WPP chief points to consumer insight as ‘growth engine’

UK— WPP’s acquisition of TNS in November helped push full-year revenues in the Kantar Group, its information, insight and consultancy arm, up almost 44% to £1.3bn, the marketing services group revealed today.

Stripping out the effects of currency movements, revenue in the division increased 27.8% – “largely as a result of the acquisition of TNS”, WPP said. On a like-for-like basis, which excludes the two-month contribution from TNS, revenue was up 3%.

WPP described 2008 as “a year of two contrasting halves” and this was true of Kantar’s performance. Like-for-like growth was 5% in the first half, CFO Paul Richardson said, falling to a rate “just under 2%” in the final six months of the year.

The insight division’s headline profit before interest and tax increased 41% to £147.6m, but as a percentage of revenue this was down 0.2 margin points to 11.3%.

Kantar accounted for 17% of WPP’s £7.47bn group revenue for 2008, but with TNS added in, the insight division will make up around 27% of the total business going forward.

WPP CEO Martin Sorrell described the group’s consumer insight capability as one of its “engines of growth”. He said the acquisition of TNS “gives us a major competitive advantage”.

Updating investors on the progress of the integration of TNS into Kantar, WPP said: “Our estimates of synergy benefits [£52m] are being met and in fact being added to. The cost benefits being identified will also be realised sooner than originally anticipated and the cost ratios will be in line with our original projections.”

Last week Kantar unveiled plans to merge TNS’s custom division with Research International and to form dedicated media, healthcare, retail and social research units by bringing together the relevant parts of TNS with other companies in the Kantar group. (You can read more about that here). TNS’s back office operations will also be folded into Kantar Operations, which provides back office support across the group.

Job losses are expected from the integration, but no figures have been given yet on how many staff will be affected.

WPP said cuts had already been made across the marketing services group in the fourth quarter to bring its year-end like-for-like headcount growth to 1.3% – down from an average like-for-like headcount growth of 3.9%.

“Headcount fell through a mixture of non-replacement, the attrition rate and increased severance,” WPP said.

Author: Brian Tarran