Olson Acquires Loyalty-Marketing Agency Denali

Deal Makes the Combined Minn.-Based Shop One of the Top 10 Independents

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CHICAGO (AdAge.com) -- Minneapolis-based Olsonhas acquired loyalty-marketing agency Denali in a deal that will transform the shop into one of the Twin Cities' largest full-service agencies and one of the country's top 10 largest independents.

Olson Chairman John Olson and CEO Kevin DiLorenzo said the buy is a recognition that loyalty marketing is something of a missing link in an otherwise highly integrated offering. The executives conducted a nationwide search for a loyalty division but quickly focused on Denali after learning it too was looking for a merger partner.

"We know these guys personally, but it just didn't occur to us [at first]," said Mr. DiLorenzo.

Said Denali co-founder Mark Lacek: "It was a short process, because once we realized they had the same mind-set, it made all the sense in the world."

Denali, which will be renamed OlsonDenali after the deal, counts Best Buy, Toys 'R' Us and United Health Group among its clients. Margaret Murphy, who joined Denali from Minneapolis-based Carlson Marketing in 2007, will be the unit's president.

While the loyalty-marketing discipline began with airlines, rental-car companies and hotel chains, it's becoming increasingly useful to retail and package-good marketers that say customer data is an essential piece of having a "one-to-one" conversation with customers.

The combination with Olson -- whose client roster includes Converse, Fifth Third Bank, Northwestern Mutual and Target -- will create a 300-person agency. Olson has been on a new-business tear of late. Most recently, it earned a place on Pepsi's agency roster by quietly snaring public relations duties on the marketer's Naked juice and Izze soda brands.

In all, Olson grew its revenue an impressive 16% last year, to $31.2 million, while Denali's total was $7.8 million, according to Ad Age estimates. The combined $39 million in revenue of the newly merged agency rivals some of Minneapolis' best-known shops such as Fallon ($40 million), Carmichael Lynch ($40.5 million) and Martin Williams ($36.5 million).

Executives from both firms said their client rosters are free of conflicts. And they do share one common client: United Health. Financial terms of the deal weren't disclosed, although Olson said it was "recapitalized" by KRG Capital Partners, a Denver-based private-equity firm.

For Olson, the deals may not be over. Executives said that they were evaluating possible acquisitions in other disciplines as well, such as public relations. The agency has looked at targets on both coasts as well as Chicago for future partners.

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