Publicis acquired Epsilon on Sunday primarily for the latter’s expertise in working with first-party client data. But Publicis got a lot more with Epsilon’s hefty $4.4 billion price tag.
Epsilon is best known for its services related to data management, email marketing and loyalty platforms. But Epsilon also gives Publicis an affiliate marketing network (Commission Junction), a third-party data marketplace, a retail data co-op (Abacus) and an ad tech platform (Conversant) built from multiple bolt-on acquisitions.
Publicis has made it clear that the biggest value add for its business comes from Epsilon’s experience working with first-party data.
Epsilon’s CEO, Bryan Kennedy, also pointed to the breadth of offerings Publicis is getting through the deal: data, tech and “scaled platforms that activate data built around a proprietary identity resolution technology linked to all of our offerings.”
But it’s a lot of stuff, and even though it’s still early – the integration plans aren’t set yet and the deal hasn’t officially closed – the industry is already wondering what Epsilon’s smorgasbord of assets really bring to the table for Publicis, and what might be spun off.
Conversant is an amalgamation of ad tech platforms Epsilon acquired in 2014 with the goal of creating an end-to-end marketing stack, powered by its data. That stack initially consisted of the demand-side platform (DSP) Dotomi, ad network ValueClick and an ad server as well as tag management and mobile in-app advertising solutions.
“In the rest of the industry, there's an onboarder, a DMP, a DSP, an attribution capability and a dynamic creative offering,” Kennedy said. “We offer a bundled solution for our clients. We actually think the rest of the market is frankentech.”
While Epsilon has been slow to integrate the pieces that comprise Conversant into a cohesive stack – let alone bring it together with Epsilon’s data business – that’s “pretty much ancient history” now, Kennedy said. In late 2016, Conversant launched CORE, an identity resolution and cross-device matching capability that bridges the gap between its first- and third-party data assets.
Epsilon still keeps a Chinese wall between its PII data and the non-PII data that sits in Conversant, but the identity resolution capability allows it to link direct customer interactions like emails with digital media campaigns.
“We can pick up recency signals from our digital advertising business for activity that might change the way you personalize an [email] subject line in real time,” Kennedy said. “All of that is linked together. That wasn't true a year ago.”
It’s unclear, however, whether Publicis’ clients will want to buy into an ad tech solution owned by their agency in an age when marketers are demanding transparency and taking technology decisions into their own hands.
Kennedy claimed that this won’t be an issue. Although working with an integrated stack drives efficiencies, marketers can choose to buy into various pieces of Epsilon’s business in order to maintain neutrality.
“We’ve moved our business toward a position of full transparency and control by a client, as opposed to a ‘trust me’ scenario, where a lot of the market lives,” Kennedy said.
Commission Junction, what’s your function?
While an affiliate network may not seem like an obvious fit for an agency holding company, CJ Affiliate is a performance-based solution that’s a consistent moneymaker for Epsilon.
“CJ is a very powerful performance driver for the brands we support,” Kennedy said. “For our clients, it tends to be one of the highest-performing digital acquisition channels.”
As one of the largest affiliate networks globally, CJ could round out Publicis’ performance business in a low-risk way for its brand clients. Because affiliate marketers only pay when their audience converts, they can feel comfortable spending in the channel without fear of wasting money.
“If you think about the kind of accountability and demand that’s being placed on the CMO today to be able to show the return on marketing investment, CJ is a perfect fit,” Kennedy said. “How do you identify with more accountability in what’s working and subtract what’s not?”
More data, please
But it's Epsilon’s first-party data platforms that are the “crown jewels” of its stack, Kennedy said. Email platform Agility Harmony sends 71 billion personalized emails annually, and loyalty platform Agility Loyalty has more than 600 million members.
Agility Unite, Epsilon’s identity resolution capability on the PII side of the house, allows brands to tie together online and offline data and run attribution across consumer touchpoints. That ID can flow back into Conversant for digital media activation and measurement.
“Publicis sees a world where their clients need to do a better job assembling first-party data, organizing and activating it across all channels,” Kennedy said. “I would be shocked if someone who spent $4.4 billion would want to spin out our first-party data management platforms.”
Epsilon’s first-party data capabilities are a “natural and seamless” cross sell for Publicis, which is trying to evolve beyond its traditional marketing and media expertise, Kennedy said. But where Epsilon’s third-party data marketplace sits within Publicis is less clear, as it could put the agency in the position of being responsible for external data sales.
Regardless of which assets Publicis decides to keep from Epsilon’s broad portfolio, the acquisition will be easier to integrate than Sapient was, Kennedy said.
“Sapient projects weren’t always in the marketing lane or close to the marketing lane,” he said. “Epsilon grew up in the same lane as Publicis. Our client is the CMO, [and] our services are all about driving better return on marketing. The adjacency is very close for us.”