MANHATTAN (CN) - An advertising research company claims in court that its main rival stole trade secrets in a "scheme to maintain a long-standing monopoly" in the $60 million per year print magazine audience research market.
Affinity LLC sued GfK Mediamark Research & Intelligence in Federal Court.
New York-based GfK MRI is a subsidiary of GfK Group, one of the world's largest research companies.
GfK Group began in 1934 as Germany's first market research institute. It serves all the major consumer, pharmaceutical, media and service markets, with more than 11,000 employees in more than 100 countries.
Affinity claims GfK monopolized the magazine audience research market and the magazine advertising effectiveness research market by stealing Affinity's trade secrets and using them to sell competing products on the cheap.
Magazine audience research measures a magazine's total readership and the demographic profiles and interests of its readers.
Magazine advertising effectiveness research tracks magazine readers' engagement with specific ads to evaluate their effectiveness.
Advertisers and publishers use both tools to determine the cost-efficiency of magazine advertising and advertising rates.
"For more than 30 years, the magazine audience research market (the 'magazine audience research market') has been dominated by the 'Survey of the American Consumer' (the 'Survey')," the complaint states. "The Survey is a biannual report derived from in-person interviews of approximately 25,000 American consumers conducted by defendant GfK MRI, a U.S.-based subsidiary of GfK Group, the fourth largest market research organization in the world. As the only 'total' audience product - the Survey measures magazine audience readership across all titles and all product categories - GfK MRI's Survey has enjoyed a long-standing monopoly in the magazine audience research market.
"Although magazine audience research can help to answer questions concerning what readership a particular magazine title has, and how it compares with the advertiser's target audience, magazine audience research does not evaluate the effectiveness of the advertisement itself, a significant research gap which, if addressed at all, was done on a case by case basis using what are referred to as custom magazine advertising effectiveness research studies ('custom research').
"Custom research, unlike traditional magazine audience research, gave advertisers limited insight into the effectiveness of a specific advertisement appearing in a specific issue of a magazine. Custom research, however, was slow, expensive to generate, lacked standardization, and was so narrow in its scope as to have limited research value. Since most major advertising budgets focused on television campaigns, with magazines operating as an ancillary outlet, the print magazine advertising effectiveness research market (the 'magazine advertising effectiveness research market') remained embryonic for decades."
In response, Affinity says, its founders, industry veterans Tom Robinson and Marianne Grogan, launched the first syndicated magazine advertising effectiveness research service in the United States in 2005.
"In January 2005, after significant investment and more than a year of research and development, Affinity entered the magazine advertising effectiveness research market with the launch of its VISTA Ad Effectiveness Tracking Service ('VISTA')," the complaint states. "VISTA offered dramatic advantages over custom research: VISTA was cost-effective because it used modern data collection techniques and was offered on a syndicated basis so it could allocate costs among all subscribers; it was comprehensive because it measured a reader's recall of and responsiveness to an advertisement across 100-plus magazine titles; it was authoritative because it allowed standardized comparisons of advertising effectiveness over time; and it was faster because it assembled and delivered its results through a web-based methodology."
