Publicis group SA agreed to buy digital marketing firm Epsilon from Alliance Data Systems Corp. for $4.4 Billion in cash, propelling the French advertising group further beyond a weakening conventional ad business in its biggest takeover yet.
Epsilon’s services span loyalty programs to email marketing and its Conversant unit collects consumer data including transactions, location and web activity. A three-way battle for online marketing dollars is underway as e-commerce explodes; pitting the traditional ad companies such as Publicis, WPP Plc. and Omnicom Group Inc. against global consulting firms and the giant tech platforms: Facebook Inc., Alphabet Inc.’s Google and Amazon.com Inc.
The ad firms easily dominated traditional advertising in newspapers, billboards and television before the market went into decline. In the digital world, they are up against companies that harvest data from billions of social media users and often get closer to consumers by handling their transactions.
The owner of agencies Saatchi & Saatchi and Leo Burnett Worldwide has a patchy record in managing acquired companies: digital ad technology is evolving rapidly and the group posted a loss in 2016 after writing down the value of one of its digital businesses. Publicis made one of the industry’s boldest bets on ad technology in 2015 with the $3.7 billion purchase of Boston-based Sapient, and Sadoun has staked the company’s future on digital tech businesses that he sees as “strategic game changers."
