Boston’s Compete Bought by UK Market Research Firm for Up to $150 Million

3/3/08

With more and more users, transactions, and advertising dollars moving to the Web, the ability to understand exactly what people do online is at an unprecedented premium. Which probably played no small part in U.K.-based market research behemoth Taylor Nelson Sofres’s (TNS) decision, announced today, to acquire Boston’s Compete for up to $150 million.

Compete analyzes the clicks made by a panel of some 2 million U.S. Web users, as well as data from internet service providers, to provide its clients with a bunch of different information about consumers’ online behavior. The company will continue to function as a stand-alone entity, according to its blog, but will also develop new products in conjunction with TNS’s media intelligence and custom research teams. TNS, meanwhile, plans to use Compete’s tools to analyzes the behavior of its own 2 million-plus-person panel, starting with the more than 1 million U.S. users in the group.

Founded in 2000 and funded by Charles River Ventures, Commonwealth Capital Ventures, Idealab, North Hill Ventures, Split Rock Partners, and William Blair Capital Partners, Compete will get an up-front payment of $75 million in cash and will be eligible for up to $75 million more in additional payments from 2008 to 2010, based on revenue performance. Compete’s revenue grew by more than 50 percent last year, to $14.9 million, though it still had a net loss last year of $4.5 million.

Compete competes in the Web analytics space with the likes of Comscore, Quantcast, and Alexa. But each of these services has faced its share of criticism—much of it centered on the systems’ accuracy or lack thereof. (See this great summary of the market from VentureBeat for more details.) One of the key issues is that user panels provide just a sample of online activity. Of course, the bigger the sample the more accurate (in theory) the data. It will be interesting to see, once TNS and Compete merge their already giant samples, just how clear a picture of the online world they can create.

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