February 6, 2012

Inside Market Data

Burton-Taylor: 2011 Global Data Spend Tops $25 Billion

Industry spend on market data rose 6.64 percent to almost $25.1 billion globally in 2011, though price increases and the strengthening US dollar contributed significantly to that growth, rather than genuine expansions of data use, according to new research released this week by Burton-Taylor International Consulting.

Within these figures, growth in Bloomberg’s market share along with Thomson Reuters’ declining market share over recent years means the two vendors now command virtually equal shares of global data spend, says Douglas B Taylor, managing partner at Burton-Taylor.

According to Burton-Taylor’s estimates, Bloomberg grew its overall revenue by 10.49 percent to $7.59 billion last year and grew its market share from 29.22 percent in 2010 to 30.27 percent in 2011, whereas Thomson Reuters only grew revenues by 2.06 percent to $7.596 billion, while its market share fell from 31.66 percent in 2010 to 30.3 percent last year.

Taylor blames the launch of Thomson Reuters’ Eikon data desktop in part for the vendor’s performance.  “They spent a lot of time and investment on Eikon and built up expectation for it, but then it came out late and was not executed as well as expected, so that took the wind out of their sails.  Now they have to not only fix Eikon, but also overcome that first impression,” he says.

Other vendors, such as FactSet Research Systems—which grew revenues 13.65 percent to $754.6 million last year—and Bloomberg capitalized on this, competing aggressively on renewals to take share from Thomson Reuters, Taylor says.  “If you’re the incumbent, you can’t let existing revenue get away from you, especially in tough economic times. With other vendors getting more aggressive about taking away revenue last year, that pushes Thomson Reuters to be more aggressive about keeping it, meaning that maybe they’re discounting more than they normally would or making more special deals.”

Interactive Data, the third-largest vendor, grew 9.06 percent with $868.8 million in revenue, while McGraw-Hill Financial—excluding S&P Indexes—saw the largest growth with a 15.4 percent revenue increase over 2010 to $546.8 million.

Although the five-year compound annual growth rate for data spend by investment banks is -1.29 percent, the segment has shown an upward trend in the last two years, up 8 percent in 2010 and 8.57 percent to $1.42 billion last year, according to Taylor.  “As deal volumes slowly increase around the world, investment banks have more available to spend on data and are slowly increasing their expenditure,” he says.

In comparison, the sector with the highest five-year CAGR at 10.37 percent is non-financial corporations that use data for strategy and investor relations purposes, and which increased spend by 7.89 percent in 2011 to $1.58 billion.  “These companies are looking for investment opportunities, potential partners or entry into new markets, and they have an appetite for information as a tool to support their strategy development, research and analysis,” Taylor says.
by Vicki Chan