NEWS30 March 2010

Synovate chief marks China, France and Germany as top shopping destinations

M&A UK

UK— Aegis has earmarked £190m for acquisitions, some of which will be spent by its market research agency Synovate. Top of the shopping list, according to CEO Robert Philpott, are purchases in China, Latin America and Africa – and France and Germany.

Speaking to Research, Philpott said Synovate’s “lack of weight” in France and Germany is a “perennial problem” for the agency.

“We were late to the market, it’s the homeland of two of our main competitors [Ipsos and GfK] and there is not much there left to buy,” said Philpott. Still, that won’t stop Synovate from looking.

Growth in those markets might not be as impressive as that in some of the other emerging and developing economies where Synovate is keen to make acquisitions, but Philpott insists there is still growth to be had from competition – from winning global accounts from global companies based on strong coverage of major consumer markets. “I do not want to surrender France and Germany,” he said.

He boasts proudly that through 2009, where net revenues overall were down 2.2%, Synovate still saw real growth in spend by its top 20 clients. Otherwise, in keeping with other big agencies, last year was tough for the agency, and for Philpott personally, who took over as CEO in August at the height of the global recession.

“Most of us who run the business… most of us had only ever seen growth,” he said. “We had seen occasional pockets of recession over the years, but never anything on this scale.”

Philpott says the agency was caught by surprise at the severity of the recession and its impact on the business, and as a result, “We were possibly a little slow to react.”

But react it did eventually, cutting some 10% of staff by year-end. Hardest hit by job cuts was the corporate centre. Philpott said: “We left many of the country and account management teams alone.” The agency also managed to wring savings from its property portfolio and from more aggressive use of procurement – a tactic learned from cost-conscious research buyers.

Philpott summed up his first seven months in charge as a period of “significant housekeeping” – a chance for clearing some of the clutter that has amassed over almost 10 years of growth through acquisition. Coming out of recession, those acquisitions will resume again, as previously mentioned, but Philpott says that by and large Synovate has achieved its goal of achieving scale sufficient to compete globally and for global contracts.

He talked of the agency preparing for phase two of its development, though quite what that will consist of is still being thrashed out internally. Certainly the recession has wrought much change in the research business, and Synovate – as with all other agencies – will be looking to adapt.

Looking to the future of the business, Philpott said: “I don’t believe that industry pricing levels will ever return to what they were, but the volume of business flowing back will be substantial.” He’s working on the assumption of flat to 1% growth in the first half of this year, but expresses hope for better things to come in the second half.

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