Eric Stein is Executive Vice President, Online Solutions, of Epsilon, a database marketing company.
AdExchanger.com: Can you give a quick background on the latest with Epsilon?
ES: We have a platform, assets and client relationships with which we're building an online business. Online Audience Central and other things that we've done over the past two years is just the start.
We've built a business using our data. We've now incorporated a platform so that our data can sit online in a more seamless and ready to use kind of way. Also, we now have a platform for our clients, in order to bring their own data online. That reflects the online complement of two of Epsilon's four main businesses offline. We have one of the largest databases of marketing service providers in the country. We run five out of the six top banks, nine out of the top 10 pharmaceutical companies, etc. Having an online complement so that clients can use [offline] data that we've helped them collect and manage in the online space is what today's marketers and CMOs want to be able to do.
Through the acquisition of the direct marketing service of Equifax, which was about a year and a half ago, we have the largest in the U.S. and it is only two of its kind. It is the largest file of consumer information available in the country with demographics and other information. Then, we also own Abacus, which is the largest transaction co‑op in the country. We're the largest surveyor in North America. We send out 35 million five‑page surveys to people on an annual basis. Those three components taken separately are bigger than any of our peers. I would say we've been very deliberate in our strategy to build this online business. But, we’re confident in what we have and are committed to continuing down this path.
AdExchanger.com: From the client's perspective, what are the challenges on their side to try the online marketing services that a company like Epsilon offers?
We have challenges.
We want to continue the relationships we have with clients and continue focusing on the foundational priorities for those relationships. Even if extending those relationships to encompass the online solutions that we now offer necessitate that we train our salesforce, and get them to talk to their existing clients or prospects about these new solutions. We've done that and feel confident about where we are. This takes time. We have a large salesforce. By rights, their priority is the priority of the client and extending that becomes a priority as well, but it needs to play its course in the relationship.
Then, the same thing is mirrored on the client side. If there's somebody who owns the email budget, but doesn't own the display budget, getting them to the same table and getting them to think about the combination and the list that they might find by working together necessitates that they combine budgets or decide whose budget is going to be used for this new program. Those types of things are conversations that we're engaged with all the time with our clients now. We see some of those challenges.
I've heard a couple of times throughout conferences and from the clients themselves that marketing is the new finance. Some of those challenges within the organization to make people aware of the capabilities have also been masked by the fact that you have had to go to so many different point solutions. When we come to the table and can talk to a client and say, "Look, bring your display person, email person and offline person. Let's get them to the table because we can run some interesting comprehensive programs to engage your consumers across channels that you have been able to before with one provider." That's a great opportunity. It's one that the vast majority of our clients are focused on. This enables their organization to go after it - a little bit of an organizational challenge, more than a cultural challenge.
How important is folding a display advertising product strategy into Epsilon's product line?
As I said, we're very committed to building the online capabilities for our clients so that they can take advantage of all the online marketing opportunities that they want to. Display is always an important channel for our clients and us. As you know, display is data-driven more and given the great data and technology heritage that we have, it makes sense that display would be a very important channel for our clients and us. That's the basis of what many of our client relationships have been built on. Display is a great way to complement other channels. We've also helped clients by doing multi‑channel marketing programs with direct mail, email and display. Given our heritage, given where our clients want to go and the results that we've seen, it is a very cool challenge for us. Display ought to be at least a complement to anybody's existing marketing activities.
How does Online Audience Central relate to all that?
Online Audience Central relates to all that because in an audience‑centric world - you cannot take just our data, but you ought to start with what you know. What you know is your own data, first and foremost, and being able to leverage that data into the online space enables you to run much more seamless programs across channels because you're using a lot of your data offline today to do all sorts of things. For example, we run many loyalty programs: the Sears loyalty program, the Best Buy loyalty program, the Hilton Honors program. For the Hilton Honors program, for example, we leverage tons of data, millions of reservations on a monthly basis. And then we sort all that data which enables “Mr. Smith” when he shows up at the Hilton in Houston, to get the feather pillow that he likes. Enabling Hilton to use that same treasure trove of data to engage with Mr. Smith when he's online, as well as offline, is really the thrust of Online Audience Central.
