patent for such technology (it hasn’t slowed down Quantcast).
Compete lost $4.5 million on about $15 million in revenue last year.
TNS said it will integrate Compete’s information into its own offering, beginning in the U.S., where TNS has its own research panel of of more than one million people.
Update: Tech Confidential says the sales price isn’t bad, based on a number of comparable deals.
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