• by Joe Mandese  @mp_joemandese, May 20, 2011

Nielsen Co. has agreed to acquire NeuroFocus, one of the leading companies applying neuroscience to advertising, media and brand research, MediaDailyNews has learned. The deal, which is expected to be announced soon, follows a bid by WPP Group, the largest advertising and media services company in the world, and an arch rival to Nielsen in marketing and media research.

A Nielsen spokesperson said the company would not comment, and NeuroFocus Founder and CEO A.K. Pradeep was traveling out of the country and was not available to comment, but executives familiar with the deal say Nielsen's takeover was sparked when WPP made an unsolicited offer late last year that triggered a buyout option for Nielsen, which had been a minority stakeholder in NeuroFocus.

Nielsen originally acquired a 30% stake in NeuroFocus in February 2008, and Nielsen CEO David Calhoun is a member of NeuroFocus' tightly held board.

The acquisition is interesting for a variety of reasons, especially the fact that neuromarketing research is getting very hot among some big marketers and agencies, and NeuroFocus has been one of the most aggressive and visible players in the field, announcing a new technology it claims can literally read people's minds.

The technology, which is actually called Mynd, utilizes a lightweight cap that can read and interpret the electrical signals emitted by human brains with a degree of fidelity that NeuroFocus' Pradeep claims is "medical grade," and could one-day be used by paralyzed people to control machines and other technology simply by thinking about it.

Mynd is also equipped with Bluetooth technology enabling it to interact with the media devices that people might be using while they are having their brainwaves measured and analyzed.

The technology, which might have been considered science-fiction only a few years ago, is part of a rapid progression in the field of neuromarketing research that has taken Madison Avenue by storm. It was one of the main subjects during the Advertising Research Foundation's annual conference in New York last month, where the trade group revealed the industry's first ever neuromarketing standards, an initiative that followed some extensive testing among leading neuroscience researchers, which NeuroFocus declined to participate in. On the day the ARF released its new standards, NeuroFocus released its own "neuromarketing standards," creating confusion and sending a ripple of surprise and outrage among ARF conference attendees.

What Nielsen might ultimately do with NeuroFocus isn't clear. On the one hand, the potential for technologies and methods that can literally read people's minds - both the cognitive thoughts and the subconscious emotional responses they have to media and advertising stimuli - would seem to be a breakthrough for a company that is the largest provider of marketing and media research in the world. On the other hand, it could challenge the efficacy of the kind of survey-based and consumer tracking methods and systems Nielsen has invested in over the years to make it the world's largest researcher.

As far back as the earliest days of TV ratings measurement in the 1950s, industry executives have joked that the ultimate form of measurement would be one that bypassed surveys and metering devices altogether, and simply connected electrodes to human brains. Now, with Mynd, a technology that effectively does that via so-called "dry electrodes," Nielsen has the opportunity to actually do that.

It's also not clear exactly why WPP wanted NeuroFocus, or what the Madison Avenue giant would have done with it. A WPP spokesperson also declined to comment, but the company also is one of the world's largest purveyors of marketing and media research, and its Millward Brown advertising testing division has been cultivating its own neuromarketing measurement methods.

"Some of our biggest brands are all sexed up about this category," one WPP insider noted, adding that the bid for NeuroFocus likely would have been an effort to accelerate some of the work Millward Brown has been doing, but also potentially to attract new clients.

"Right now there isn't a lot of money being allocated to this area, but it is very sexy stuff that is showing the potential for real growth," the WPP executive speculated.

With some of the world's biggest marketers using it to probe consumers' brains, NeuroFocus would indeed have seemed to be a plumb target for takeover. The company has set-up what it calls "NeuroLabs," full-time brain measurement laboratories directly on the facilities of big marketers including Procter & Gamble, Coca-Cola Co., and even tobacco marketers R.J. Reynolds, according to executives familiar with those accounts.

While NeuroFocus has had the highest profile in the industry, the field of neuromarketing research has blossomed into an important cottage industry within the overall marketing and media research field, with at least half a dozen significant players utilizing a variety of biometric measurement technologies applied to the most current scientific principles about how brains are influenced by and respond to media and marketing stimuli.