Interview with Eric Salama: "TNS would remain an active living brand"

Mr. Salama, 2007 was a further growth year for the market research industry. What will 2008 bring?

Continued growth, tightening of client budgets and who knows, more industry consolidation?

What trends do you see for the global market research industry over the next five years?

Continued growth in demand for insights especially in emerging markets, more emphasis on how insights are used by clients, greater emphasis on data quality respondent engagement and privacy issues, clients continuing to consolidate budgets.

What do clients expect from a market researcher today?

Strong craft skills, an ability to combine insights from many sources, a deep understanding of their business and of how the insights will be used internally to make better decisions and a proactive approach.

What are the reasons for Kantar´s Multi-Brand-Strategy? Will you keep this strategy in the future?

We will. It is better for employees who can connect with their company cultures and better for clients who can tap into specialists. It is no surprise that our top 20 clients account for a higher proportion of our revenue than is the case for either TNS or GfK. It brings issues of its own around coordination and branding but we think that it is better to have strong individual companies working together.

Few days ago, the city of Nuremberg as well as the Free State of Bavaria have expressed their rejection regarding the planned GfK-TNS merger. Even though both parties can´t really influence the ballot of next Friday, do you expect more stakeholder resistance against this "merger of equals"?

In addition to the City of Nuremberg and the Free State of Bavaria, the CSU political party expressed some concerns. The members of the Verein have proved very smart in the past and have created a structure which is unique in the world. GfK has been very successful in the past. To threaten that success and to abandon a model which has served so well seems strange, especially when there seem to be more problems than benefits associated with it. So yes, I would expect more resistance and it would seem inconceivable to me that the board of GfK could ignore the wishes of the members. After all the Chairman of the Verein and of GfK, Hajo Riesenbeck, an active McKinsey consultant, has made it quite clear in the German press that he will not proceed if the Verein does not agree at the level of 75% required. The shareholder documents are also explicit in stating that the merger will only go ahead if 75% of the members of the Verein vote in favour of the merger.  The other puzzling matter is why Klaus Wubbenhorst has been sacrificed for the merger. Does Hajo Riesenbeck believe he is not fit to run the company from London?

Does the planned GfK-TNS merger make sense – from shareholders´, clients´ and employees´ perspective?

Neither TNS shareholders nor the Verein will be happy – both will find themselves compromising their approach at every major decision. The former will always want the best financial return, the latter will always want to do what is best for German industry and the promotion of research locally. I don’t think that the employees working in panel parts of the business will be affected for good or bad but those working in the custom parts of the business will find that the overlap in services is high in Germany and France and the need to find huge cost synergies that the management has promised will mean job losses and uncertainty. And the key area of weakness for both companies – the United States – would not improve as a result of this merger. I don’t hear many clients clamouring for TNS and GfK to merge

In case of an acquisition of TNS by WPP: Would you prefer an integration rather than maintaining the TNS brand under the Kantar roof?

TNS would remain an active living brand.

A merger of GfK Germany and TNS Infratest would not just provoke the Antitrust Agency, but also some key customers. Isn´t TNS Infratest the real core Kantar is interested in?

We have a strong business but believe that the combination of TNS and Kantar is a better geographical fit than the proposed GfK/TNS merger and that it is one which offers more to clients. Of course the TNS Infratest business is recognized as a good one but the possibility to create compelling client offers and environments in which employees to thrive extends into many more areas.

In case of a merged GfK Germany/TNS Infratest: What integration activities are necessary to meet both the announced synergy savings and the ambitious 15% margin? 

I do not know what level of analysis GfK and TNS have undertaken.  From the outside it seems that the accountants have come up with very ambitious numbers and it seems to me that second tier management haven’t been deeply involved in the realities of what is possible or desirable. One thing I would say is that GfK has traditionally approached operational, IT, Internet issues in a decentralised way.  To achieve these synergies would require not just deep cuts but a change in culture and a move away from the decentralized way that GfK have approached things.  Also, the shareholder structure and management structure seems very cumbersome, non-aligned and devisive.