Interview with Eric Salama, CEO of Kantar on the Bain Capital acquisition, the transformation of the market research industry and the Kantar business, and what the future may hold.
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CEO Series: Interview with Eric Salama, CEO of Kantar

Interview with Eric Salama, CEO of Kantar on the Bain Capital acquisition, on the transformation of the market research industry and the Kantar business, and what the future may hold.

After months of rumors, the news hit a few weeks ago that Bain Capital was acquiring 60% of Kantar. DRNO had the details:

WPP has agreed to sell 60% of its data, research, consulting and analytics business Kantar to private equity firm Bain Capital, in a deal which values the whole of Kantar at around £3.2bn ($4.0bn).

WPP CEO Mark Read is currently driving a turnaround strategy and in March announced a formal process to sell Kantar – home to the agencies formerly known as TNS, Millward Brown and Lightspeed – with WPP retaining a stake in the business. Earlier this month, WPP confirmed that it was in exclusive talks with Bain Capital about the sale.

Proceeds to WPP from the deal (which is subject to the approval of WPP shareholders and regulatory and legal approvals) after tax and continuing investment in Kantar are expected to be £2.5bn ($3.1bn), and WPP will retain 60% of net proceeds to reduce debt. The balance of £1.0bn ($1.2bn) will be returned to shareholders. Read says that with a much stronger balance sheet and a return of approximately 8% of current market value to shareholders planned, WPP is making good progress with its transformation.

As part of the deal, Kantar will be ‘carved out’ of the wider WPP group by way of a reorganisation, and placed into a holding structure ahead of completion. Eric Salama (pictured), who remains as Kantar CEO, comments: ‘Our new ownership structure presents a great opportunity for Kantar, our employees and our clients. In Bain Capital we have a partner who shares our ambition, brings relevant expertise and – with WPP – can help us accelerate our growth and impact for clients. We are focused on delivering ‘human understanding at scale and speed’ and the ‘best of Kantar’ more consistently. We will do so by investing more in talent and by becoming a more technology-driven solutions provider’.

Of course, I was excited to get the inside story on this so I reached out to Eric Salama, CEO of Kantar, to set up and interview and he graciously agreed.

In this wide-ranging interview, Eric and I discuss how the deal came about, what it means for the future of Kantar, and more broadly his view on the future of the insights and analytics industry.

You can watch/listen or read the transcript (edited for clarity) below, although I recommend watching and listening to get the nuance of the conversation. One note; there was an unfortunate technical glitch that resulted in my camera not being recorded; since I have a face for radio that is likely a small blessing. Also, there is a strange recording artifact of a periodic “beep” which is vaguely annoying but doesn’t interfere with the interview itself.  Please pardon both issues; despite being a technophile, apparently, my skills don’t include AV!


Video Interview


Transcript of the Interview

Lenny: Hello everybody! It’s Lenny Murphy here with another of our interview segments and today I am blessed to have the man, the myth, the legend – Eric Salama, world’s toughest CEO of Kantar. How are you Eric?

Eric: I’m reeling from your introduction! I’m fine; thank you.

Lenny: Well you know, it’s a bit of the Irish in me; I’ve got a touch of the Blarney Stone. But my respect for you is certainly profound and has been for a long time. So, we were chatting beforehand that you’ve had a hell of a year with things you didn’t expect and things that you did expect and how it’s all played out. Talk about how you got to this point in 2019 for Kantar and for you personally.

Eric: I think it’s pretty straightforward in the sense that we decided a while ago, going back probably 15 months or so, that Kantar could be a better partner for its clients, could grow faster and have a bigger impact in the market and be a better place for our employees if we had a different ownership structure, so we really launched that process around October 2018. We spent five months or so putting together a business plan, stress tested it every which way and really thought about the next five years in a way that we have never thought of before.

We then went out and talked to probably 15 or so Private Equity companies. We got bids from about half of those and then narrowed that down to a few companies to take to the second round of due diligence. We spent probably about six weeks then with two of those Companies who did a lot of work with us. We got final bids and we selected Bain Capital in the end as the partner to go forward with, which we’re absolutely thrilled with and we’re thrilled about them as a partner; we have a shared ambition to grow the business in a certain way and to really take it forward.

Lenny: This is at least the second research play for Bain, with the first one being Macromill. What attracts them to this industry specifically?

Eric: They do a ton of work in the market talking to clients, talking to commentators, talking to ex-employees, talking to a whole bunch of people and especially clients and I think they came to the same conclusion as us which is we are in a growing market. All clients want to put data and insights at the heart of their decision making so the demand for what we do is big and is growing and clients said to them Kanter is unique in terms of having a global scale. We really trust them. We like the fact that they understand what’s happening and why it’s happening. They understand we are a unique asset.

I think they came away thinking it’s an industry in transformation. There’s lots of stuff that needs doing in terms of introducing more and more technology and speeding up the processes but it’s an industry that’s growing.

It’s an industry in need of transformation which is attractive for a PE firm and Kantar has unique assets. I think that combination of things was probably the mix that really made them very passionate about the business.

