Deal of the Year: IPG buys Acxiom Marketing Solutions
Key product acquired:
2,100 data and analytics professionals
How current conversations around data privacy and ensuing tweaks to major digital platforms like Facebook will affect Acxiom Marketing Solutions' capabilities.
The move comes down to arguably the most valuable resource in advertising — data, data, data — for better targeting, personalization and concrete figures to drive marketing success.
In a year where headlines swarming Madison Avenue have been focused on consolidation and flat growth, Interpublic Group of Companies (IPG) made big waves with the purchase of Acxiom's data marketing division, Acxiom Marketing Solutions (AMS), for $2.3 billion. The deal, completed Oct. 1, marks a win-win for both companies, sharpening IPG's specialization in an increasingly key field — data — while allowing AMS to tap into a deep network of agency talent and brand clients.
The AMS acquisition ultimately puts IPG on sturdier footing as marketing quickly steers toward an uncertain — but certainly data-driven — future, and as traditional ad agencies have grappled more and more with the encroachment of alternative marketing services providers like consultancies on their business. It also marks an important milestone in what's been a remarkable turnaround for IPG, which, just a few years ago, was under investor pressure to sell itself. In 2018, however, the company experienced three consecutive quarters of strong performance.
Beyond being a long-term investment, the AMS purchase might have assisted in recent big account wins as well, including that of American Express. The financial services giant had previously worked with the data firm on its Predictive Intent Segments for targeting marketing messages, and AmEx CMO Elizabeth Rutledge said IPG's Universal McCann shop was selected as a new partner thanks to its expertise in media, technology, data and insights.
A brighter future
IPG's buy equips the company with some 2,100 new data and analytics professionals, but for the AMS team, the deal presents growth opportunities that might have otherwise been closed off. Parent company Acxiom was once a formidable marketing giant, but following the Cambridge Analytica scandal and Facebook's subsequent decision to wind down Partner Categories, its prospects turned bleak.
Partner Categories helped advertisers to target ads based on third-party data, with Acxiom being a significant broker in the program. Following the decision to shutter Partner Categories in March, Acxiom said the change in its relationship with Facebook was expected to negatively impact total revenue and profitability in 2019 by as much as $25 million.
Under its new stewardship, AMS might be able to find fresh room for innovation, while the agency can more quickly build out its data services and talent rather than developing them in-house, which can take years.
"After careful consideration of a variety of options and potential partners, it became clear that a sale of AMS to IPG, with its scale and breadth of complementary services, represented the best possible path forward for our clients and associates," Acxiom Corporation's CEO Scott Howe said around the acquisition.
The long view
That's not to say AMS will be a panacea for IPG's problems. Like any major agency conglomerate, the company is facing competition from consultancies and trends such as brands moving more marketing work in-house. The company also paid a hefty price tag for AMS, which some industry experts initially expected to be sold for between $1.5 billion to $1.8 billion.
But IPG has also been sturdier than many of its peers, and increased organic growth targets to 4% to 4.5% for 2018 after beating analysts expectations in Q2. A heavier investment in data now could build on that momentum for the long term and further support strong performers under the group's portfolio, such as Mediabrands, McCann and MullenLowe.
"While marketing and information technology are increasingly converging within client organizations, service providers remain bifurcated," Philippe Krakowsky, IPG's chief strategy and talent officer and chairman and CEO of IPG Mediabrands, said in a statement in July. "With the skills and capabilities that AMS brings to our portfolio of companies, we can offer clients end-to-end solutions that we believe will change the way in which we work for brands, and accelerate the onset of outcome-driven marketing."
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