|Revenue ($ in millions)||2017||2016||% chg|
Asterisk (*) indicates figures are Ad Age estimates.
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 rankings of agency companies and agencies 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 $7.7 billion in 2017; $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 rankings of agency companies and agencies based on revenue of Epsilon.
Alliance Data said the Epsilon segment's actual (not pro forma) revenue was $2.272 billion in 2017; billion in 2016; $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 29 percent of Alliance Data's 2017 worldwide revenue.
Alliance Data disclosed that Epsilon's 10 largest clients represented about 32 percent of Epsilon's worldwide revenue in 2017; about 30 percent in 2016; about 28 percent in 2015; and about 34 percent in 2014. Alliance Data said no single client represented more than 10 percent 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.
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), Getmembers.com, 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. Epsilon in fall 2017 combined Catapult and Epsilon into one structure with unified creative, account and strategy teams, though the agency brands as of 2018 continued to operate under the Epsilon and Catapult names.
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 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: Epsilon's mission is to know consumers better than anyone else, connect them to brands in meaningful ways - both online and offline - and grow clients' business. Starting with data, including rich customer profiles, purchase behaviors and media interactions, Epsilon leverages powerful technology platforms to activate those insights in real time through loyalty, email and digital media channels. Additionally, Epsilon's digital media arm, Conversant, provides unrivaled data intelligence that fuels deeper customer insights, world-class technology integration, activation, execution, and continuous measurement and optimization. While deep orchestration expertise (including traditional agency services like strategy, creative, analytics) is layered across client work, Epsilon maintains several unique differentiators including: proprietary data (MarketView, TotalSource Plus and Abacus the original cooperative database), the ability to identify individual profiles, unique platforms (Agility Harmony and Agility Loyalty), multi-channel attribution and real time activation. Epsilon works with the world's most recognized brands including 15 of the top 20 global brands and eight of the top 10 Fortune 500 companies. In 2017, Epsilon won new business across every practice, including significant client expansions/renewals for Shell, AT&T, GNC, Juicy Juice, KeyBank, Hyundai, Volvo, Guideposts, Nature's Way and Mizkan, among others. As a deciding factor, GNC's Chief Marketing Officer Jeff Hennion stated, "We chose Epsilon as a partner because their offerings are extremely flexible, and they understand what it takes to create deep, emotional connections with customers. Additionally, Epsilon has the ability to scale and enhance these services as our business continues to grow."
Bryan Kennedy, CEO, Epsilon/Conversant
Alliance Data Systems Corp.'s Epsilon/6021 Connection Drive, Irving, Texas 75039/Phone: (469) 262-0600