It’s all marketing

novembre 23, 2022

Image of human hand pointing at touchscreen with business document.

In times of market challenges, companies are taking steps to reduce their cost structure. Over the past weeks, we have seen several layoff announcements. As companies review and adopt their operating budgets for next year, other non-personnel costs could be at risk.

With many economies on the brink of recession, executives could be inclined to decrease their marketing expenditures. As shown in the latest International Business Barometer, more than half of corporations expect to reduce marketing expenditures over the next year in fear of recession.

As seen in previous downturns, companies maintaining their marketing expenditures increase their likelihood of emerging from recessions in a better position than competitors. As the competitive landscape becomes less intense, companies maintaining these expenditures could differentiate themselves and gain market share.

Market research is vital in finding new customers or launching new products. Market research expenditures represent a small proportion of the total marketing expenditures. For that reason, they tend to be more resilient compared to advertising expenditures. For example, P&G spent $7.9 billion on advertising during its fiscal year 2022, as opposed to $2 billion for research and development costs. In our view, market research expenditures could be one of the most strategic expenditures inside marketing budgets. Market research is the starting point for the launch of new projects, and it drives commercialization.

Ipsos, a company we own in our International Small Cap strategy, is one of the largest market research companies globally. The company is active in 90 different markets and employs more than 18,000 people. We believe that Ipsos benefits from secular growth driven by strong demand for reliable information to solve more complex issues. Corporations need to access that information to position themselves in a fast-changing world. The new 2025 plan unveiled by Ipsos aims to have the company grow faster than the market research industry, notably through market share gains and the development of digital and tech-based services.

Market size

  • The global market research services industry is expected to reach $90.8 billion by 2025. That industry is expected to grow 5.3% per annum.

Growth strategy

  • Expanding its client base or grabbing more share of wallet from their existing customers.
  • Adding new tech-based services, such as: SaaS offering, advisory, DIY research, social intelligence.
  • Bolt-on acquisition.


  • Recognized as one of the most innovative market research companies, as published in a recent GreenBook Research Industry Trends report.
  • Thanks to its global reach, Ipsos is one of few companies with capacity to manage worldwide market research programs.
  • Well-diversified geographically and by client types. Its exposure to defensive sectors like the pharma and public sectors represents close to 30% of revenues.
  • Long-term client contracts with high recurrency.
  • Strong balance sheet with a low leverage ratio of 0.4x net debt to EBITDA.


  • Fragmented market with lots of opportunities to conduct M&A, especially in DIY research.
  • Digitization trend in the market research industry. Digitization helps bring down costs associated with data collection while providing new source of revenue.
  • Its revenue from new services has grown rapidly over the years. Through these new services, Ipsos has met corporates’ needs in term of data collection in real time, quickly analyzing large amounts of information, leveraging measurement of social media, and providing advice for clients. The company can build on that expertise and experience to increase market share. 
  • With 32% of its revenue being generated in the U.S., Ipsos has room to gain more market share in the biggest market research industry globally. 
  • Emerging markets are expected to outpace the growth in developed markets.


  • The industry is somewhat exposed to the cyclicality of its clients’ marketing budgets.
  • Failure to develop new services or falling behind on technology would negatively impact its revenue.