Publicis buys Epsilon to boost data marketing for clients

16/04/2019

French ad giant Publicis has bought marketing services company Epsilon for around $4.4bn, in a move that will help its clients better personalise their advertising.

Publicis buys Epsilon to boost data marketing for clients

The acquisition gives Publicis access to Epsilon’s loyalty software, which serves 600 million accounts and it "has more than 250 million unique consumers identified in the US. Its proprietary platforms Conversant handle 1 billion updates every 5 minutes allowing to further improve messaging based on consumer insights on a real time basis.

The company says it can build on top of a client’s first-party data with its own assets, like behavioural and transactional data.

The deal with Alliance Data Systems Corporation will entail Publicis acquiring its Epsilon business for a net purchase price of $3.95 billion after a tax step-up, with a total cash consideration of $4.4 billion. Publicis will form a strategic partnership with Alliance Data’s remaining business.

"With the acquisition of Epsilon, Publicis Groupe is bringing the necessary technology, expertise and the talent to complement our offer in creativity, media and business transformation, and help our clients leapfrog their competition and grow profitably," Publicis Groupe Chairman-CEO Arthur Sadoun said in a statement, adding that the deal would help Publicis "deliver personalized experiences at scale" for its clients.

Major ad holding companies have grappled with whether to own data or to insource the data from providers. Last summer, Interpublic agreed to acquire Acxiom’s Marketing Solutions for $2.3 billion. Dentsu Aegis Network in 2016 bought a majority stake in data marketing company Merkle.

Bryan Kennedy, CEO of Epsilon, in a statement said: "During extensive discussions with the Publicis leadership team during the recent review process, we found powerful common ground, including shared values and a strong vision for the future of data-driven, digital-first marketing."

“Huge appetite for data driven marketing”

Julie Langley, partner at Results International, commented on the deal: “Of the major networks, Publicis is one of the few without a major data-marketing arm, so it makes total sense for them to acquire Epsilon.

“Data capabilities have been much in demand over the last few years and we’ve seen a huge buyer appetite for businesses with expertise in using the main tech platforms - particularly Adobe and Salesforce - to deliver data-driven marketing,

“Sir Martin Sorrell spoke recently about wanting to acquire a first party data firm for S4. While Epsilon has a lot of the data expertise that he appears to be on the hunt for, S4 is very unlikely to have the fire power to afford a business of this scale currently. The same applies to the other mid-size networks and emerging players. The competition Publicis might have faced in acquiring Epsilon is most likely to have come from Omnicom or more likely from the private equity community.

“There’s also an interesting contrast between the acquisition strategies of the networks and the consulting firms. The latter have been adding creative services while the former have been adding data and technology skills. But ultimately they are competing for the same market; building ultra-personalised customer engagement.

“Publicis will now be intent on ensuring that Epsilon’s core data capabilities are properly integrated, particularly with the creative offer. The ability of data to drive better creativity is central to the industry’ agenda and we only have to look to Wunderman Thompson to see a similar integration of capabilities at play.

“Our quarterly analysis of industry M&A has shown that the networks have been doing fewer deals in recent years, but when they do acquire, they are prepared to pay for very large, very strategic deals. IPG’s purchase of Axicom is a recent example of this. “


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