What can you say about revenue projections or expected growth for Online Audience Central?
I can't really share revenue stuff, but we have dozens of clients for database management in the offline world. This is a perfect complement to that. Not in the immediate time frame because we wouldn't be able to keep up with it, but within a fairly short time frame, I’d hope that many of those clients would want to have conversations about how to add the online component to their existing platform. I can tell you that even before we launched, we were in discussions with high single‑digit numbers of some existing clients and prospects for this capability.
It's not easy the work that we've done. And we have a great team focused on integrating this online component with the offline since July.
Considering all the services you offer, does Epsilon become an agency? It would seem to me that you're developing a next‑gen agency, if you will.
It depends on what you mean by agency, but I take it you mean (Publicis-owned) Starcom. Both Epsilon and the traditional agencies that you're referring to have strong, trusted relationships with our clients. Those relationships continue to be one of the sources of Epsilon’s strengths, and on the agency side as well. As these worlds start coming together, we're very complementary to each other - as well as competitive. Epsilon brings a strong data background, capabilities of analytics and an ability to show a client how to think about the results that they will achieve with these cross‑channel platforms or cross‑channel programs. These are things that the agencies would add to their mix as well. The creative mix, the buying decisions, all of those types of things are the ones that we work closely with agencies today. We're not competitive at all there. It's a rapidly shifting world. Having trusted partners like Epsilon on one side of the table and a traditional media buying creative agency on the other side, that is a great place for a client to be and we can really stand up some of these programs quickly.
Looking down the road a little bit, what are some of the channels that you have on your radar that maybe clients are either asking you about or that you think clients are going to care about?
When I think about where our assets have traditionally been used and where they will be used, our focus as a company with our clients has been on using data to drive programs that has mostly been in the authenticated space. We're doing retention programs with those clients. We've done some acquisitions as well with the data in the direct mail channel.
As you look across the data assets that we have, the opportunity to do upper‑funnel types of activities for large brands that are already our clients is an exciting prospect. I'm talking about brand awareness, intent to purchase, and trying to drive those types of data is an exciting potential for us. It takes you into some of the more emotive media channels like television and digital video ads. Those channels become more integrated with data. Those are the ones that we're excited about. That being said, it's early still. And the ones that are on our nearer‑term radar is certainly mobile. We already do some social stuff. Those two are ones that we're still building into and on our nearer‑term radar. But longer term, our data assets provide opportunities for us and our clients to integrate television, video and different marketing objectives than we've traditionally worked on.
That leads to my question about Facebook and how you plan on getting in there. That seems to present its own challenge from a data‑driven marketer's standpoint in that it's a closed ecosystem, no?
If it's a wall, it's a consistently shifting wall in terms of height and width and everything like that. They have an interest in enabling data‑driven marketing programs. They also have a lot of data themselves. How much of that they're going to want to make available to partners of the clients that are advertising on their site and how much they're going to want to make that available to third‑parties like Epsilon or others, remains to be seen. We have run some programs already and integrated social as part of the program.
There's one that comes to mind we did for a large CPG company, and it really drove a piece of their sampling program. We've found ways to integrate that data and use that data, alongside the platform. And we’ve made it an integral part of the overall program that we were building for our clients. As the social space continues to evolve, I imagine that there will be ways we will be able to integrate social more seamlessly with the programs that we run. That's a shifting landscape though.
What has surprised you about the data‑driven digital marketing side of things lately?
There are a couple of things. But, I'm not surprised by the venture capital or the logos in this space. It's a huge opportunity. Marketing across the board is shifting in this direction and it makes sense that venture capitalists and the companies that they finance and help plan are going after it.
I have found it surprising that there is less integration across some of those point solutions than you might think. The difficulty with which clients have to pull stuff together to try to make it work when they even venture to go that route is a bit surprising.
One of the other surprising bits was also on attribution. I've been a bit surprised by the willingness of clients who know better to give attribution to retargeting efforts where they know that the retargeting is over‑weighted and geared towards being over-rated. There are a lot of clients who rely on last‑click attribution and many of them know better, but they don't have a better model yet. I'd love to engage with clients like that and show them the way that we look at cross‑channel programs. Certainly, retargeting has an important place in the mix.
By John Ebbert