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Merkle buys CFM Direct for financial services advantage

Merkle Inc., a leading database marketing agency, has bought CFM Direct, a direct marketing shop with a strong financial services client portfolio that includes Capital One, Bank of America, HSBC, Kroger Personal Finance and RBS.

The acquired agency’s 90 employees in the Oak Brook, IL, and King of Prussia, PA, offices are now part of Merkle’s commercial markets group. The deal comes three months after Merkle, Lanham, MD, bought AB&C, a nonprofit processor of donations.

“We looked at seven or eight opportunities before we looked at CFM,” said Merkle president/CEO David Williams. “They were rooted in direct marketing, we liked the people, we liked the culture, we liked the management team.

“The second reason is the focus on financial services,” he said. “We believe the financial services marketplace continues to be the most sophisticated information-based marketplace and CFM was competing and winning in the space.”

AdMedia Partners, New York, advised CFM in the transaction. Terms of the deal were not disclosed.

CFM last year generated billings of $50 million and revenue of $17 million from clients including TIAA-CREF, General Electric and Advanta. The 18-year-old agency offered strategy, creative, campaign execution and production management.

Merkle handles database marketing for brand-name marketers such as DirecTV, Geico, Dell, Walt Disney Co. and CARE.

All CFM staff will keep their jobs. But the agency loses its name.

“The reason we sold was that we had tremendous success in the financial services industry, which suffers from a great degree of parity, saturation and regulation,” said CFM president Mike Shutty. “These are very large companies. In this space we recognized that we could grow organically, but market demands were exceeding our ability to deliver on this vision.

“Therefore, we set out to scale up our consumer-insights offering,” he said. “We understood the space well and, in our opinion, we felt that Merkle shared this emerging vision of making an interminable link between brand insights and consumer insights, and fusing that information into the development of truly integrated direct marketing programs. [Also] we want to create a seamless union between creative staff and analytics staff.”

Mr. Shutty’s new title is president of agency services at Merkle’s commercial markets group. He will continue to work out of the Oak Brook, IL, office.

The CFM acquisition comes on the heels of two major independent direct marketing agency mergers announced in the past month. Mercury Media merged with Advanced Results Marketing and Weyforth-Haas Marketing combined with Bennett Kuhn Varner.

This increased merger and acquisition activity signals a growing challenge for midsize agencies.

“The No. 1 challenge is the inevitable commoditization of the traditional services in the direct marketing space,” Mr. Shutty said.

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