Merkle acquires CognitiveData

Database marketing agency Merkle has acquired data quality services provider CognitiveData, a company that has quickly grown since coming on the scene in 2001 as a result of its proprietary data hygiene technology. Terms of the deal were not disclosed. ?

The move reflects the growing importance of data and analytics to today’s marketers and, therefore, to marketing service providers and agencies. The current economic environment is simply accelerating trends that have been pushing marketers toward a closer examination of data over the past few years, such as increasing costs and demands from higher-ups for greater accountability. ?

Epsilon recently created a new business intelligence division, Epsilon Targeting, which combines its data services, databases and co-op Abacus under one umbrella. Also, last week, marketing and information services provider Telematch Inc. made two acquisitions to improve its data dashboarding, analytics and database management. ?

Even more traditional advertising agencies are shining a light on data, with WPP recently partnering with Omniture and Ogilvy North America partnering with Unica and Pluris in order to enhance their data offerings.?

The economy “is driving significant attention to data quality” among marketers, said Don Patrick, COO at Merkle.?

In fact, in the past year, five out of Merkle’s top 10 clients have signed up for CognitiveData’s services. Merkle has been offering CognitiveData’s services to its clients for two years. ?

However, the real reason why data quality has become so important in 2009 and why an acquisition like this makes sense for Merkle is because costs continue to rise for mail, and marketers are looking for ways to be “smarter” about how they go to market, said Patrick. ?

“Once marketers learn to mail smarter, they continue to mail better even after the economic environment gets better,” he said. ?

Peg Kuman, CEO of Telematch, agrees. “Particularly in a climate like this, people are much more focused on knowing who their best customers are,” Kuman said. “To that degree, the more you can learn about what makes buyers respond and what makes non-buyers non-responsive will make you a better marketer.”?

While Merkle’s expertise lies in building databases and high-volume data input, CognitiveData’s focuses on refining small sets of data to optimize postage savings by insuring the accuracy of mail files and eliminating waste in direct mail programs. By being able to offer CognitiveData’s services to its clients, this will “drive more value for our clients,” said Patrick. ?

The deal calls for CognitiveData to remain a separate brand that will operate as a wholly owned subsidiary of Merkle. As such, it still will sell through other marketing services providers.?

CognitiveData employs approximately 50 people in offices in Little Rock, AR, New York, and Chicago.?

“We think the data quality space is a $75 million space,” said Rod Ford, president and CEO at CognitiveData. The company ended 2008 with $19 million in revenue.?

With Merkle’s resources now behind the brand, Ford said he will be looking to quickly bring its technology into additional direct marketing channels and to integrate more data processing services into Cognitive-?Data’s offerings. ?

The brand is currently strong in retail, communications, insurance and publishing. Some of the areas where it will be looking to grow include fundraising — an important vertical for Merkle — gaming and travel and leisure, said Ford.?

Data and analytics “is both an attractive and interesting space these days — more so than I have seen in my 20 years in the industry,” said Michael Goodnough, managing partner at analytics consultancy Emerge Partners. “Analytics used to line up well with direct marketing, but now it lines up well with marketing, period.”?

While many of the bigger agencies have expressed an interest in data and ana-?lytics, this has been realized more through partnerships as opposed to acquisitions, Goodnough pointed out.?

“There just aren’t many companies of scale to buy that build analytically driven marketing programs,” he noted.?

“We don’t want to be in the business of hardware,” said Marc Fleishhacker, managing director of Ogilvy Consulting North America. Instead, the agency takes a “build not buy approach” to analytics and partners with data technology providers as needed, he explained.?

Over the past three years, Ogilvy’s internal analytics team has tripled in size, and that growth rate has picked up even more in 2009, says Dimitri Maex, managing director of marketing effectiveness at Ogilvy. ?

“Analytics has become a really hot commodity,” said Maex. He added that Ogilvy looks to hire people with a mix of mathematical and marketing skills who can handle campaign measurement, optimization and data mining. ?

And because campaign optimization — which happens in real time — has become such an important part of what marketing agencies do, Ogilvy seeks to have its analytics team work closely together with its creative and media planning employees. ?

Next month, when Ogilvy moves into new offices, analysts, planners and strategists will work together in the same area. ?

“The work really starts when you launch a campaign,” said Maex. “You don’t just sit back and watch what happens. You really optimize on a day-to-day basis, which is why it is important to put the data and the analytics in the hands of the people making the optimization decisions.”?

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