Publicis Considers A Bid For Epsilon As Agencies Seek Ownership Of Data

Agencies need access to unique data sources to bring strategic value to their clients.

Publicis said Monday it is in talks to acquire Epsilon from parent Alliance Data Systems in an effort to beef up its own data assets. The agency network is bidding against Goldman Sachs and private equity firm Advent International for Epsilon, which is valued at roughly $5 billion and has 8,000 employees, according to Bloomberg.

“The Group’s governing bodies feel an obligation to study any possibility to strengthen its position thanks to assets that could fit the Group’s strategy and bring an enhanced service to the Group’s clients, while reinforcing its competitiveness for the future,” Publicis said in a press release confirming its bid for Epsilon on Monday.

Owning Epsilon would give Publicis deeper expertise in working with data in an increasingly privacy-centric world, as well as ownership of a unique data asset. It would also give Publicis an ad tech stack with Conversant, the marketing automation platform Epsilon bought for $2.3 billion in 2014, as well as affiliate marketing platform CJ Affiliate.

“Epsilon would bring Publicis data management, identity resolution and loyalty capabilities,” said Jay Pattisall, analyst at Forrester.

The potential purchase comes less than a year after IPG acquired Acxiom for $2.3 billion and almost three years after Dentsu Aegis Network acquired Merkle for $436 million. Like those companies, Epsilon has a large services arm that helps marketers work with data in addition to a unique data asset.

Like IPG and Dentsu, Publicis is hedging its bets that clients will want to work with an agency-owned data asset rather than sourcing their own, Pattisall said.

“The proposed purchase would signal a strategy shift for Publicis Media from a federated data model to a proprietary one,” he said. “Marketers will need to decide which model best suits their needs, and there is certainly an argument for either.”

Like most agencies, Publicis is trying to modernize its services and diversify its revenue mix as clients decrease spend on traditional advertising. The group reported just 0.3% organic growth in Q4 thanks to soft spending by consumer goods marketers. Epsilon could offer an opportunity to attract new revenue streams from clients looking for consulting service around the activation of data and marketing technology.

But Publicis’ turnaround story has been a long one and its history with big acquisitions is bumpy. The group is still struggling to integrate Sapient, which it bought for $3.7 billion in 2014 and subsequently wrote down by $1.5 billion in 2017. Publicis’ stock was down 4% on the Epsilon news.

“If a sale goes through, I would anticipate Epsilon and Publicis undergoing an integration of about 18 to 24 months – not unlike what we’re seeing with IPG and Acxiom,” Pattisall said.

If there is a sale, Publicis will also need to reconcile Epsilon’s data assets with its existing platforms and services, such as identity resolution platform Publicis People Cloud and data unit Publicis Spine.

“It will take some time to resolve the duplicative capabilities,” Pattisall added.

Enjoying this content?

Sign up to be an AdExchanger Member today and get unlimited access to articles like this, plus proprietary data and research, conference discounts, on-demand access to event content, and more!

Join Today!