by Luke Jones
Posted 11/7/2011 12:00 am
Updated 12 months ago
Acxiom Corp. is one of Arkansas' bigger but lesser understood businesses.
Its power is visually obvious in its multistory headquarters in downtown Little Rock, and most locals know that it is in the marketing business - mailing lists and the like - even though Arkansans are more likely to sell to Acxiom than buy services from it.
But what does Acxiom actually do in exchange for more than a billion dollars a year?
"The way we characterize it, we have coverage and information on 98 percent of the U.S. adult population," said David Danziger, who works in Memphis as director of Acxiom's consumer targeting and append products.
These days, according to Danziger, about 70 percent of the company's revenue comes from marketing services, including collecting and selling personal information. The "append" in Danziger's title refers to the appending, or attaching, of consumer information to Acxiom client data.(And the other 30 percent? Click here.)
Acxiom, which began in 1969 as a politically oriented direct-mail service called Demographics Inc., has been building a database of that information for the last 20 years, and it now extends to other countries like China, France and Brazil.
Whether you know Acxiom or not, odds are Acxiom knows you. And it sells information about you to companies that range from small to very large.
"The bulk of Acxiom's business comes from helping marketers make better decisions about how they approach customers and prospects," Danziger said. "We're providing data and information, and managing information for our clients to help them do that."
Acxiom helps companies with significant marketing budgets hone their advertising to specific markets. The company remains mum on its clients' identities, but CEO Scott Howe recently mentioned a multiyear contract with Harley-Davidson Motor Co. and described agreements with credit card providers, retail banks, an automotive manufacturer and a magazine company.
In August, British media giant Guardian News & Media signed on as a client.
Many of Acxiom's clients are huge businesses, and the loss of a single client can be a significant hit. Acxiom's revenue is sensitive to the business cycle, and its profitability even more so.
Acxiom's job is a challenge when some clients aren't sure how to reach their markets, or don't recognize their core demographic.
"Some of the biggest spending in advertising has been in television ads, where they have some inkling of who they're reaching," Danziger said. "Like if there was an ad on 'Jersey Shore,' we know there's a common demographic watching that show. But some other, broader-based shows are more challenging. That's where Acxiom comes into play."
Acxiom typically sells what Danziger calls "characteristics."
"We maintain for clients large databases of consumers," he said. "Part of what we can provide to them are characteristics, where we have, over time, compiled a substantial information base, providing characteristics from individuals and households."
By "over time," Danziger means that two decades of constant data collection and refining, all stored in Acxiom's data centers across the country. The characteristics themselves fall into a variety of categories.
"The most basic example, and one I always think about as a basis, sounds almost anachronistic: the White Pages or Yellow Pages directories. There's a solid combination of names, addresses and phone numbers, all associated with each other, providing a good, solid baseline of information to work from," Danziger said.
But Acxiom's data go far beyond public records that have already been compiled.
"You also layer in from a public standpoint who owns a house and who does not," Danziger said. "Then the character of that property often tags along with that, and property records. Then there's the whole range of private sources that are self-reported: surveys, warranty cards, presence of children, age ranges, things like approximate income."
Danziger said Acxiom was contractually restricted from describing what else, exactly, those private sources entail, and where they come from. If it becomes common knowledge, he said, competing data companies could notice and profit.
Curiously, Danziger said social media, which seems like it should be the answer to a personal-data-collectors' fevered prayers, "has not played a major role in Acxiom's approaches to data at this stage."
But there are, he said, marketing services providers that are "doing many new and interesting things in the realm of 'social listening,'" where companies learn what people are saying about them through social media outlets.
"More and more, clients are interested in figuring out more about what people are influential on social media, what people do on various social networks and how that information can be translated into useful marketing activities and conversation," Danziger said.
Acxiom uses its collected characteristics to calculate buying behaviors and marketing information. Both the data and its management are Acxiom products. Keeping track of characteristics can get hugely complex with larger companies.
"Managing a database of 100,000 people is not that complicated," Danziger said. "But managing the database of a large credit card company - effectively it might look at the whole country. Managing 120 million households, that's where the real complexity is."
Danziger said managing these enormous databases was a cornerstone to the business Acxiom does.
Employing a Digital Focus
As it develops its digital marketing strength, Acxiom is edging further away from its original emphasis, direct mail. Danziger said it was a necessary and natural move.
"Acxiom's history and legacy was very much in the direct mail world," he said. "The reason was that was one of the only channels that existed. There was a robust amount of individual household information that was really good. If I'm mailing to you, I know I'm reaching you."
But the paths started to separate with the advent of telemarketing and, later, email marketing. Acxiom, ever more active in the digital arena, hired Scott Howe as CEO in July, partially based on his experience with online advertising at Microsoft Advertising Business Groups in Seattle.
Danziger said Acxiom's challenge had been to separate relevant advertising from what is considered to be spam. Danziger said Acxiom was spending considerable development time in online display advertising, which he hopes can become more focused.
"When the Web-verse exploded, there were untargeted banner ads," he said. "One could argue that they're still not very good, but they're emerging as an opportunity. This adds lots of possibilities, where we're making sure more ad dollars move into areas that can be intelligently approached."
He said more and more emphasis was being placed on online and mobile areas and reaching the right people.
"It's pretty exciting to be in the area of helping to reach customers better," Danziger said. "There are certainly some new areas, new challenges that lie ahead. But I think we're doing well, in a privacy sense, and customers will appreciate that."