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

Worldwide revenue $2.07 billion

  • Revenue ($ in millions)20142013% 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.

    Business segments and operations:

    Plano, Texas-based Alliance Data reported worldwide revenue of $5.3 billion in 2014; $4.3 billion in 2013; and $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 2014 and 2013 pro forma revenue of Epsilon, Alliance Data's marketing-services operating segment. Pro forma revenue includes revenue of Conversant, a digital marketing-services company acquired in December 2014.

    Alliance Data said the Epsilon segment's actual (not pro forma) revenue was $1.522 billion in 2014; $1.380 billion in 2013; $996.2 million in 2012; and $847.1 million in 2011.

    Irving, Texas-based Epsilon accounted for 28.7% of Alliance Data's stated 2014 worldwide revenue. Alliance Data disclosed that Epsilon's 10 largest clients represented about 34.1% of Epsilon 2014 revenue, with no single client representing more than 10% of Epsilon's revenue.

    Deals and strategic moves:

    Epsilon made large marketing-services acquisitions in 2014 (Conversant), 2012 (Hyper Marketing) and 2011 (Aspen Marketing).


    Epsilon, through Alliance Data, on Dec. 10, 2014, acquired Conversant, a digital-marketing services company, for about $2.3 billion and put Conversant under the Epsilon umbrella. Conversant, post-acquisition, accounted for $45.5 million of Epsilon's stated (not pro forma) 2014 worldwide revenue. Conversant was known as ValueClick before changing its name in first-quarter 2014.

    Hyper 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 (later renamed Catapult),, PanaVista (later renamed 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.

    Aspen Marketing:

    Epsilon acquired Aspen Marketing, a marketing-services venture, 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.

    Other deals:

    Other Epsilon acquisitions include Equifax's Direct Marketing Services (DMS) and Database Marketing (DBS) divisions (purchased in July 2010 for $117.0 million); Abacus (a provider of data, data management and analytical services for retailers and catalogs, purchased from DoubleClick in February 2007 for $439.3 million); DoubleClick Email Solutions (2006); digital creative specialist Big Designs (2006); and Bigfoot Interactive (2005).

    Management and employees:

    Epsilon in December 2014 promoted President Andrew (Andy) Frawley to CEO, succeeding Bryan Kennedy. At that point, Kennedy took the title of chief executive of Epsilon/Conversant.

    Frawley joined Epsilon in January 2009.

    Kennedy joined Epsilon in 1996 and became president-CEO in January 2009.


    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.

    In its own words: Epsilon is the global leader in creating connections between people and brands. An all-encompassing global marketing company, we harness the power of rich data, groundbreaking technologies, engaging creative and transformative ideas to get the results our clients require.

    The acquisition of Conversant by Epsilon's parent company, Alliance Data, in December 2014, adds important capabilities to Epsilon's digital messaging platform, Agility Harmony. The combination of the two companies provides scale in the rapidly growing display, mobile, video, and social digital channels. Conversant's data will enrich Epsilon's existing offline and online data set, allowing for more effective targeted marketing programs.

    On the heels of Epsilon's acquisition of Conversant, president Andy Frawley was named chief executive officer of Epsilon. Bryan Kennedy, previously CEO of Epsilon, now leads the combined Epsilon and Conversant entity.

    In 2014 Epsilon won a great deal of new business and significant client expansions/renewals including major brands such as Sephora, FordDirect, Ebates, Uncommon Goods, and Ann Inc.

    Epsilon conducted and released proprietary research in 2014 including Quarterly Email Trends and Benchmarks, Multichannel Trend Report, New Mover Report and The New Face of Luxury.

    Especially notable in 2014, was the publication of Igniting Consumer Connections written by Andy Frawley. Published by Wiley, Igniting Consumer Connections shares decades of experience, data and stories drawn from dozens of top brands and Epsilon's proprietary research to help marketers better understand, respond to and engage with consumers.

    In October, Epsilon announced a major rebranding to reflect its evolution into an all-encompassing, global marketing business. The rebranding included a top-to-bottom redesign of our website, logo, graphics, and new brand assets including a simplified, black-and-white logo.

    Top executive: Andrew Frawley, CEO
    Headquarters: Alliance Data Systems Corp.'s Epsilon/6021 Connection Drive, Irving, Texas 75039/Phone: (972) 582-9600
    Twitter: @EpsilonMktg

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