Following its acquisition of Synovate, Ipsos has become Egypt and the Middle East's largest research powerhouse

On October 12, 2011, Ipsos announced it had successfully completed the acquisition of Synovate, a business with an enterprise value of £525 million (LE 5.03 billion), making it the third largest market research company in the world (behind Nielsen and WPP's Kantar) and ahead of GfK and IMS Health.

"Ipsos has a very interesting history being known as the fastest growing research company in terms of size in the world for the past 15 years," says Amr Kais, Ipsos Country Manager. "There are two kinds of growth: organic growth and acquisitions. We were enjoying double-digit growth for a long time and this was coupled with some acquisitions and partnerships around the world."

A researcher in his own right, Kais led Ipsos Egypt long before the acquisition was on the table. The American University in Cairo marketing professor set up his own research company in 2000 that ended up partnering with Ipsos in 2006 to form its Cairo-based outpost, Ipsos Egypt.

When the Synovate deal was done at the end of 2011, who better to take the helm but Kais himself? Under his direction, six-year old Ipsos Egypt had grown very fast, closing 2011 on a much higher turnover and profit compared to 20-year-old Synovate, although Kais prefers not to share the numbers.

Synovate, which is the research arm of Aegis Group, is one of the world's top media and digital marketing communications groups spanning 80 locations globally. With synergies in operations and a common client base, Ipsos made the move to acquire Synovate globally.

Research is the keyword here. "Ipsos's slogan would be 'the home of researchers,'" Kais explains. "We are the only research company in the world that is controlled by researchers, not venture capitalists or investment banks."

In the words of Ipsos Co-President, Didier Truchot, a researcher himself, "With Synovate, Ipsos strengthens its leadership position in its chosen areas of specialization and enhances its intellectual and commercial offering to bring enriched and improved solutions to our clients."

Post-acquisition Ipsos
The acquisition became effective January 2012, and Ipsos hit the ground running as the largest research company in the Middle East and Egypt -- something Kais says is a source of pride and worry at the same time.

"It's a source of pride because we are now 'the movers and shakers' [in the industry]. We are definitely the trendsetters of this industry," he says. "On the other hand, it's a big responsibility being number one, especially in a market that's premature like Egypt where we really need to make sure that we set a model for others to follow in everything we do."

An underdeveloped market has several drawbacks that go beyond just finding more clients to buy the research, although that is a concern on its own. "Research is still widely used by multinationals -- other local companies are starting to realize how important it is," Kais explains. "We are also a [scarce] information environment by default; we are not used to knowledge, we are not used to information."

Bureaucratic hurdles present additional challenges for researchers in Egypt. According to Kais, Egypt is so used to secrecy that the nation lacks legal infrastructure governing information dissemination. "Research companies like ourselves have to get permission before asking [consumers] if they like vanilla or strawberry ice cream flavors," Kais says, explaining that approvals for a survey like this would have to come straight from the Central Agency for Public Mobilization and Statistics (CAPMAS).

"In other environments and mature markets, [market research] is a given," Kais says. "We do this by default and the exception would be to get permission in case you are going to tap into restricted [information] or [the respondent's] privacy."

Kais adds that the market is also premature in terms of standards applied by research companies in terms of respecting privacy, applying the correct methodologies and transparency practices with clients and respondents.

"We witness very sad practices by other research companies because they are not regulated as [they would be] in other mature markets," Kais says.

While Egypt lacks a regulatory body for market research or a marketing body that can regulate the industry, Kais is hoping a private initiative could fill this void. He had taken initial steps to start such an entity during his tenure as chairman of the marketing committee at the American Chamber of Commerce and with some of his fellow professors at AUC to form a professional association.

Ipsos in Egypt
Despite being a premature market and one where your product is mostly appreciated by the niche market of multinational companies, Kais is confident of the potential the market holds. With business growing at 40% over the last two years, he sees significant future growth.

"The local clients [are increasing] and I find that it's our role as leaders in the market to educate our clients to upgrade their marketing knowledge and know how," he explains. "For example, last year we organized several seminars on the different marketing dimensions: loyalty, customer satisfaction, media planning and so on."

It's two steps: educating the client about the importance of research and -- just as importantly -- teaching them how to use the research. "As a researcher, my issue is not only selling research so that I can make better business. My saddest moment is when I give you the research and you don't use it well," Kais says.

Although the market is premature, the competition is already in place. Yet Kais confidently explains that Ipsos has grown very 'tough' for its competitors. "We grew in this very difficult year in 2011, versus [others who witnessed a] free fall drop," a confident Kais states. Ipsos has maintained a very low employee turnover -- something Kais says competitors can't match overnight.

 "It's all related to this unique environment that we preserve at Ipsos," he says. "They can pay more, they can [offer big] titles, they can do a lot of things, but this unique environment that made me able to maintain a rate of 0% employee turnover in the last three years, is something that I don't think anybody else can copy overnight."

Kais repeatedly stresses that Ipsos is unlike any other research company in the market simply because it was founded and run by researchers -- the key factor setting it apart from its competitors. That, and Ipsos's competitive understanding of the local market.

"We have international staff with Egyptian backgrounds and understanding of the Egyptian market," Kais says, as he highlights Ipsos' strength in tapping the local market. "This is not to say we don't have expatriate staff -- we have a lot, but they are here to [pass] knowledge and experience on to help us grow and develop junior researchers."

When it comes to the local understanding of the Egyptian market, Ipsos places those with the right understanding and background in these key areas. Moreover, an expatriate at Ipsos believes in the company and is here to stay.

Ipsos MORI chief executive Ben Page was cited on Brand Republic website saying that the acquisition would complement both companies' strengths well. "Synovate has got brilliant coverage in Africa which Ipsos doesn't have." According to Page, the deal gives Ipsos a greater edge in the African market.

Ipsos on Egypt
As a researcher analyzing the market pulse, Kais has a front-row seat to monitoring the current state of the Egyptian market. Yet there isn't a single clear cut answer.

"It's the market of all odds," Kais says, chuckling. "People are sometimes pessimistic yet they never stop buying things. We were always under the perception that 2011 was a bad year across the board, but when you look into the figures, you realize that this is not true: we have witnessed huge growth in many sectors."

Despite the political and economic uncertainty, several sectors witnessed growth in 2011. "Some of the leading confectionery and chocolate manufacturers tell me 2011 was an unprecedented year in terms of growth for them which proves the fact that anxiety increases the consumption of chocolate," Kais says.

Another sector that's fared well is real estate. The February 2012 Cityscape Egypt exhibition has revealed heavy demand -- unprecedented, according to Kais, even when compared to the sales recorded at previous Cityscape exhibitions.

 Kais suggests the trend could reflect the instability of the financial sector and Egyptians' preference for holding assets rather than liquid cash.

© Business Today Egypt 2012