The Large Agencies in Asia – SPECIAL REPORT

In many ways, the ‘Large Agencies’ hold a tighter grip in the Asian research business compared to Western markets.  Their market shares tend to be higher, since young industries and unsophisticated buyers are often attracted to ‘big names’.  Anyone who has delivered a credential presentation to a client in Asia has probably been asked questions such as ‘how many staff do you have’, or ‘how long has your company been in operation’.  This type of client preoccupation over the size of their agencies being some kind of determinant of reliability and credibility has worked to the benefit of the Large Agencies who can boast impressive networks, history, resources, and infrastructure.

But the research business in Asia is maturing, and the buyers are becoming more sophisticated, focusing more on value, insight, customization, and faster turnaround – areas where independent firms can often out-maneuver their larger competitors.  The research market in Asia is therefore becoming more fragmented, and has been confirmed by successive surveys of market research buyers undertaken by Asia Research in 2008 and 2009.  In the most developed markets in the West, the large agencies are now almost in the shadow of the vast array of small to medium sized agencies, many of whom offer the benefits of both being ‘small enough to care, and big enough to matter’.

The merger last year of two of the large players in Asia, TNS and Research International, is perhaps a sign of how large agencies are no longer able to maintain their share of the market through organic growth alone.  Rumors of further mergers of among the big players continue.  Speculation over Synovate being acquired by one of their brethren is no longer news since it has been the stuff of speculation since 2005.

But for the moment, it is business as usual for the large agencies.  And similar to all agencies in the market they face the usual battle for business and staff.  To their credit, ‘the Big 4’ as we refer to them, meaning Nielsen, TNS/RI, Synovate, and Millward Brown has maintained staff satisfaction levels throughout the economic crisis (albeit lower than their competitors a year ago), while all other agencies has seen staff satisfaction ratings fall, particularly with the other global firms.

The Asia Research Staff Satisfaction survey, that forms the lead article for this edition, also incorporated a brand perception survey of some of the larger agencies in Asia.

This Special Report on Large Agencies in Asia reports on how employment at these firms is viewed by the industry at large, and also those who have or are currently working in these companies.  It also draws on observations made by senior managers recently employed in these larger firms to provide context to these findings.

The survey asked respondents which of a range of HR and work related attributes they associate with various large agencies including Nielsen, TNS, Synovate, Millward Brown, GfK, and IPSOS.

Inevitably the results were skewed by familiarity of researchers across Asia with these organizations.  Generally Nielsen as the market leader in many Asian countries tends to be rated stronger than the other companies across many attributes.  Also Nielsen and TNS were rated higher because about one-in-four of those responded to the survey either currently works for these companies or have done so in the past.  Hence when analyzing the results it was only considered fair to examine the image of these employers based on where their image is stronger or weaker relative to their average rating across all image attributes.  And in a competitive context, analysis was undertaken on how their image compares among those who either work for them currently or have done so in the past, i.e. people who have had some direct experience of working for these companies.  The sample sizes only among those who currently work for the various firms was deemed to be too small to form a basis for analysis.  Likewise the number of respondents who currently or have previously worked for GfK and IPSOS was also considered too small for analysis and the image of these companies at a wider market level is also not strong enough to draw any meaningful conclusions.

Asia Research recognizes that the analytical approaches used by this publication will not be entirely free from bias.  But it also recognizes that any bias has an equal chance of affecting any one of the companies being analysed!

Nielsen – the industry behemoth still gets some of the fundamentals right:

Nielsen is usually the largest employer in the markets covered in the Asia Research survey.   Its strongest image at an overall market level is for offering good career prospects and secure employment, and providing good training for its staff.  Among those who have not worked for this firm before, it suffers from all industry stereotyping of being the oldest, largest, and perhaps a boring company.  Hence its image generally ranks lower for innovation and progressiveness, and also for being less fun to work for.  However, unlike their peer group, they seem more likely to convince former employees to return to the company – with more Nielsen employees in this survey having worked for Nielsen at some time in the past.

Among existing or past employees, its brand performance versus its competitors is generally rated ‘in the middle’.  Interestingly among clients, it ranks as the large agency-side employer who clients would most like to work for (alongside Millward Brown).

Those who pass through Nielsen have generally credited the company for building its client value proposition by concentrating on getting their infrastructure and processes right, without having to resort to hype and slick PR to promote themselves in the same way as other firms.

It maintains a strong commercial position by cornering the retail audit market and media research, and killer FMCG research tools such as BASES, although this strength has been viewed by some as resulting in some complacency.  It has been noted that the other large agencies in the market are specifically targeting Nielsen’s market in an effort to increase their own share, for example the assault on their retail audit business from Synovate using the tools obtained through Synovate’s acquisition of AZTEC.

