A correction has been made in this story. See below for details.What's Epsilon, one of the largest consumer data companies in the world, doing buying a digital ad agency? Hoping to steal more client dollars away from the branding, CRM and digital agencies they traditionally use.
Epsilon, itself owned by Alliance Data Systems, agreed to a $460 million acquisition of Hyper Marketing (HMI) last week in a deal that brings brand agency Ryan Partnership, social agency SolutionSet and retail agency Catapult under the data firm's wing.*
The idea here is to marry Epsilon's consumer data insights and data management and analysis capabilities with HMI's marketing services.
"We operate in complementary spaces … and we see those complementary spaces converging around digital and around data," President Bryan Kennedy told Ad Age . "We are fairly aggressively looking to grow our business…and when we find something that really makes great sense we tend to move very quickly."
Epsilon and Hyper Marketing share more than a dozen clients. Epsilon purchased marketing services agency Aspen last year to enhance its email marketing, mobile, creative, and loyalty program offerings.
By bringing in new service capabilities through HMI, Epsilon aims to streamline the campaign process for clients, possibly siphoning business away from other agencies.
Data and services
For instance, a CPG brand may work with one firm to manage its shopping program at retail outlets, along with a separate digital agency and maybe another to handle CRM. Epsilon wants all that business, from data management to loyalty programs to branding campaigns.
"It's a bit of an irony in today's world of omnichannel marketing where a customer expects to be connected seamlessly with a brand across all channels," said HMI CEO Zain Raj, discussing the multi-agency approach most brands currently take.
In addition to becoming a one-stop shop for CPG brands and other firms, the acquisition promises to fuel Epsilon's data machine. "There's a huge benefit to being able to walk into multiple channels," said Mr. Kennedy, noting "all the data that sits behind those channels."
The rapidly-paced expansion of Epsilon comes amid sustained government scrutiny of the data industry.
As greater amounts of consumer data flow to companies like Epsilon, lawmakers and privacy advocates continue to pressure them to reveal more about how they collect, store, and use data. Epsilon was among nine data firms that responded last week to inquiries about their practices by a handful of legislators including Rep. Ed Markey of Massachusetts and Rep. Joe Barton of Texas, co-chairs of the Bipartisan Congressional Privacy Caucus.
No significant executive changes or layoffs are expected as a result of the HMI acquisition. Mr. Kennedy expects the deal to close before the end of the year.