IPG acquisition of Acxiom – a smart investment?

20 July, 2018

In the world of Advertising, Technology, and Media related M&A deals, one particular transaction has been stealing all of the headlines this month – Interpublic Group’s acquisition of Acxiom’s legacy data management business for a staggering $2.3 billion!

Advertising company, Interpublic Group (IPG), announced on July 2nd that it has committed to acquire the Acxiom Marketing Solutions business (AMS), which consists of Acxiom’s marketing services operation and lines of business from Acxiom’s audience solutions operation.

Up until now Acxiom has been one of the USA’s major consumer data providers for marketers, a function which has made up 75% of Acxiom’s current business.

The Details

  • IPG will acquire AMS for $2.3billion.
  • The transaction is expected to be completed by the end of the year.
  • IPG will take on 1,200 of Acxiom’s current workforce.
  • AMS will be a stand-alone division within IPG aligned with its media brands.

The Benefits

Acquiring AMS will enable IPG to offer its clients end to end data and marketing solutions and will expand its expertise to data analysis meaning IPG can better serve its clients’ data management needs.

IPG hopes this combined service offering will significantly increase revenue to beyond what either company could have obtained independently.

The Risks

By the own admission of IPG’s CEO, Michael Roth, the acquisition is a “big bet” given the intensifying global focus on tightening data protection regulations (for example the recent introduction of the EU’s General Data Protection Regulations and new data laws in California) and rapidly growing concerns regarding the use of personal data in marketing campaigns. Although Roth is not overly concerned by such matters; Roth holds the belief that Acxiom’s focus on data ethics coupled with IPG’s commitment to media transparency will in fact provide a “unique opportunity” to change the current cautious approach businesses are taking to data-driven advertisement.

Summary

The acquisition of AMS may provide value in the long term for IPG and result in IPG being better equipped to complete in an industry where clients increasingly expect advertising companies to offer advertising based on digital consumer data. However, the success of the acquisition will hinge on whether IPG can effectively deal with the new operational risks that it will now face. To avoid being the subject of data handling criticism that the likes of Facebook and Cambridge Analytica have suffered in recent months, IPG will need to invest heavily in its technology and obtain expert advice to ensure it processes all consumer data in in a secure, ethical and regulatory compliant manner.   

For more information on company mergers and acquisitions, contact Laura Wilson at laura.wilson@crippspg.co.uk.