Agency Family Trees 2014

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Alliance Data Systems Corp.'s Epsilon* [This record free to all users]

Worldwide revenue $1.38 billion

  • Revenue ($ in millions)20132012% chg
    Ticker: ADS (NYSE)
    Asterisk (*) indicates figures are Ad Age estimates.

    Fast facts: Alliance Data Systems Corp. provides data-driven marketing and customer-loyalty services for major marketers in a variety of industries. Its offerings include customer-loyalty programs, database-marketing services, marketing-strategy consulting, analytics and creative services, direct-marketing services and private-label and co-brand retail credit-card programs. Alliance Data reported worldwide revenue of $4.3 billion in 2013, up from $3.6 billion in 2012. Revenue was split among three segments: Epsilon (marketing services); LoyaltyOne (including Air Miles reward program in Canada); Private Label Services and Credit (private-label retail credit card programs).

    The company appears in Ad Age's ranking of agency companies based on stated 2013 worldwide revenue of Epsilon, Alliance Data's marketing-services operating segment. Worldwide revenue shown for 2012 is Ad Age DataCenter's estimate of Epsilon pro forma revenue (including Hyper Marketing, acquired in 2012). U.S. and non-U.S. revenue splits are Ad Age estimates.

    Alliance Data said the Epsilon segment's actual (not pro forma) revenue was $1.380 billion in 2013; $996.2 million in 2012; and $847.1 million in 2011.

    Epsilon made large marketing-services acquisitions in 2012 (Hyper Marketing) and 2011 (Aspen Marketing).

    Epsilon on Nov. 30, 2012, bought Hyper Marketing, a marketing-services company, for $451.8 million (net of $7.1 million of cash and cash equivalents acquired). The Hyper Marketing acquisition in 2013 contributed $273.6 million in revenue, according to Alliance Data's 10-K filing for year ended December 2013.

    In connection with the Hyper Marketing acquisition, Epsilon on Dec. 31, 2012, purchased Advecor, a marketing-services agency, for $12.2 million.

    Hyper Marketing was a marketing-services company and network formed by the January 2012 rollup of marketing-services ventures SolutionSet and MediaWhiz with D.L. Ryan Cos. Ad Age's Agency Report 2012 (April 30, 2012) ranked Hyper Marketing as the world's No. 22 agency company in 2011.

    Epsilon's acquisition of Hyper Marketing included CatapultRPM (now Catapult),, PanaVista (now CatapultVista), Ryan Partnership and SolutionSet. The deal excluded Hyper Marketing's MediaWhiz, which was acquired in January 2013 by Matomy Media Group, a performance-marketing firm based in Israel. Matomy in 2014 rebranded MediaWhiz as Matomy USA. Before the sale to Epsilon, Lake Capital, a private-equity firm in Chicago, owned a majority stake in Hyper Marketing, with the remainder held by senior executives.

    Lake Capital entered the picture in August 2005 when Lake made its initial investment in MediaWhiz, an online performance-marketing agency founded in 2001.

    Lake Capital in July 2006 acquired a stake in Haggin Marketing, a direct-marketing agency founded in 2001. Haggin in February 2009 bought SolutionSet, an agency started in 2002. Haggin in October 2009 changed Haggin's name to SolutionSet.

    SolutionSet MediaWhiz Partnership was created in August 2011 when SolutionSet and MediaWhiz combined to form an agency network.

    SolutionSet MediaWhiz Partnership in January 2012 acquired D.L. Ryan Cos., a full-service multichannel marketing-services company founded in 1984. The combined venture took the name Hyper Marketing. In the wake of that merger, Hyper Marketing in early 2012 realigned service offerings under its lead agency brands. Specifically, the new agency structure shifted the local-marketing group out of SolutionSet and into Catapult (formerly part of D.L. Ryan Cos.). Additionally, RPM Connect (a promotions agency spun off from D.L. Ryan's Ryan Partnership in 2008; formerly Ryan Partnership Minneapolis) was realigned under the CatapultRPM brand to create a single integrated offering.

    After Epsilon purchased Hyper Marketing, Epsilon folded most of Hyper Marketing's operations into Epsilon services.

    Epsilon retained and expanded CatapultRPM, a shopper-marketing and promotion agency, folding in some services that previously had been part of Aspen Marketing. CatapultRPM in June 2013 shortened its name to Catapult.

    Epsilon acquired Aspen Marketing on May 31, 2011, for $359.1 million (net of $13.5 million of cash and cash equivalents acquired), expanding Epsilon's agency business. In announcing the deal, Alliance Data said Aspen was projected to generate $250 million in revenue in 2011.

    Ad Age's Agency Report 2011 (April 25, 2011) ranked Aspen Marketing as the world's No. 25 agency company in 2010.

    Alliance Data was formed from the 1996 merger of two entities acquired by private-equity firm Welsh, Carson, Anderson & Stowe: J.C. Penney Co.'s transaction services business (BSI Business Services) and Limited Brands' credit-card bank (World Financial Network National Bank). Alliance Data went public in June 2001.

    Alliance Data bought Epsilon for $314.5 million in October 2004 and has expanded Epsilon through acquisitions.

    In May 2007, Alliance Data agreed to be bought by private-equity firm Blackstone Group for $7.8 billion, including assumption of debt. After a battle over Blackstone's obligations in the deal, Alliance Data on April 18, 2008, terminated the deal.

    Alliance Data is based in Plano, Texas.

    In its own words: Epsilon is the global leader in creating customer connections that build brand and business equity.

    A new breed of agency for a consumer-empowered world, our unique approach harnesses the power of rich data, world-leading technologies, engaging creativity and transformative ideas to ignite connections between brands and customers, delivering dramatic results.

    In 2013 Epsilon won a great deal of new business and significant client expansions/renewals including major brands such as Dunkin' Donuts, AT&T and Marriott International. Epsilon conducted and released proprietary research including Quarterly Email Trends and Benchmarks, New Mover Study, Digital Shopper Tool Impact Study, Gmail Tabs Study and The Multichannel Trend Report. Our strategic partnerships grew to include Facebook and Twitter.

    Epsilon launched Agility Harmony, a cloud-based, next-generation digital-messaging platform for global marketers that enables the creation and delivery of cutting-edge email and cross-channel campaigns. Built from the ground up and developed with input from thousands of digital marketing professionals across the globe, this groundbreaking platform allows for seamless integration and strategic growth across both established and emerging digital channels.

    Notable new hires in 2013 included: Andy Jacobson (VP-agency sales), Kevin Mabley (senior VP-strategic consulting), MK Marsden (senior VP of the Client Solutions Center), Jeff Reiser (VP-industry strategy for financial services) and Lori Williams (senior VP-client services and automotive sector lead).

    Top executive: Bryan Kennedy, CEO, Epsilon
    Headquarters: Alliance Data Systems Corp.'s Epsilon/4401 Regent Blvd., Irving, Texas 75063/Phone: (972) 582-9600
    Twitter: @EpsilonMktg

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