Part of Omnicom Group's Diversified Agency Services network, Targetbase, of Irving, Texas, which specializes in data analytics and customer relationship management, is capitalizing on a down market that values data-driven profits.
"We love it," said Targetbase CEO David Scholes of the current economy. "Our business is great at producing returns on investment, measurable results. We claim we can turn your data into profits," he said, "and turning an asset into profits is exactly what clients are looking for."
Clients like Cingular, which, after a many-months-long, hotly contested review-that included Omnicom sibling and Mr. Scholes' 20-year alma mater Rapp Collins Worldwide in the finals-chose Targetbase as its first direct-response agency. The wireless provider, like many marketers today, wanted to understand its 21 million customers in order to better serve and communicate with them, as individually as possible.
"We wanted someone who could come in and assist us in developing a strategic application for communicating with our customer base, to decrease churn and increase revenue," said Jane Ratliff, director of customer communications for Cingular, adding that 99% of Targetbase's programs will focus on retaining existing customers. "There's a lot of untapped potential in that base in terms of selling them new products and services," Ms. Ratliff said. "In the industry as a whole, the new subscribers we're getting in are not typically as valuable as the customers we already have."
That tenet-that it's cheaper and better for the bottom line to keep a customer than to acquire a new one-is becoming even more popular in harder economic times.
"The drive is coming from the marketers," Mr. Scholes said. "A lot of marketers realize that they have a lot of information that they spent a lot of money to collect, and they're not using it," he said. "Clients have troves of data" they don't use effectively, he said.
"In order to turn data into information, the data has to mean something," said Brett Gow, an independent consultant specializing in customer relationship management. "Through analytics, you've now turned information into knowledge," he said. "Knowledge allows you to formulate strategies and execute programs."
Targetbase's projects are as varied as increasing Web traffic and e-newsletter subscriptions for Fisher-Price, managing the CRM database for Honda Motor Co.'s American Honda, developing the Pampers.com Web site for longtime client Procter & Gamble Co. and creating a centralized data warehouse for Sony.
"Rich data that contains our customers' behaviors, our customers' preferences, their transactions with us and their communication preferences is important to us, because our No. 1 corporate goal is lifetime owner loyalty," said Nick Digeralamo, manager of CRM for American Honda, which has been working with Targetbase since 1994.
Omnicom purchased Targetbase, a 20-year-old division of market research company Mark Research, in 1999. The 280-person agency saw $51.3 million in revenue in 2000, according to Advertising Age figures, on $400 million in billings, according to Mr. Scholes.
"In a marketplace that everyone accepts has not been the easiest, [Targetbase] is having an incredibly good run," said Michael Birkin, president of Omnicom's DAS who promoted Mr. Scholes from president of Rapp Collins' New York office two years ago to run Targetbase. "There is no question there's a need and a hunger for data from clients. The challenge is packaging that," and Mr. Scholes was charged with "giving it a little bit more of a crisp marketing position to clients," Mr. Birkin said. "It's really going to make a difference to clients in cost-effective times like this to really get the most for their money."