From The News Front: Epsilon, Bigfoot Team Up in E-Mail CRM Wars

(Direct Newsline) E-mail service provider Bigfoot Interactive and loyalty marketing company Alliance Data Systems Corp. launched a counter offensive in the e-mail CRM wars by announcing that Alliance Data’s Epsilon unit will acquire Bigfoot for $120 million.

No lay-offs are expected at Bigfoot, which will be named Epsilon Interactive and remain headquartered in New York City when the deal closes in the fall.

In a market where e-mail failed to evolve into the acquisition tool many expected and the U.S. Postal Service keeps raising its rates, marketers are increasingly looking for ways to raise the average order sizes and conversion rates of e-mail to existing customers, while lowering the percentage of people who opt-out.

As a result, database marketing services providers have been on an e-mail buying spree of e-mail service providers who, in turn, see their future in offering more enhanced database services.

For example, Acxiom Corp., Conway, AR, announced an agreement in March to acquire e-mail service provider Digital Impact. InfoUSA announced an agreement to acquire e-mail technology company @Once in January, and Experian acquired e-mail company CheetahMail in March 2004.

Alliance Data Systems of Dallas provides data repository services, but it does not have the consumer data resources of Experian, Acxiom or InfoUSA’s Yesmail unit.

However, this means Epsilon is “data agnostic,” according to Mike Iaccarino, Epsilon’s president. “We will go and build a database and our desire is not to drive names using our own compiled list and charge them on a per-name basis.”

Al DiGuido, Bigfoot’s chief executive, says that so far, the marriages of database and e-mail marketing firms have been hampered by culture clash. “You’ve seen dysfunctional families stay dysfunctional,” says DiGuido, who will be president of Epsilon Interactive. “We did not want to make the same mistake that the other folks have made and have the market see this as a siloed part of another organization,” hence, the name-change from Bigfoot Interactive to Epsilon Interactive, he says.

Bigfoot and Epsilon have a strong presence in financial services, travel and entertainment marketing, said DiGuido.

Wakefield, MA-based Epsilon in May was named the No. 4 direct marketing agency for 2004 with $144 million in revenue in Ad Age’s annual Top 30 Marketing Services Agency special report. Alliance Data bought Epsilon last October for $300 million.