• by Steve Smith , Staff Writer @popeyesm, September 21, 2007

Another week, another acquisition. Longtime direct mail marketer Acxiom purchased re-targeting and behavioral network EchoTarget this week. Acxiom forms a new unit from the marriage, Relevance-X, with former EchoTarget CEO Greg Smith in the lead. Promising to combine segment-based and behaviorally based marketing in order to target display ads, Smith and Rich Howe, chief marketing and strategy officer, Acxiom, explained how and why the companies came together.

Behavioral Insider: What was the rationale for the acquisition?

Rich Howe: Acxiom has a 30-year history of traditional direct marketing. We have been adding interactive marketing capabilities through acquisitions like Digital Impact and Tefka [site personalization solution]. So we still had a hole in our suite. We needed to get into display advertising in a big way. And EchoTarget and Greg Smith in particular I think offered us the opportunity to fill out our suite. That was the driver for us.

Behavioral Insider: Greg, what is Acxiom buying in EchoTarget?

Greg Smith: They have very, very large, strong and very intelligent clients that are just trying to understand the Internet a little better. For us it was a great opportunity to open the doors to major customers. Frankly [we were] a smaller niche-oriented player mostly focusing on retargeting. Acxiom has done a great job of prospecting in the direct mail world. Now we have the opportunity to tap into that data expertise. We just get the opportunity to get a larger audience that is at the C-Level.

Behavioral Insider: Is consolidation in the behavioral space making it harder for small companies?

Smith: I still think there is room for the niche player. The AOL/Tacoda deal to me was a good thing as an affirmation that this industry of BT is for real. The BlueLithium deal with Yahoo is also an affirmation. It says clients are really taking BT seriously and going beyond just test budgets. Acxiom recognized that as well.

Howe: I think it was just a matter of time. We started to make some moves in the behavioral arena. Clearly we have been doing that in the traditional world forever. For us it is much like we did with Digital Impact. We were sitting on the sidelines watching the activity in the marketplace, knowing we needed to get into it but waiting for the right time. In the EchoTarget purchase that was in part a result of some of the accelerated activity, we see [ourselves] going into the marketplace of display advertising.

Behavioral Insider: What products will this deal help you develop?

Howe: We can go to our clients that are looking to tie all their marketing programs in a  single platform. The largest clients we deal with have these large marketing data warehouses that are already built, and large investments made, and they want to fully monetize that by including the digital capabilities. You are not going to do away with direct mail. It will continue to be a big part of the spend for big customers. We can complement all of the techniques you have had in that world with the other channels like email and search and Web site optimization, and of course trying to leverage display advertising as a means to build product or just sell products. It is multichannel play. That is the game we are playing.

Smith: EchoTarget has always been about the value of segmentation. It is not uncommon for us to work with retargeting clients that have 40 or 50 different segments, not the norm of one, two or three. We felt so passionately about the value proposition of still getting the scale but chopping that pie up in small pieces and showing custom creative units to get better results. That is the same thing that Acxiom has been in the business of doing for years.

Behavioral Insider: Are there ways that Acxiom's offline disciplines can inform online BT?

Smith: What drives response at the end of the day? And it is not just a direct marketing play. It is as true for brand marketers as well. Acxiom has done some enterprising work in life stage marketing, and we're hopeful that will be very successful in the online world as well. I am thrilled to get feedback from agencies that have really focused on developing creatives for multiple segments, and started to really see that it can drive results substantially.

Howe: We have developed a standardized schema of marketing segments called Personicx, which is based on life stages. There is an opportunity, since segmentation tends to be so random, to bring some standardization to that across the Internet. The result is, it allows companies to get more creative with their creative.

Behavioral Insider: As these networks consolidate, what will become the points of differentiation among you?

Smith: I really think that it's essentially a two-tiered approach all those players have. They have premium inventory whether it is Yahoo or AOL, and you'll get the first impressions and they have highly branded sites, etc. I don't think that will change. It will be sold the same way. But there is still this pool of what is left over growing at a substantial rate.

What is going to differentiate the ad networks in my mind is their use of data.  Our travel customers may use a competitor where the [retargeter] has a tag on the home page and knows only that the user went to the Web site.

All they know is, a user went to the site and didn't make a transaction. Whereas we know that user actually searched flights to Vegas or New York. We can now micro-segment those users -- or we can aggregate [searchers for] Montego Bay and Nassau into a Caribbean segment. The devil is in the details. I foresee -- especially in this new world of interest in BT and in customized creative units -- that the ability to understand how to segment data and then bring it to the marketplace through the media is going to be a core competence that a lot of other companies will be looking for.