As Neustar Faces Loss Of Its Big Government Contract, CEO Hook Says Marketing Services Won't Be Affected

neustar q2Neustar is banking on growth in its marketing services division, the primary point of conversation during its Q2 2015 earnings call. That the company will likely lose a major contract that supplies number portability services to the United States might be a financial hit, though CEO Lisa Hook was adamant that it won't affect Neustar's growing marketing services business.

That contract was “tentatively” awarded to Swedish company Ericsson by the FCC, though Neustar extended its ownership of the contract, which would have ended on June 30, so that it can run the business until it’s given a six-month notice of termination. The earliest Neustar can get that notice is September 30, 2016.

Investors wondered at the potential damage inflicted by the contract loss on Neustar’s data-driven marketing services, which relies heavily on names, addresses and phone numbers – wrapped with other data attributes – to help clients target the right customers and prospects. Maintaining that core information and ensuring that it’s up to date is what fundamentally gives Neustar’s stack its power.

So if it were to lose the number portability contract, would it also lose access to a valuable source of information?

Hook says it wouldn't. “Frankly, we originally thought the legacy business would assist us in this regard because it has the numbers, but it’s not useful,” she said, adding that Neustar only gets the names of service providers, switch locations, device types and the services that the devices can accept or send.

“It’s not linked at all to a person,” Hook continued. Neustar’s data sources, instead, come from other areas: registry services, order management services, caller ID services, various directory services and partnerships it’s created around mobile device IDs.

Neustar's confidence in marketing services seems undiminished, and the unit's revenue increased 17% YoY to $40.9 million (the company’s total revenue jumped 8% YoY to $256.8 million). Consider that during this time two years ago, marketing services raked in just $29.5 million in revenue.

Of course, during that time frame, the company acquired the data management platform Aggregate Knowledge, struck a deal with Omnicom’s Annalect division (Annalect white-labels Neustar’s ad tech stack) and consolidated its marketing tech offerings into a suite.

Neustar’s current messaging, different from other ad tech players, is around selling both marketing services and marketing security – reaching out to both CMOs and CIOs. “We’re explaining to [the latter] that their job is changing,” said Hook. Whereas CIOs used to care primarily about enterprise IT and firewalls, now they have to care about keeping company sites well-lit and running, and the ecommerce store open and operating.

 

 

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