John Lamparski/Getty Images for Acxiom CEO Scott Howe
- IPG plans to buy Acxiom's Marketing Solutions division for $2.3 billion.
- The deal should help it create custom audiences for clients and target ads.
- But the deal represents a risk for IPG, in part because its competitors may no longer want to work with Marketing Solutions after it becomes part of IPG.
- What's left of Acxiom will rename itself after its LiveRamp division and move its headquarters.
Ad agency holding group Interpublic Group announced Monday a deal to acquire Acxiom's Marketing Solutions business for $2.3 billion in cash in the latest major mashup in the advertising industry.
Under the agreement, the Marketing Solutions group - which accounts for three-fourths of Acxiom's revenue and develops software that helps companies and their brands manage large volumes of data - will be folded into IPG's properties. What's left of Acxiom will remain independent but will change its name, headquarters and focus.
"After careful consideration of a variety of options and potential partners, it became clear that a sale of [Marketing Solutions] to IPG, with its vast scale and breadth of complementary services, represented the best possible path forward for our clients and associates," Acxiom CEO Scott Howe said in a statement.
The deal, which the companies expect to close by the end of the year, is subject to regulatory approval as well as a vote by Acxiom's shareholders.
IPG's advertising agencies include Deutsch, IPG Mediabrands, FCB, McCann, Huge, and R/GA. Buying the Marketing Solutions group should help it craft custom audiences for its clients and target groups of customers with specific messages.
The deal "could prove to be the most significant [merger or acquisition] within the agency space since Publicis bought Sapient in 2014," Brian Wieser, a senior analyst at Pivotal, said in a research note. "Conceptually, we think such a transaction should be very positive for either company, as it would provide exposure to revenue streams that should remain vibrant."
It's not clear if other agencies will continue to want to work with Acxiom
But the deal represents a risk for IPG. It's not clear if other advertising companies and agencies will stick with the Marketing Solutions group after IPG assumes control.
"There is risk that holding companies who don't end up with Acxiom's Marketing Solutions will not want to use [its] products going forward because doing so benefits a competitor," Wieser wrote.
What's more, marketers remain cautious of third-party data analysis services in the wake of Facebook's Cambridge Analytica scandal. In March, Facebook announced it was winding down its Partner Categories program. That program allowed advertisers to work with third parties such as Acxiom to target ads.
"Marketers are increasingly conscious of 'ethical data' and the notion that consumers should be providing more explicit forms of consent for their data to be used, even if they have provided consent that meets legal standards," Weiser wrote. "We're doubtful that most consumers know that data about them exists in Acxiom databases."
IPG's deal to acquire the Marketing Solutions group does not include Acxiom's LiveRamp data-migration business. Business Insider reported in May Acxiom was shopping that business around. Instead of selling it off, though, Acxiom will make it the company's new focal point after the deal with IPG. In fact, the company plans to group all of its remaining properties together after the deal is completed and rename itself LiveRamp.
Howe and Warren Jenson, Acxiom's chief financial officer, will remain in their current positions after the name change. But the company's headquarters will shift from Conway, Arkansas, to San Francisco after the sale, and its ticker symbol will change from ACXM to RAMP.
The IPG-Acxiom deal comes just two weeks after another big move in the ad space - AT&T's agreement to buy AppNexus for about $1.6 billion.