Alliance Data Systems (ADS), which owns Epsilon, this week announced that it will acquire Conversant, formerly known as ValueClick, for $2.3 billion. Conversant -- which had spent nearly a decade and a half as the acquirer, not the acquired -- will be rolled into Epsilon, which appears to be making a play in the marketing tech sector. Conversant brings a display ad network, mobile and video offerings, and programmatic tech to Epsilon.
BMO Capital Markets sent out a note on Friday about the ADS-Conversant news, writing that it “expect[s] the deal to bring the importance of first-party data into greater focus” and calling first-party data the “underpinning rationale of the deal.”
The trick, of course, will be staying transparent enough now that transparency concerns are impacting the balance of power in ad tech, BMO notes.
“Moreover, Conversant generally operates a full/managed-service model and does not offer the en vogue self-serve platform model that players like TubeMogul offer,” BMO writes in its note.
Why might that be important an important caveat? TubeMogul, to use BMO’s example, has seen the number of clients using its platform on a self-serve basis double in the past 12 month, and advertisers using TubeMogul on a self-serve basis accounted for 72% of all spend on the platform in Q2 2014. Other companies are noticing marketers’ desires to be more hands on, too: Rocket Fuel dished out $230 million to acquire [x+1], a DSP/DMP with self-serve capabilities.
BMO doesn’t “see a major impact” on agencies, but does note that ADS’ acquisition of Conversant will stiffen the competition “for [agencies’] trading desks and other programmatic services” because Epsilon now offers email, display, mobile, video, an ad server and programmatic capabilities.
And, of course, ADS now has some serious financial incentive to push into the ad tech space -- not the least of which includes the fact it just invested $2.3 billion to polish Epsilon.