Iconoculture profits from looking behind the curtain

Iconoculture Inc., a Minneapolis company that tracks cultural and consumer trends for a blue-chip client list, has been out front on a broad array of forecasts ranging from the $40 billion market for upscale pet toys to baby boomer nostalgia that morphed into a growing taste for "retro" products.

One of the more memorable forecasts, however, was delivered in fall 2007 at a conference of clients and Iconoculture staff.

Citing consumer debt, trade deficits and growing evidence of a subprime mortgage meltdown, among an array of economic threats that apparently escaped the notice of the White House, Iconoculture financial prognosticator Chris Keating issued a chilling prediction:

"We're going down."

Iconoculture did not escape the ensuing wreckage, said CEO Dan Frawley, noting that the company's revenue in the last half of 2008 declined 15 percent from a year earlier. Yet the gross for the full year still rose 10 percent from 2007's $15.9 million, a coup given the looming financial collapse.

Even better, despite that modest gain, Iconoculture still ended 2008 with a five-year compound annual growth rate of nearly 80 percent.

The question is, what happened to hoist the company from $1 million of revenue in 2003 to a $17.5 million gross in 2008? By all accounts, it was the decision by Iconoculture founders Vicki Abrahamson and Mary Meehan to hire Frawley, 50, as CEO in 2002.

Then, as the business shot skyward, he raised $16.5 million in three offerings to finance the growth.

Frawley's strategy goes well beyond presenting mere trend data on the company's website, which Abrahamson and Meehan launched the year before he came aboard. More important, Iconoculture advisers help clients interpret the data and translate them into new products, marketing approaches and branding ideas.

"It's not just the data, but the meaning behind it; the why behind the what," Frawley said.

The search for that meaning involves a dozen research and advisory teams focused on areas ranging from demographics, consumer segments and financial trends to food and beverage, health and beauty and media, entertainment and technology. Throw in several ethnic groups, plus leisure, fashion, travel and sports, and you get a passel of "whys" to go along with the "whats."

The key is the cross-referencing that occurs among the specialties, said Frawley, who offered this example: Researchers spotted an upward trend in the sale of presweetened cereals to baby boomers, and went in search of the why.

The payoff for all this prognosticating is a heavyweight client list that ranges from General Mills, Toyota and Nestle Purina to MasterCard, Hershey and H.J. Heinz to Hyundai, Ford and Panasonic.

Clients pay annual subscription fees of nearly $50,000 for access to the website and to all of Iconoculture's strategic advisers for five of the client's staff members. Frawley said the website records 4,000 hits a day and advisers receive an average of 80 calls a week.

It appears clients regard the fees as money well spent.

"We use a half-dozen trend services, and Iconoculture is the best of them," said Margie Reynolds, assistant manager for consumer trends at Brown-Forman Corp., the wine and spirits giant in Louisville, Ky. "They give us a 360-degree view of the consumer; not just what's going on in the market, but why."

Eileen Mahdi, director of market insights and product strategy at Hyundai Motor America in Fountain Valley, Calif., agreed: "Iconoculture's matrix structure enables businesses to tap expertise in numerous areas of interest."

But it was a brief stint as an executive at the Gartner Group, the technology-focused research firm, that triggered the Iconoculture success: It introduced Frawley to the subscription and advisory model.