Acxiom Corp, having a market capitalization of $2.3 billion is offloading its data marketing division. The deadline is Thursday, and we are already seeing some of the advertising giants like Interpublic Group of Co and Dentsu Inc. likely to pitch in with their offers. The data marketing unit represents a significant chunk, about three-fourths of Acxiom’s total revenue. It specializes in storing and managing customer data from clients in the retail and financial services sector.
The marketing services business generated $697 million in revenue for the year ended March 2018. Hence, strategists expect the acquisition to fetch a minimum of $1.5 billion to $1.8 billion. Many interested acquirers have already submitted their bids in April, and the two advertising giants are expected to weigh in their options on Thursday.
Ad companies have always used their purchasing power to negotiate the best deals for their clients. However, the rise of digital marketing has made customer data a critical ingredient in the ad-buying process. It has forced such giants to strengthen this area. Dentsu, acquiring the marketing firm Merkle in 2016 is a prime example.
The US-based IPG own agency networks like Mediabrands and McCann Worldgroup whereas the Japanese-based Dentsu owns Carat, 360i, iProspect, and McGarryBowen. It makes these two companies as two of the world’s largest advertisement holding companies.
Customer data is useful because it helps marketers develop relevant advertisements to target the right section of people. In the absence of customer data, these companies have to rely on social media channels like Facebook that do not tend to share much data with advertisers.
One has to keep in mind the Cambridge Analytica fiasco, especially when it comes to acquiring customer data. This incident caused a significant uproar in the US fuelling calls for data-privacy legislation. Europe has already taken the lead in this matter with the GDPR (General Data Protection Regulation).
One has to concede that these issues have affected Acxiom’s business significantly, especially as Facebook has decided not to continue with Partner Categories, one of the ad-targeting options allowing advertisers to utilize data from data brokers such as Acxiom.