On one hand, you have the obvious need for quality data—paramount for marketers that yearn for laser-like precision when targeting consumers with ads. On the other, there's a regulation-driven landscape, one that's increasing in scope and aiming to thwart the status quo for reaching consumers online.
Wait … what does AMS actually do?
Much of Acxiom Marketing Solutions' capabilities have been boiled down as "ad personalization," which doesn't do it justice. The real prize for IPG CEO Michael Roth, and what sets AMS apart from other, similar companies, is its ability to aggregate, segment and model data—sometimes predictively—according to audience buckets such as demographics, interests, purchase behavior and life events such as births, a home purchase or even lifestyle changes. This is often then used for anonymous audience-based targeting and ad personalization, says Diaz Nesamoney, CEO of Jivox, a digital personalization marketing company, in an email.
"This is the real value of Acxiom," he says. "AMS, like many data providers, gets data from retail partners, public government records, surveys, websites, apps and data aggregators. The data comes from consumers who have allowed this data to be collected and used for marketing and personalization purposes."
AMS has data on more than 2 billion consumers as well as some 1,600 data experts to make sense of it.
To hear Nesamoney describe it, data and technology are the new currencies of digital marketing, and Acxiom was one of the few independent companies with a large mass of consumer data, making it extremely attractive for an outfit like IPG as it swims forward into a data-driven world.
"Data also drives AI, which will inevitably power most or all of digital marketing in the next few years whether it is for audience identification/classification, targeting, optimization or personalization, data is the new fuel that will power digital marketing," Nesamoney adds.
Acxiom Marketing Solutions was responsible for generating three-fourths of Acxiom revenue, so what prompted it to unload such a lucrative asset?
The standard practices for data collection are indeed under siege: The European Union's General Data Protection Regulation and California's Consumer Privacy Act are just two recent examples of the new rules reshaping the field.
Under California's recently approved law, for example, consumers will be able to tell a publisher or retailer to purge all their data. That applies to any business that operates in California, whether that's Amazon, Target or The New York Times.
"In a world of tightening consumer data privacy regulation—and justifiably so—data is the new currency in the information society," says Tony Katsur, senior VP of platforms at Nexstar Digital. "Data is not going to go away, but if you look at the horizon for the next several years, it will be turbulent for folks that own data as an asset."
As Katsur says, the next few years for data owners will be rocky, not an ideal condition for a public company such as Acxioim, and that's likely what prompted it to sell AMS. A major holding company such as IPG, which has a large, diversified portfolio of businesses, can weather that storm. So long-term, "data is here to stay," Katsur says. "It will have greater value. We will not see data's demise in the next 10 years."
The bigger risk for IPG
Although AMS will provide significant value over the long term for IPG, the bigger issue at hand is the operational risks, Katsur says. "Agencies historically don't have data science and technology in their DNA. Full stop, they just don't," he says. "This will require ongoing R&D, and holding companies haven't shown they are willing to double down on technology or capital expenditures."
The good news: Operational difficulties are solvable, while general market trends are not. Any hurdles IPG faces can be solved through investing in technologists, experts and by continuing to invest in its platform, Katsur says.