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Tallying the Results

By Mel Duvall Print this article Print

Their market research system mines the collective thoughts of netizens. But can the Rochester, NY company accurately interpret its polls to represent the world at large?

Tallying the Results

Since the beginning of 1998, Harris has invested about $67 million in its Internet initiative—the majority was paid for through an initial public offering in December 1999, which raised $85.5 million. The timing of the IPO was fortuitous, to say the least. Had the company waited another couple of months, as some underwriters were pressuring it to do, the bubble would have burst.

About $35 million to $40 million of the $67 million has been spent on technology infrastructure. The rest has been spent on supporting costs, such as research, building the Internet panel and rewarding panel members. The company uses a wide range of methods to attract and keep panelists. Some participate in a reward system where they receive points for each survey they participate in, and exchange those points for merchandise. Highly valued panelists, such as doctors, may be paid cash. Now that Harris has amassed a panel with enough critical mass, it's concentrating on improving the quality—in other words, attracting and keeping panelists most desired by clients.

A milestone in the company's ability to convince clients to try Internet polling came with the U.S. presidential election in November 2000. Harris used its Internet panel to canvass 240,000 voters, and calculated that the race between Al Gore and George Bush was a dead heat. It correctly predicted the outcomes of 34 of 36 states, with Florida and Oregon too close to call. Research Business Report's Lederer says Harris' accuracy in that election was a turning point, a statement Black agrees with. "We succeeded on a scale that could not be explained away by dumb luck," he says.

Still, the company wasn't out of the woods. In January 2001, Harris was notified by a number of core clients that they would be canceling market research planned for that year. Harris was already losing about $21 million a year on revenue of $50 million. Emergency meetings were called, and plans were forged to cut $15 million in costs. About 250 employees were let go, including more than half the development staff. By then, however, most of the Internet infrastructure was in place, but the lower operating costs of Internet polling set the stage for a faster recovery.

The company recorded its first profitable quarter in June 2002 since becoming a public company three years earlier. In its fourth fiscal quarter ended June 30, Harris earned $169,000 on revenue of $30 million. Revenue for the entire fiscal year was $100 million, with Internet revenue representing $40.6 million of that total. The trend continued the next two quarters. In its most recent quarter, ended Dec. 31, Harris recorded net income of $2.1 million, on revenue of $32.5 million.

As important as profits are, Black says he's keeping an even closer eye on client satisfaction ratings. Before its Internet initiative, Harris regularly posted satisfaction rates averaging about 9 on a scale of 1 to 10 (it does its own measurements). By the fourth quarter of 2000, it had slipped to 7, largely based on delays caused by its technology troubles and the diffi- culties caused by MAPS' spamming action. Today, Black says the company is back at 9, and Internet jobs are producing a slightly higher satisfaction rate than telephone work.

The company's next big push is to develop an international Internet research panel. It already has a strong presence in Europe and Japan. "When you can go to a client and say, 'I can do a survey for you in 10 countries simultaneously and have the results back to you in a week'—that's a whole new world of research," enthuses Black.

This article was originally published on 2003-02-01
Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.

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