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

Worldwide revenue $2.2 billion

  • Revenue ($ in millions)20162015% 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 $7.1 billion in 2016; $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 revenue of Epsilon

    Alliance Data said the Epsilon segment's actual (not pro forma) revenue was $2.155 billion in 2016; $2.141 billion in 2015 (including Conversant, acquired in December 2014); $1.522 billion in 2014; $1.380 billion in 2013; $996.2 million in 2012; and $847.1 million in 2011.

    Epsilon accounted for 30% of Alliance Data's 2016 revenue.

    Alliance Data disclosed that Epsilon's 10 largest clients represented about 30% of Epsilon's worldwide revenue in 2016; about 28% in 2015; and about 34% 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 is run by Bryan Kennedy, CEO of Epsilon/Conversant.

    Epsilon CEO Andrew (Andy) Frawley left the company in September 2016.

    Epsilon in December 2014 had promoted Frawley to CEO, succeeding Kennedy. At that point, Kennedy took the title of chief executive of Epsilon/Conversant.

    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: Our mission, on behalf of clients, is to know consumers better than anyone else and reach them in channels where they interact - whether online or offline - to create emotional connections. Starting with data, including rich customer profiles, purchase behaviors and media interactions, we help derive meaningful insights and then leverage powerful technology platforms to activate those insights in real-time through loyalty, email and digital media execution. By bringing the power of data to those moments, in ways that matter, we help our client's business grow. Epsilon's interconnected business practices deliver unrivaled data intelligence that fuels true customer insights, world-class technology integration, activation, execution, continuous measurement and optimization.

    In 2016 Epsilon won a great deal of new business, significant client expansions/renewals and agency of record wins including Del Monte Foods, CNO Financial Group, Red Roof, Gemological Institute of America, London Sports, Lamps Plus and Cracker Barrel.

    Epsilon was named a Leader in the January 2016 report "The Forrester Wave: Customer Loyalty Solutions For Large Organizations, Q1 2016" by Forrester Research and Agility Harmony, Epsilon's digital messaging platform, was named a Leader in the July 2016 report "The Forrester Wave: Email Marketing Service Providers, Q3 2016" by Forrester Research, receiving the highest score for current offering. Epsilon was also named a leader for email marketing agency and strategy services by The Relevancy Group in the report "The Relevancy Ring - Email Agency Buyer's Guide 2016." The OTA named Epsilon to its 2016 Online Trust Honor Roll for the fifth consecutive year. The Shopper Marketing Effie Awards recognized Epsilon and client GlaxoSmithKline with gold Effie for the FLONASE Allergy Relieve Over-the-Counter launch in the New Product or Service category and Epsilon and client ServiceMaster took home a Bronze ECHO award in the best use of email category. Additionally, Epsilon and its clients took home notable industry recognitions from The Internet Advertising Competition, 2016 American Package Design Awards, Hermes Awards and the W3 Awards among others.

    Epsilon was the only marketing and advertising company to make LinkedIn's Top Attractors List in 2017 and was also named one America's Best Employers by Forbes. In 2016 , Epsilon made notable new hires: Lisa Gallerano, General Counsel; Noga Rosenthal, Chief Privacy Officer; and promotions: Richard McDonald, President, Agency Practice; Stacey Hawes, President, Data Practice; Wayne Townsend, President, Technology Practice; Cathy Lang, President, Automotive Practice. Additionally, Jane Huston, Epsilon's Chief People Officer was named a Top Women in Business by the Dallas Business Journal; Stacey Hawes received a Bronze Maverick of the Year Stevie Award and Evan Wallach, General Manager, Online Data, was named an inaugural IAB Data Rockstar.

    Additionally, in early 2017 Epsilon debuted a new team within its agency practice dubbed Data Design, which leverages proprietary data, partnerships and technology to empower the creative process. In 2016 Epsilon announced Agility Loyalty QSR, a new SaaS loyalty solution to help quick serve and fast casual restaurants connect and drive deeper relationships with digital-savvy consumers. Epsilon also introduced MarketView, a first-to-market transactional data set that provides marketers with unprecedented targeting enabling them to see where their customers and prospects spend their money, how much they spend and how often across a wide variety of categories and brands. Epsilon also announced the launch of its formal health practice, EpsilonHealth to continue to meet the growing needs of today's healthcare marketers, committing to 'Make it Better' for clients and consumers.

    Epsilon conducted and released proprietary research in 2016 including Quarterly Email Trends and Benchmarks, the 2016 New Mover Report, a customer maturity report for Australia and New Zealand, alongside Econsultancy, 2016 holiday shopping survey results, and The Customer Recognition report, uncovering why the single customer view eludes marketers, alongside Conversant and Econsultancy.

    Top executive: Bryan Kennedy, CEO, Epsilon/Conversant
    Headquarters: Alliance Data Systems Corp.'s Epsilon/6021 Connection Drive, Irving, Texas 75039/Phone: (469) 262-0600
    Twitter: @epsilonmktg

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