Not such a big deal, but a good fit in Asia

But from an Asia perspective, it seems the two companies will complement each other relatively well – over time, clients may find they actually benefit from deeper expertise and operational efficiencies. For employees, the integration may be a lot less painful than they think. Here’s why.

Same size, different footprint
Overall, the two companies are of a similar size in Asia. Ipsos’s 2010 annual report shows APAC (external) revenue of around USD $180m. There is no directly comparable figure from Synovate as the company uses two mechanisms for reporting revenue – total revenue (which was $260m for APAC last year) and net revenue (with a corresponding figure of $160m). This latter number removes direct costs – which, presumably, will include a substantial amount of business between the different offices of Synovate. At a guess, assuming two-thirds of direct costs are attributable to intra-company sales, the comparable APAC figure may be in the region of $200m.

However, these aggregate numbers mask quite pronounced differences by country. We estimate Synovate’s southeast Asia businesses probably top $50m in combined external revenue, compared with Ipsos’s at about $27.5m. So in this part of the region, it is Synovate that is the much bigger fish, with perhaps nearly double Ipsos’ revenue. This is not surprising, considering their AMI heritage.

Indeed in several countries, there is very little overlap (if any). Ipsos doesn’t have a presence in Vietnam, whereas Synovate launched there last year. In Malaysia, Synovate has an established business; Ipsos entered the market only last year. And Ipsos’s Hong Kong operation is relatively small (revenues of around $3.5m), whereas Synovate is a very big player this market.

Complementary specialisms
Moreover, even in countries where both companies are well-established, there is generally less overlap than one might expect. In many areas, there is virtually none – examples from the Synovate side include a large healthcare practice, business consulting and Censydiam. For Ipsos, there is their advertising specialism, social research and several other areas that reflect their unique matrix structure.

Even when one considers less specialised research, the two companies are quite complementary in many areas. Synovate’s qualitative side of the business is rather more developed and, in any case, Asia is a tight labour market for qualitative researchers (largely because of the growth in freelancing). For quantitative FMCG research, which accounts for a very large proportion of research spend in Asia, Synovate have key contracts in place with Unilever, whereas Ipsos have P&G. In a combined organisation, the need for Chinese Walls means teams would need to remain distinct. Ipsos is also relatively weak in the financial services sector, a real area of strength for Synovate. The list goes on.

Not such a bad fit
Overall, the two businesses will complement each other relatively well. That’s good news for researchers on both sides of the business. The combined organisation would dominate custom research in the fast-growing China market, and enjoy strong economies of scale there. The overall footprint in Asia will be stronger, facilitating better (and more cost-effective) delivery of pan-regional research, and thus a higher probability of winning major multi-country pitches. Ipsos would inherit Synovate’s strong operational infrastructure. And there will be ample opportunity for cross-selling of proprietary products from both sides of the business to an enlarged client base. All of this would potentially accelerate growth, which is already healthy for both businesses in Asia. Assuming the integration is handled well, we believe employees from both Ipsos and Synovate should see this as a great opportunity and not a threat.

John Wigglesworth is a former GfK director, now running Asia Research Recruitment in Singapore