Creating innovative products and solutions starts with collaboration
By Rick Erwin, Adstra CEO | Adweek – February 27, 2023
Most people are familiar with the three largest U.S. credit bureaus—Experian, Equifax and TransUnion—as well as their place within the financial data ecosystem.
But these credit bureaus also play a sizable role in advertising. Since 1990, all three companies have been growing their marketing services footprint. However, their commitment to this segment has been cyclical; they either seem to be acquiring marketing services businesses to grow their footprints or divesting them to withdraw from the sector.
While marketing and advertising may be far from their main business focus, the presence of the credit bureaus within the advertising industry is vital and primed for a renaissance.
The pendulum swings
Experian, for example, began amassing its marketing unit in the 1990s with the acquisitions of DirectTech, Metromail and several other companies, eventually creating a $1 billion global marketing services business. But by 2017, Experian had divested most of those companies. Then in 2020, it began acquiring again with its acquisition of Tapad.
More recently, TransUnion has become a major force in data-driven marketing advertising with its acquisition of Neustar and other growing companies in the space.
The reasons why this persistent investment/divestment cyclicality exists are less important than the implications of it for leaders in the marketing and advertising industry. One thing is very clear: These companies do little organic innovation, instead favoring M&A as the primary path to build new products and solutions, new functionality, and growth in the marketing and advertising sector. Leaders of ad-tech and marketing services should take note.
The credit bureaus, through their acquisition of dozens of marketing services companies over the last three decades, have fueled an ongoing pipeline of innovation that is crucial to the advertising industry. Their periodic interest in the sector, backed by deep pockets, has provided healthy exits for innovative founders and leaders of up-and-coming businesses in the data-driven marketing arena.
More importantly, the bureaus have been responsible for creating numerous synergistic marketing services platforms through their acquisitiveness. Many of these exist today as successful parts of the bureaus themselves and as components of other companies in the industry.
Ad-tech and marketing services companies increasingly need the core competencies that credit bureaus have long maintained. Credit bureaus are experts in data acquisition, information security, privacy and compliance, and software engineering. They know how to develop technology platforms for the ingestion, consumption and distribution of data. As data-driven marketing contends with new privacy standards and the loss of cookies, the role of the credit bureaus becomes even more essential.
Back in the game
Relative to the last 30 years of investment and divestment, this appears to be the beginning an investment cycle period for the credit bureaus in marketing services. In the current environment of rising interest rates, they are also advantaged somewhat in competing for acquisitions with non-strategic or financial buyers, something that has not been as true over the last 10 years.
This is an excellent time for founders and leaders of innovative growth companies in the marketing data and identity space to cultivate their relationships with the bureaus. Establish partnerships, explore synergies and approach clients with joint offerings. All three credit bureaus have a long established track record of being great acquirers, and great owners of businesses in the sector, and this will likely be even more true and relevant in the coming three to five years.
As CEO of Adstra, Rick drives the strategy, growth and profitability for Adstra’s industry-leading data and identity products and services. With over two decades in the data-driven marketing industry, Rick is a leading voice in the field of omnichannel marketing and an outspoken advocate for the value of data in the global economy.