Lenny: Yeah, one thing that has always impressed me about Kantar and your leadership has been the almost constant evolution. From the House of Brands that was in play for a few years to beginning to consolidate them under a single brand that you began a few years ago and then, of course, your bets on tech partners such as your early investment in Zappi and recognizing where the world was going to go from an automation perspective. You’ve been forward-looking in how that process was going to play out and then bringing that in-house eventually with Kantar Marketplace. You’ve done many bold things to disrupt your own business in a variety of ways. What does that look like now? Is that path going to continue? What are some of the things you can share without giving away the secret sauce if you will as you think about the future with a partner like Bain in further ways that you’re going to embrace disruption yourself to get to that future state of the business?

Eric: I think generally speaking in the world that we’re in you can either be the disruptor or you can be the disrupted. There isn’t a middle. This isn’t an area where you can just happily keep on going as you were and I’d much rather be the disruptor than the disrupted and that does mean disrupting our own business. You’ve seen that kind of evolution: as you say, we’ve gone from having dozens and dozens of different brands gradually over a period of time to go to market with one brand and that’s really designed to make us a simpler partner to work with without losing the expertise and the specialization which clients really value.

We need to become simpler. We changed all of our internal incentives a few years ago so that people get rewarded on the basis of clients overall results. That was a big step forward. We have done all the technology kind of self-disruption and the most obvious example of that at the moment is Kantar Marketplace where clients can self-serve around concept testing and around copy testing. We think of it as clients need a choice; sometimes they need the deep diagnosis and the longer time period of full-service for more important campaigns but sometimes they need really quick turnaround where they want it back in a day and want it much cheaper. I think we have to continue to do that.

I think what you’ll see us do going forward is really try and behave more and more like a start-up within a big corporate environment and I would say from a client point of view speed and simplicity are the two key needs. We need to radically shorten turnaround times and delivery times and we’re working with a number of our clients to do that and by that, I don’t mean, you know cut a day or two off stuff. I mean half the time, or make it a third of the time, or in terms of turn-around do some stuff in real-time as we do in Latin America with media at the moment. We want to make everything much more real-time, make everything much more predictive, make everything much more forward-looking. So that’s an agenda which really requires much more technology investment in automation and a different way of working with clients. It requires clients to also come along that journey with us, which all of them are doing.

We also need to focus on simplicity; we need to be able to offer up the best of Kantar in a really simple way and we need to be able to do that so that clients get the same answer whichever part of Kantar they touch but we also need to maintain our specialization and our expertise to get people to work together around the client issue and provide a client solution. So we’ll continue to do that.

I think we’ve got all of the ingredients within the business to be able to be our client’s major partner going forward.

Lenny Murphy: You may remember this years ago I was in conversations with you guys around a Global Innovation Role and at the time my thought was that due to the way the business was structured at the time it was a recipe for failure. Now I kick myself and think “Damn, I wish I had taken it!” because you’ve done all those things that needed to be done. So, for whatever that’s worth, not that you need my approval, you’ve done a great job accomplishing those goals.

Eric: Yeah, I remember that and I think it’s also important that we’re proud of what we’ve done. But, we don’t think the job is done because actually there’s a lot more to do and we just need to always remember that our clients are going through huge disruption and their needs in terms of the need for speed, simplicity, and understanding human beings at scale is accelerating.

It’s nice to kind of pause and think backward and think about all the stuff that we’ve done well, but I think it’s also equally important to look forward and to just be clear about what we need to do going forward to be successful and to help our clients. If we just stick on the Innovation point that you made, a lot of our Innovations now are really across Kantar like what we’re doing with holistic brand guidance. It’s a different way of looking at brand-tracking which really is much more rapid approach which incorporates survey data, social media data, purchase data, and media data. That innovation requires people from across all of Kantar to work together. Another example is Marketplace; we’re putting lots of different types of solutions on to Marketplace. It requires Tech teams, Ops teams, and different types of research teams to work together across media & audience measurements and effectiveness. Real ROI on those products requires people that used to work for what was called Millward Brown with people that work for what used to be called Kantar Media and Lightspeed. All of these people have to work together; a lot more of our Innovation requires the kind of collaboration which we’re now getting within the business and which has been a real focus over the last few years.

Lenny Murphy: You mentioned in another interview that one of the benefits of having Bain as a partner would be the ability to make investments that you couldn’t make before. As you think about those investments, what are the areas that you are interested in? What is the call to action for all the start-ups to solve this problem or have the interesting capability?

Eric: I think there’s a combination of investing in stuff so that we can grow faster organically and we’ve got a number of products and services that we’ve rolled out that we’re now trying to roll out to more and more markets. We launched something called WorldPanel Plus for example in the UK where we capture all consumer purchase behavior through smartphone app technology and we have built a panel which is a hundred thousand strong as opposed to 40,000 strong now. That’s working really well for our clients in the UK, but we’re now in the process of rolling that out to China and to Brazil and we want to do that in France and Spain.

Some of the investment that we’re talking about is growth via investment and acquisitions. I don’t think it’s gonna be a surprise to you but the kind of areas that are interesting to us are things like behavioral data, social media data, analytics, purchase panels and a whole bunch of things e-commerce. Those types of things are important to our clients as well as technologies which enable us to do things better, faster, and cheaper.

