IPG Investors Still Have Questions About Acxiom Acquisition

IPG’s investors are struggling to grasp exactly what kind of data Acxiom works with and how the $3.2 billion acquisition positions the holding company in a privacy-centric world.

“When we bought Acxiom, everyone misunderstood it to be InfoBase, which is the third-party data management offering,” CEO Michael Roth said on IPG’s Q4 earnings call on Wednesday. “The core part of their business is management of first-party data.”

Two-thirds of Acxiom’s revenue comes from managing first-party data, which will be critical as privacy laws take shape across the United States and cookies disappear from the industry, Roth said. This part of Acxiom’s business grew 5% last year.

Roth reiterated that IPG clients do not have to use InfoBase, Acxiom’s third-party data brokerage, in order to work with Acxiom. IPG Mediabrands has AMP, its third-party data platform which clients can also tap into.

“It’s up to our clients to see which one is best for them,” Roth said.

While both AMP and InfoBase use third-party cookies, IPG has been worried about cookies for years now and “building ways to work around” Google’s most recent changes, Roth added. The short-lived future of the cookie was one of the core reasons IPG bought Acxiom.

“We’re highly confident in working with Acxiom, Kinesso and all the tools we have that we will have a solution in place to address that issue,” he said.

Acxiom and Kinesso, IPG’s new data and technology unit, have been helping IPG win pitches and grow engagements with existing clients. Kinesso combines IPG Mediabrands’ ad tech and mar tech expertise with Acxiom data.

“We had a number of client wins, particularly on the media side, where Kinesso working with Mediabrands and Acxiom made a difference in the success of a pitch,” Roth said. “This is the kind of stuff clients are looking for.”

IPG expects Acxiom and Kinesso to contribute to an organic growth pickup in 2020, in which the company is forecasting 3% growth, despite cycling through client losses in the first half of the year. Kinesso will continue to roll out new products throughout the year.

Organic net revenue grew 3.3% in 2019 to $8.63 billion, and 2.9% in Q4 to $2.43 billion, outperforming the sector. Organic growth in the United States, which has been a challenging market for holding companies, was 2.1%.

Still, investors had questions about whether IPG’s ownership of Acxiom would cause other agencies and their clients to stop working with the company due to competitive concerns.

“We see zero conflict,” Roth said. “That was part of our due diligence. It’s a legitimate question.”

Overall, more than half of the questions asked during IPG’s question and answer session with investors on the earnings call were related to Acxiom.

“I know all the questions are on Acxiom, and they should be,” Roth said. “But we have the rest of our business. And the rest of our business is doing pretty well. Acxiom is great, but … we don’t want to lose sight of all the businesses we have in our portfolio.”

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1 Comment

  1. As they should. Acxiom data is consists of non transparent household segments. Pretty much contradicts what GDPR and CCPA want to accomplish with transparency and sourcing of the data.