This week Publicis Groupe completed its $4-billion acquisition of data marketing firm Epsilon. It is the second largest deal in advertising history, behind only Dentsu’s $5 billion acquisition of Aegis in 2012.
Epsilon is about e-mail marketing, managing loyalty programs, a lot of data scientists and an ad tech platform. But this deal was really about owning data—lots of data. This has been the key talking point for Publicis Groupe CEO Arthur Sadoun since announcing the deal in April.
“With the addition of Epsilon’s capabilities in data to our existing creative, media and technology firepower, we have all the necessary assets and talent to help our clients leapfrog their competition and grow profitably in a data-led, digital-first world,” he said in the statement confirming the completion of the deal on Tuesday.
Rather than add Epsilon as a new unit, it will be integrated into Publicis’s four existing hubs: media, communications, Sapient and Health. Publicis believes Epsilon’s data assets and expertise will, for example, materially improve the way Publicis media agencies target and connect with high potential consumers, and how its creative agencies can understand consumers and develop dynamic, more personal and therefore more resonant creative.
And as the third largest advertising holding company in the world, serving clients across Canada and in every category—brands like Metro, Rogers, Chrysler, Great West Life, Toyota and TD Bank—the acquisition could have an effect across the industry if everything goes as planned.
The Message spoke with Andrew Bruce, the former head of Publicis Canada, current North American CEO of Publicis Communications, and a member of the Publicis team that completed the acquisition, about what the deal could mean to marketing and to marketing in Canada.
Why do this deal?
Because marketers today covet personalization and customization, and that requires data. “We’re trying to organize our group to be able to provide one-to-one engagement at scale,” said Bruce. “To appropriately do that in a modern marketing world, where the channels are fragmented, where you’re trying to understand individual behaviours and create meaningful direct relationships with consumers, the whole thing hinges on data.”
But this was also about catching up to the competition. Both DentsuAegis and Interpublic have added significant data and data expertise in recent years with the acquisition of, respectively, Merkle in 2016 and Acxiom last year. Publicis was trying to build its own data platform but it was taking too long, said Bruce. “It would have taken us 15 years.”
The power of first party
The deal isn’t just about data, it’s about first party data—depending on how you define first party data.
This is how the deal is being presented by Publicis and how it is being interpreted by many. In an article just after the deal was announced in April, CNBC cited three different analysts praising the deal for giving Publicis access to an enormous amount of first party data. Epsilon certainly has deep experience helping its e-mail and loyalty clients manage their first party data, and access to data through its ad tech platform Conversant. But it also owns a massive amount of data via a cooperative acquired through its acquisition of Abacus in 2007, and built out since then.
“That data cooperative is about 1,000 businesses providing their first party data to Epsilon,” said Bruce. “And then what they buy back is a holistic view of their customer, through all the other data inputs that come from all the other first party data that we have.” This is vital to today’s marketers, who are eager to get the most complete picture of their customers—their purchase habits, what influences those purchase decisions and so on, said Bruce.
“The problem is so many industries have one data source, for the most part. So if I’m a retailer I might have POS data, but I don’t understand how that customer spends and makes decisions that they do throughout the rest of their life,” he said. Epsilon’s data gives marketers access to additional first party data to complete that picture.
However, you don’t have to look hard to find data experts who call this second party data. Here’s an IAB definition, for example: “Second party data is another company’s first party data that has been shared for the purpose of creating audience segments or insights for the brand’s use. This party data can be purchased directly from the company that owns it, or can be found through a data co-op.”
Regardless, Publicis now has access to a lot of really rich, really valuable consumer data.
How much data is that?
The deal gives Publicis Groupe access to $15 trillion in transaction data tied to individuals, and can now track 535 million mobile devices and 200 billion online interactions daily, said Bruce. But this deal is not just about access to massive amounts of data, he said. It is also about managing the data effectively to to be relevant to consumers.
“The numbers are staggering, but when you manage them and the tech platform that underpins it is right, the knowledge and insight and understanding that is created is meaningful to our clients,” he said.
What about privacy and data ownership?
Where Publicis was processing data before, and therefore less responsible in terms of meeting privacy requirements, that will change as an owner. “We’ve had our team of experts…inside Epsilon for months, understanding how do we get this data, how do we use this data, what information does it provide and are we going to be compliant when the time comes,” said Bruce.
And Publicis has obviously seen the rising consumer concerns about how data is being used. “If we do this right, then we’re not annoying people, we’re not filling their social platforms with crap… It is understanding the customer journey, where are they on that journey in regard to a purchase decision, and what do we then share to add value to that journey, as opposed to just annoy or over communicate,” he said.
What about Canada?
Epsilon is described as having a North American focus, but in reality it has been a U.S. focus. Fully 97% of its $1.9 billion in net revenue in 2018 came from the U.S. A Publicis spokesperson confirmed to The Message that “Canada accounted for a fraction” of the other 3%.
The data set is dominated by American consumers (Epsilon says it has 250 million U.S. profiles), but Canadian consumer data will also come from any large U.S.-based marketer doing business in Canada, said Bruce. “We’re getting Canadian data all the time.” Epsilon told The Message that it has a proprietary, permission-based database of two million Canadian consumers that includes demographics, financials, lifestyles and interests, purchase behaviours and more.
“But so much of [U.S. consumer] insight and understanding is obviously applicable to this market,” said Bruce. “We do have an offering that is highly relevant to Canada.”
The roll out in Canada will begin soon, likely with larger clients first, he says. “Sizeable clients with large customer bases that we’d be able to work with right away, bringing Epsilon into the mix,” he said. The key will be to “thoughtful about how we roll it out. The last thing I want to do is over promise and under deliver.”