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ISSUE NO. 65– April 2019

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Publicis to Buy Epsilon from Alliance Data

Alliance Data’s Epsillon Business has agreed to be sold for over $4 billion to Publicis.Alliance Data Systems Corporation is a publicly traded provider of loyalty and marketing services, such as private label credit cards, coalition loyalty programs, and direct marketing, derived from the capture and analysis of transaction-rich data.

The war for access to consumer data  just escalated. Consumer data has become increasingly valuable to  fuel digital ad targeting and attribution.  Publicis owns agencies such as Saatchi & Saatchi, Leo Burnett and Publicis Media and is one of the world’s largest digital ad agencies. CardLinx member Dentsu is a top 5 global competitor to Publicis.

CardLinx Insight

The rapid pace of consolidation continues in digital advertising, payments and retailing. The fuel for this consolidation wave is access to consumer data. Customer information helps marketers and agencies craft relevant ads for consumers, target those messages at the right people and measure their effectiveness. The largest players crave more data and are willing to deploy cash piles to acquire it as this deal demonstrates. The companies that have access to data will prosper. Those that don’t, will not.

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Japan's Softbank Doubles Down on Fin-tech with Wirecard

Japan’s leading global investor, Softbank, has announced a $1 Billion investment pledge in Wirecard. Wirecard is a leading global payments platform and processor that focuses on merchants’ in-store and on-line payments processing needs. Wirecard is publicly traded and currently has a market cap of €17.18 billion. Wirecard provides card issuing, data analytics, risk management, and other related services that cover all aspects of payments. Major competitors to Wirecard include First Data, WorldPay, Stripe, and Worldline.

CardLinx Insight

Softbank has a well-earned reputation for great contrarian bets on technology. This investment in a troubled fin-tech company Wirecard demonstrates the enduring attractiveness of the fin-tech sector. With US financial markets at all-time highs, bargain investments like Wirecard are difficult to find. Expect to see more M&A and investment activity in undervalued and sub-scale payment companies, including companies such as Global Payments, Synchrony Financial, and others.

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Google Growth Slows as Card-Linking and New Digital Players Gain

Google reported sharply slowing revenue growth for its digital ads business as new competitors including card-linked marketing platforms and Amazon, Walmart.com gain traction. Google’s  first quarter revenues were up 17% year-over-year, compared with 26% in last year’s first quarter. Google’s performance was in sharp contrast to Amazon that achieved record growth in its latest quarter.

CardLinx Insight

For most of Google’s existence, it has been both the largest and fastest growing digital advertising platform in the world. That seems to be changing. Google’s search ad platform has come under intense pressure as merchants and CPG companies re-evaluate spending so much on Google online ads when 90% of their sales happen off-line. Furthermore, Google charges on a cost per click basis with no direct correlation to increased sales for the merchant or CPG.

New digital advertising platforms that deliver attributed advertising have been gaining share from Google. Amazon leads the pack and now ranks third in size among digital ad businesses in the US after Google and Facebook. Amazon has a huge advantage because many of its users are logged in as Amazon Prime members when they search on Amazon. Most of the purchases are also completed on Amazon’s platform resulting in enhanced targeting and attribution. Card-linked platforms including Rakuten Ebates In-Store, American Express Offers and Bank of America’s Bank Amerideals are other new platforms gaining share from Google. These card-linked marketing platforms are growing because their users are also logged-in/ opted-in. The resulting off-line purchases can be traced back to the online ads, thereby delivering a much higher level of correlation from ad to purchase than Google can provide.

MEMBER UPDATES

We welcome Cartes Bancaires to The CardLinx Association!

Cartes Bancaires is France’s national interbank network and payment network with over 46,000 ATMs and over 1 million EFTPOS acceptance points. As of 2017, CB had 68.25 million cards in circulation. CB was created in 1984 and has since incorporated technologies in card payment to give it value added services and added security. Learn more at www.cartes-bancaires.com

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