“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Maja Milicevic, co-founder and principal at Sparrow Advisers.
On Sunday Publicis Groupe announced it is buying data provider Epsilon in a $4.4 billion deal.
It identified two main considerations that drove this deal. First is the importance of building first-party data for its clients, thus enabling them to better compete with a rising direct-to-consumer sector. The second driver is better data-driven creative, allowing for personalized experience at scale.
While these are strong points and much needed, I’m skeptical that this acquisition will really help further those stated goals. At first glance, it appears that Publicis is acquiring something that is not unique. Even if the integration process between the two companies is super-smooth – which rarely, if ever, happens – there are some questions that immediately come to mind.
How quickly can you build value on top of the first-party loyalty program assets?
Epsilon’s lead categories focus on CRM, email, database and loyalty programs, along with the transactional data stemming from these channels. There are likely to be some data points proprietary to Epsilon based on its partnerships with brands to create these loyalty programs. But in most cases, the expectation would be that if Company A is using Epsilon to onboard its own first-party data, that data remains first-party data to Company A.
With the Publicis acquisition, will its clients have to port their first-party data exclusively into Epsilon?
Will clients be forced to choose the underlying technology Publicis is using?
Epsilon owns Conversant, a DSP that would make it easy for anyone to target Epsilon segments across all the internet. While Publicis may see it as unique to have a third-party data provider and execution layer (DSP) under the same roof, I don’t think it adds any edge to the offering. Anyone can buy the segments and target them through a DSP or multiple DSPs of their own choosing. If the choice of DSP is up to the client, what is the value-add of the acquisition?
Will Epsilon's third-party data become more exclusive?
Epsilon and other third-party data providers are in the business of selling the data segments they aggregate – Epsilon reported related annual revenue of $2 billion in 2018 – and these segments are easily accessible to anyone looking to buy. There is no indication that Epsilon will now exclusively make their data available only to Publicis or its clients.
What about those clients for whom Epsilon data isn’t a good fit?
Are the legacy loyalty program assets compatible with an increasingly mobile-first, digitally savvy consumer universe?
This is a fair question to ask in light of Epsilon being a data-driven marketing pioneer and IPG’s recent Acxiom acquisition. With increasing pressure from privacy advocates, fallout from high-profile data misuses and a tightening regulatory environment for consumer data worldwide, what’s the possible runway here to fully realize a commercial advantage from this acquisition?
With the triopoly’s first-party data and share of advertiser wallet, is this move enough to make the Publicis offering competitive at scale?
This question particularly applies to creative: How many data assets will be enough, and how many will have to come outside of the first-party and Epsilon third-party data universe to truly compete with the scale, reach and customization capabilities of major platforms?
As with most data suppliers, Epsilon’s strategy to date has been to make sure that its data assets are as easy to buy as possible on as many targeting platforms as one can integrate with. Owning a large third-party aggregator doesn’t differentiate an offering in any way, except perhaps affecting margins. I am not optimistic about any value-add to Publicis’ clients.
Frankly, I’m afraid companies are going through these acquisitions to match what someone else from a similar category has done, and I’m worried that the larger industry is having a hard time understanding the nuances in quality and scale of first- and third-party data and what’s unique vs. what’s a commodity. In this kind of climate, no wonder walled gardens continue flourishing beyond anyone’s reach.
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