I think we are a really good partner to startups that are looking to sell for two reasons: one is we do offer the ability to those companies to really scale their offer with a great client base around the world. The second one is if you look around our business, we’ve got a lot of people in senior leadership positions now who sold their businesses to Kantar at some stage over the last 20 years. I came through acquisition, Nick Nyhan our Chief Digital Officer came through acquisition, Mark Ryan who leads all of our profile panel development work came through acquisition, Wayne Levings who’s our Chief Client Officer came through that way; I could just go through a long list of people! I’m really proud of the fact that companies that have sold to us in the past have also generated more career opportunities for people and people have developed and thrived and gone on to careers which they couldn’t have done in a small start-up or a small company. So, I think for both people reasons and scaling business reasons, we are a really good partner for companies around the world and if there are people out there who are listening who have got something that they think is interesting then please do give me a call.

Lenny Murphy: There have always been roadblocks really within the industry for more service-based businesses to make plays with more technology-based organizations, primarily because of the non-fit from a valuation perspective with Private Equity backed businesses looking for that “one plus one equals three” formula rather than being true investors to help get to that greater value equation, right? It’s often a question of arbitrage versus long-term investment. Did you think about that scenario and do you think there’s a path where you can function as an accelerator for a technology-based company that fits a different profile financially or are you going to be limited to looking at more of those arbitrage type of deals?

Eric: I’ve discovered through the process that just because you are called a PE company, that doesn’t mean that you will have the same drivers. There are PE companies with hugely different strategies in the same way that there are advertisers with very different strategies and there are employees who bring different skills. So, I wouldn’t pack all PE companies into the same box, and part of the reason for us going with Bain Capital was a really shared belief about how we grow this business.

How we grow this business is scale things which we can scale, even further simplify, make ourselves more client-centric than we are at the moment, and invest in the things that can really grow. That’s the agenda that we’ve got and we’re not looking at a kind of quick, one year, “Let’s restructure and make lots of money somehow” scenario. We’re trying to build an even better, sustainable business. That’s the ambition. The ambition isn’t to make money quick. The ambition is to build something which has an even bigger impact in the marketplace in which we can all look at and think we’re incredibly proud to be having this kind of impact on our people and our clients. That’s a genuinely shared ambition that we all hold and I think they bring to us lots of skills, particularly around IT, Ops and Technology, to enable us to execute faster and more successfully against what is a very ambitious rollout plan that we have.

Lenny Murphy: That’s great to hear. I’m conscious of time, so can you encapsulate the end-state vision of next two to three years for Kantar’s growth? What does that look like? And after you have accomplished those goals, what is the stage-gate to your next phase of development?

Eric: Well, the overarching ambition is to really deliver human understanding at scale so we can really help all of our clients: Global multinationals, big local companies, long-tail clients, etc.. understand people as people and to be able to understand the implications of that for what they do, and for us to help them develop their strategies on the back of it. It’s a focus on really holistic understanding and really simple recommendations and strategies.

On the back of that now is how we get there. We’ve got some Milestones. We’ve got a new suite of brand guidance products which are in the market. We’ve got a new suite of media and ROI related products in the market. We’ve got a suite of artificial intelligence tools, which allow us to really be much more predictive and help clients do things which they just couldn’t do before. From an innovation point of view, we’ve got a very ambitious agenda which we deliver to some clients and some places at the moment.

From a milestone point of view, it’s really delivering the best of what we’ve got to all of our clients around the world and it’s more about the consistency of doing that and the speed of that. We still have too much stuff at the moment which takes too long which requires manual workarounds. If you and I were having this conversation in three years’ time, I hope what you would recognize in the business is a much more tech-driven business, one where everything is delivered much faster, much more real-time. It’s much more forward-looking and that’s across the board in terms of everything from our Insights Services or through our consulting services. I think just seeing that develop and transforming ourselves into that type of company is what I hope you’ll see over the next three years.

Lenny Murphy: Well, I am certainly not going to bet against you based on your track record of transforming the business so far. I think that makes sense and that you’re almost a textbook case of what we’ve been talking about for years in the GRIT Reports regarding what the future insights organization will look like. Again hats off; you’ve continually shown leadership in transforming the business and leading the industry into whatever the future state looks like.

Eric: That’s very kind of you to say, Lenny. But genuinely it is really 28,000 people around the world who at the moment are very excited and highly engaged about the future and it requires all of those people to transform ourselves and, as you said earlier on, to sometimes cannibalize ourselves. It’s a very big team here and I think our clients recognize that it’s not about a single person. It’s about the teams working on their business.

Lenny Murphy: Thank you Eric; I appreciate the opportunity to sit down and chat with you, it is always a pleasure.

Eric: It was lovely to talk to you as well. And, thank you for everything that you guys are doing through the reports that you write and the blogs because we do actually look at all of them and absorb them it; it’s a great way of understanding and benchmarking ourselves very well.

Thank you.

Lenny Murphy: Thanks! I guess we’re a Mutual Admiration Society!

Eric: Absolutely!

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