Others also observe that the high margins that have been achieved through their traditional retail audit business then sets an unrealistic benchmark for their ad hoc services.  It has been commented that rigid internal pricing structures can often price Nielsen out of the market for many ad-hoc projects leading to frustration among some executives who are keen to build a more Cipro diversified client base.

TNS – could emerge from the merger as the best in class:

Following the acquisition of Research International in 2008, the new TNS will be a very significant player in the market research industry in Asia.  Its ability to tap on the best talent across both companies and to also benefit from shared resources will put it at a significant advantage in the market place in 2010 and beyond.  Observers though are critical of the way the old Research International has been overshadowed by the acquirer.  Many comment that the old RI had many good proprietary analysis tools that, perhaps for the sake of expediency, have now been assigned to the rubbish bin.  Some also speculate that a clash of personalities and egos as a result of the coming together of the two companies could result in in-fighting and eventual staff churn.

Some have observed that either by design or by luck, the merger of the two companies has resulted in relatively little duplication of their client bases.  Indeed this company stands out as having interesting and varied projects that probably reflects the range of their client base that they now have.

They have also been successful in securing big global accounts, some of whom are served directly from Asia, and being more discerning about the type of business it pursues mindful of the need to maintain bottom line performance.

Synovate – the new leadership has got their work cut out!

Synovate has in many ways been one of the industries greatest success stories.  A brand that is still only seven years old now ranks in the top 10 research companies globally, and is one of the top research companies in Asia.  Within Asia, Synovate was born out of the old Asia Market Intelligence (AMI).  In the 90s, it was the fastest growing research company in Asia, characterized by rapid expansion of their network, the development of a suite of proprietary tools, flashy and high profile PR, and with the reputation of being the ‘fun agency’ in Asia associated with work hard but play hard too.

The party mentality though tended to appeal to a small group of mainly expatriate employees, highly loyal to leadership and enriched by generous share allocations in the sale to Aegis in 2000.  However, the fact that 90% of staff were Asian and generally had the same needs as your average Asian researcher, meant that many did not buy into the company culture.

The obsession with top-line growth characterized by AMI’s growth in the region is one that continues under the Synovate brand, but has now been highlighted as perhaps the underlying cause of poor bottom line performance.  In an effort to sustain their growth, Synovate gained the reputation of chasing all business, and for pricing itself low in order to win the business.  It is argued that this approach resulted in Synovate returning a loss of over £3 million the first half of 2009.

In the Asia Research survey, Synovate’s image among its own staff and among those who used to work for the firm is the weakest on almost all attributes, even surprisingly on ‘innovation and progressiveness’ from which its own company name is derived.  The only area where it does perform strongly is on being ‘fun to work for’, which is a characteristic that still prevails from the old AMI days and which might be losing relevance.

The new management that takes over as a result of the outgoing CEO’s retirement is expected to involve a very different style of leadership.  It will face an uphill task to restore its brand image from an employment point of view.

Millward Brown – making an effort to understand staff more:

In many ways Millward Brown has out-performed their peer group in employer brand image, particularly in providing secure employment, and understanding staff needs.  It also performs well (along with TNS) on ‘innovation and progressiveness’, and training schemes, and is also up there with most of its peer group in offering good career prospects.

This suggests that the company has put more effort into building an HR value proposition, and creating more dialogue with staff.  Some comment that Millward Brown has also done more to increase staff retention even reversing staff decision to leave the organization.

However, the downside is that among those who currently work for Millward Brown or have done so in the past, fewer would put them in their top two companies if they were to work for another large agency.  Based on the image ratings, it appears that it does not have the range of interesting and varied projects to make a new career with the company motivating, e.g. too much of continuous or brand tracking research.

Conclusions:

At a total market level (both existing, lapsed, and prospective employees) the large agencies are generally associated with offering good career prospects, secure employment, good training, and interested and varied projects.  For most companies they are also seen to be ‘innovative and progressive’, but perhaps less so for Nielsen.

For almost all companies though, they have a lot of work to do to demonstrate they ‘understand staff needs’ and are ‘fair in their dealings with staff’.  Millward Brown though appears to have addressed these points more, and probably wins the prize for having the most effective HR function.  The strongest company going forward though is arguably TNS, and stands out from the competition in having the most interesting and varied projects.  Although this is ranked as less important to staff, generally all these attributes matter.  TNS also has the lowest staff vulnerability, and being high in the consideration set for future employment implying that the attributes where it does stand out from the competition, i.e. job variety and innovation, matter more to staff than they have indicated in this survey.

But the fact remains that the greatest competition for staff will come from the diverse choice of smaller independent companies, many of whom are viewed as being more appreciative of their staff, and with more commitment to a fair work-life balance.  One-in-four of researchers, even if out of work now would reject working for any of the large companies and very few who have been through the large agencies feel that have any commitment to a fair work-life balance.  Some observe that careers in the large agencies are also for ‘corporate people’ looking for business management careers, and not to the strong senior researchers who the clients really look for.