MASTERCLASSING

Publicis buys data marketing firm Epsilon for $4.4bn

Tyrone Stewart
Publicis CEO Arthur Sadoun
Publicis Groupe CEO Arthur Sadoun

Publicis Groupe, one of the largest advertising companies in the world, has agreed to pay $4.4bn to acquire marketing and data firm Epsilon. The deal – which breaks down into a $3.95bn net purchase price after a tax step, with a total cash consideration of $4.4bn – is expected to close in the third quarter of this year, should all necessary approvals be received.

Publicis will look to use Epsilon’s data capabilities to help it ‘deliver personalised experience at scale’, making use of its acquisition across its creative, media, and digital business transformation solutions.

“Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations. The only response is to deliver personalised experiences at scale. They have to transform to meet this new market imperative, said Arthur Sadoun, chairman and CEO of Publicis Groupe.

“With the acquisition of Epsilon, Publicis Groupe is bringing the necessary technology, expertise and the talent to complement our offer in creativity, media and business transformation, and help our clients leapfrog their competition and grow profitably.”

The agreement with Alliance Data Systems Corporation, Epsilon’s parent company, will also see Publicis form a strategic partnership with the remaining business.

“The unique relationships that have been cultivated between Epsilon and our other Alliance Data businesses will remain intact, and we look forward to working with Publicis Groupe to develop an even broader relationship promoting mutual and sustainable growth going forward,” said Edward J. Heffernan, president and CEO of Alliance Data Systems.

Julie Langley, partner at Results International:
“Of the major networks, Publicis is one of the few without a major data-marketing arm, so it makes total sense for them to acquire Epsilon.

“Data capabilities have been much in demand over the last few years and we’ve seen a huge buyer appetite for businesses with expertise in using the main tech platforms - particularly Adobe and Salesforce - to deliver data-driven marketing,

“Sir Martin Sorrell spoke recently about wanting to acquire a first party data firm for S4. While Epsilon has a lot of the data expertise that he appears to be on the hunt for, S4 is very unlikely to have the fire power to afford a business of this scale currently. The same applies to the other mid-size networks and emerging players. The competition Publicis might have faced in acquiring Epsilon is most likely to have come from Omnicom or more likely from the private equity community.

“There’s also an interesting contrast between the acquisition strategies of the networks and the consulting firms. The latter have been adding creative services while the former have been adding data and technology skills. But, ultimately, they are competing for the same market; building ultra-personalised customer engagement.

“Publicis will now be intent on ensuring that Epsilon’s core data capabilities are properly integrated, particularly with the creative offer. The ability of data to drive better creativity is central to the industry’ agenda and we only have to look to Wunderman Thompson to see a similar integration of capabilities at play.”