Every now and then, a holding company makes a purchase that suggests a shift or an expansion of its vision. In 1986, WPP bought its first eleven creative agencies. In 1995, it began buying digital agencies. In 2000, it bought Young & Rubicam for US$4.37 billion, which included corporate branding giant, Landor, plus Wunderman, Burson-Marsteller, Sudler & Hennessey and Cohn & Wolfe. In 2013, Dentsu bought media company, Aegis Group, for US$4.9 billion.
Now Publicis Groupe is poised to buy data-driven marketing company, Epsilon, for US $4.4bn. Epsilon, whose credo is Humans over Hype, is a unique technology and platform company whose focus is to maximise the value of its clients’ data.
The massive purchase, which it expects to finalise in the 3rd quarter this year, has been made through an agreement with owner, Alliance Data Systems Corporation, for US$4.4bn (AU$6.1bn). This, the holding company hopes, will give it what it needs to advance into the future.
Arthur Sadoun, chairman and chief executive officer of Publicis Groupe, explained, “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.
“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…With this critical move, we are going further, faster and deeper in our own transformation, becoming a leader in this data-led, digital-first world.”
Maurice Lévy, chairman of the supervisory board of Publicis, added, “The Conseil de Surveillance has thoroughly and carefully reviewed this transaction and has approved it unanimously considering that it would be good for all stakeholders.
“For the clients: it will accelerate the transformation of Publicis making it a more relevant and more competitive partner. For the talents: in a highly competitive environment for talents, Publicis will be in a position to benefit from a remarkable leadership team, 3,700 data scientists and great technology teams and artificial intelligence experts. For our shareholders: the transaction, which was not planned, has great merits from a financial point of view. The price is fair, the transaction is headline EPS and Free Cash Flow accretive at double digit level, it gives a stronger profile of growth and a new and better balanced mix of product and revenues. Therefore, it will generate value creation that will greatly benefit our shareholders.”
The purchase is Publicis Groupe’s response to an environment in which clients are shifting their investments towards data and technology-driven marketing solutions that allow them to foster customer engagement, support growth and reduce costs, the company said in its statement.
“Publicis has set a clear ambition to combine creativity, data and technology to address its clients’ needs and become a leader in marketing and business transformation.
“With Epsilon at the core, Publicis will become the first player to offer a unique end-to-end services to its clients. It will result in enhanced growth of its existing businesses while opening up new opportunities in an enlarged $1.5 trillion industry.”
Epsilon will bring to Publicis, the company continued, assets that will improve its ability to generate creative ideas and build more relevant campaigns. “By powering the Dynamic Creative Engine, Publicis will go one step further to adapt to real time context of customers (who they are, what they do, what they buy).” The connection between Epsilon’s data sets and Publicis Media’s touchpoints will provide superior media intelligence to build consumer IDs, segment audiences and maximise media buying ROI by accurately measuring and optimising campaigns in real time. And Epsilon will boost Publicis’ digital power by allowing it to deliver deep customer insights to optimise clients’ business models.
Read Publicis Groupe’s statement in full here.