Identity Crisis: Data Services Firms Aren't Sure What They Want to Be

Acxiom , Experian, Merkle and Epsilon Make Moves to Remain Relevant

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Marketers in the U.S. will spend $11.5 billion on data and data-related services this year, up from an estimated $10.5 billion in 2010, according to a report from research consultancy Winterberry Group last month. In hopes of attracting those dollars, Acxiom and its other main competitors in the marketing data-services space -- Experian Marketing Services, Alliance Data's Epsilon and the smaller yet scrappier Merkle -- have made all sorts of moves to remain hip in the eyes of the modern audience-data-obsessed marketer.

Primarily through acquisitions, they've patched on display-ad systems, social-media data services, mobile-targeting technologies -- the slick clothes and cool tattoos of today's marketing industry -- and in some cases bolstered their creative and consultative agency services.

Some seem more comfortable in their new look than others, though. After speaking with industry insiders, partners and the firms themselves, here's where Ad Age sees them fitting in.

Best known for: Data sales and data matching
Employees: 4,485
2014 revenue*: $1.1 Billion
*SEC filings; for fiscal year ended March

In 2013, Acxiom de-emphasized its marketing consultancy offerings—a serious departure. The firm "did an about turn when Scott [Howe, Acxiom CEO] came on board [in 2011]," said Steven Plimsoll, Acxiom's former European chief strategy officer and current CIO and CTO at WPP's Mindshare.Acxiom instead began touting the strengths of first-party data it manages for clients' loyalty, CRM and other programs, stressing its value for ad targeting over third-party data. But a year later Acxiom pivoted. Announcing its Audience Operating System ad-targeting platform, Mr. Howe said he wanted AOS to be a neutral platform that connects all types of data, including third-party information. Last month, Acxiom introduced a product combining LiveRamp, which it bought in 2014, and AOS features—and called it LiveRamp Connect. But Acxiom has indicated it could veer back toward an emphasis on consulting. "We have evolved our positioning over the years to better align with our clients' needs and to reflect Acxiom's new offerings," Mr. Howe said in a statement. "In keeping with that practice, we will continue to do so as our business needs dictate." [Top]

Best known for: Email Marketing
Employees: 7,000
2014 revenue*: $1.5 Billion
*SEC filings for parent company Alliance Data Systems

Epsilon CEO Andy Frawley admits there is a disconnect between what big data-services players bring to market and what their clients are actually set up internally to use. "That's a little bit of the opportunity we see," he said, explaining why the firm underwent a massive brand overhaul in 2014 to emphasize consulting and agency-like services. "That's why we started evolving the company with acquisitions beyond data and technology."Epsilon acquired Hyper Marketing, which encompassed brand agency Ryan Partnership, social agency SolutionSet and retail agency Catapult, in 2012. Soon after, it scooped up Advecor, a marketing-services agency. Its most recent acquisition, Conversant, brings the company additional display-ad capabilities and a means of tying individual devices together using cookie-free anonymized IDs—crucial for mobile targeting. Firms like Epsilon with feet planted firmly in data may find it difficult to prove the value of their core data products during the strategic, consultative and early creative development phases of campaigns. At the creative stage before ROI can be measured, clients may be reluctant to buy expensive data sets. [Top]

Best known for: Data sales and data matching (and credit reports in the consumer space)
Employees: 3,400
2014 revenue*: $920 Million
*SEC filings; fiscal ended March. Marketing services only

Companies like Experian are trying to eschew the "data broker" label, thanks to intense suspicions about the sale of personal information. And for good reason. Sen. Edward Markey, D-Mass., resubmitted his Data Broker Account-ability and Transparency Act earlier this month, calling the data-services business a "shadow industry of surreptitious data collection that has amassed covert dossiers on hundreds of millions of Americans." The data-broker label "makes my skin crawl," said Kevin Dean, senior VP-global product management of marketing services at Experian. Mr. Dean acknowledges Experian's data core, but he'd rather frame the company as a "linkage business" helping tie phone numbers, email addresses and social IDs to a single identity for cross-channel targeting. The company bolstered the ability to tie identities together when it bought 41st Parameter in 2013. The fraud-detection firm runs AdTruth, a linchpin in Experian's ad system that recognizes a consumer across devices for ad targeting and measurement. [Top]

Best known for: Loyalty Consulting Services
Employees: 2,632
2014 revenue*: $382 Million
*Self reported; company is privately held

Observers say Merkle, which focuses on performance-driven marketing services like dynamic display ads and digital CRM communications, has been successful at integrating the acquisitions it's made over the past few years, most recently digital and direct agency New Control and loyalty firm 500friends. Merkle's HQ is located in Columbia, Maryland. The privately held firm was founded in 1971. The company may be less than half the size of its competitors, but it aims for a global presence, and serves large international clients including Schneider Electric and Dell. Merkle already has 350 employees in China and expects further growth in the European Union, U.K. and other parts of Asia.From the perspective of the fourth-largest media agency by revenue, global capabilities are the most essential, said Steven Plimsoll, noting that WPP works extensively worldwide with Experian and Acxiom for data appending, ID unifying and third-party data-supply services. "Still," he continued, "there's no IBM 'Big Blue' equivalent." [Top]

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