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

Worldwide revenue $2.14 billion

  • Revenue ($ in millions)20152014% 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, end-to-end marketing services, analytics and creative services, direct marketing services and private label and co-brand retail credit card programs.

    The company appears in Ad Age's ranking of agency companies based on revenue of Epsilon, Alliance Data's marketing-services operating segment. Business segments and operations:

    Plano, Texas-based Alliance Data reported worldwide revenue of $6.4 billion in 2015; $5.3 billion in 2014; $4.3 billion in 2013; and $3.6 billion in 2012.

    Alliance Data revenue was split among three segments: Epsilon (marketing services); LoyaltyOne (including Air Miles reward program in Canada); Card Services (private-label retail credit card programs; segment renamed in 2015 from Private Label Services and Credit).

    The company appears in Ad Age's ranking of agency companies based on 2015 and pro forma 2014 revenue of Epsilon. Pro forma revenue included 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 $2.141 billion in 2015; $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 33.2% of Alliance Data's stated 2015 worldwide revenue.

    Alliance Data disclosed that Epsilon's 10 largest clients represented about 28% of Epsilon's worldwide revenue in 2015; and about 34% of revenue in 2014. Alliance Data said no single client represented more than 10% of Epsilon's revenue during those years.

    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.

    In 2015 Epsilon won a great deal of new business and significant client expansions/renewals including major brands such as Shire Pharmaceuticals, Marriott, Honda and Lamps Plus.

    Epsilon opened its India operations in Karle Town Centre, Bengaluru, along with the hire of the Country Head, Epsilon India, Ashish Sinha.

    Epsilon conducted and released proprietary research in 2015 including Quarterly Email Trends and Benchmarks, #marketingtomillennials: a guide to understanding today's millennials, The value of services for the omnichannel marketer (in conjunction with The Relevancy Group), the Digital Shopping Tool Impact Study 2015 and the 2015 New Mover Report.

    Epsilon was named a Leader in the January 2016 report "The Forrester Wave: Customer Loyalty Solutions For Large Organizations, Q1 2016" by Forrester Research. Agility Harmony, Epsilon's digital messaging platform, achieved the leader's ring in The Relevancy Group's, The Relevancy Ring - Email Agency Buyer's Guide 2015 and in The Relevancy Ring - ESP Buyer's Guide 2015. Epsilon was also named to LinkedIn's Top 100 Most InDemand Employers and the OTA 2015 Online Trust Honor Roll. Marketing Magazine in Hong Kong awarded Epsilon the silver award for Direct Marketing Agency of the Year. Epsilon and client GlaxoSmithKline received top honors at the CADM Tempo awards for Nicorette/Nicoderm CQ "What's Your Why" campaign.

    In 2015 and early 2016, Epsilon made notable new hires: Brian Trevor, senior VP, research and development; Mark Fiddes, executive creative director in EMEA; Matt Fearin, chief information security officer; Tom Edwards, chief digital officer, Agency; Rob Powers, senior VP, strategy and growth.

    Additionally, Epsilon celebrated the 25th anniversary of the Abacus Cooperative in April 2015. Epsilon Shopperview, a new precision marketing solution for CPG marketers, was released in September 2015, providing 360-degree insight into who consumers are, what they buy and why they buy. Epsilon's Agility Harmony became the first enterprise digital marketing platform to feature real-time content capabilities via Harmony Live, which allows marketers to provide instantly relevant content in email based on time, place, device and behavior: every time the email is opened. Epsilon and Lithium + Klout announced an exclusive partnership to bring deep customer insights to marketers.

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

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