How long until the data companies are as big as the global ad agencies?

Data is of course important (much to the chagrin of many creatives I know) because today’s ROI-driven clients demand it; statistical analysis, data mining, web mining, financial modelling, tracking and measurement and quantitative market research are skills as valued and in demand as the ability to come up with crisp copy and great ideas. These skills are doubly important in an online world in which social media is so ubiquitous.

It comes as no surprise, therefore, to see a rash of acquisition activity over the past four weeks or so. According to the Green Square Deal Monitor, no fewer than five data analytics shops were snapped up in August.

Kantar Media (KM), part of WPP’s enormous market research group Kantar (the second biggest in the world after Nielsen), started the month off by acquiring a minority stake (how big, we’ve not yet been told) in SecondSync, a UK-based social TV analytics company.

KM, which specialises in audience measurement (this means attitudes and levels of engagement as well as numbers), operates in some 60 countries worldwide, but this new deal – which is in itself an extension of the data-sharing agreement the two companies signed earlier this year – allows KM to not extend its reach in the UK. Currently it is a contractor of BARB (the body which measures TV audiences), but working more closely with SecondSync allows it to develop new measurement and analytics tools.

This is because SecondSync is a “social TV” agency: essentially it focuses on analysis of social media conversations around TV broadcasts to provide audience insights for media planning, audience research and commissioning. For advertisers and media buying agencies, this kind of information is hugely valuable, as it allows them to not only make better placement decisions, but also by passing this info up the chain to creative agencies, to make better-targeted and more appropriate ads.

It’s sometimes said that these days the twitterati have the same power as the old New York newspaper theatre critics, who could close a Broadway show on opening night, if their reviews were scathing enough. Indeed, a recent Ben Elton sitcom was quietly dropped by the BBC after it received less than rave reviews on Twitter. But the big problem is making sense of all the noise that TV inevitably generates on social media.

SecondSync developed a bespoke Social TV Dashboard (the UK’s first), which helped broadcasters and advertisers make sense of the big data coming out of social media. Cementing a close partnership with the leading player in audience measurement (KM) should benefit both parties’ offerings, and I suspect it may not be too long before KM either takes a bigger stake or buys outright.

London is of course full of start-ups, but one of the most interesting from my point of view is ERN Global, whose management board is made up of some of the UK’s most expert data types, and whose CVs include some of the bluest of blue-chips, including BT, Mastercard, Barclays, RBS, Sky, Lloyds and CapitalOne. Without having actually issued any products (there is one, but we’ll come to that in a minute) or services, it has raised some $4.6m in capital, which, if nothing else, demonstrates investors’ confidence in the viability of its offering.

ERN’s business proposition is simple: Banks, merchants, payment processors and consumers generate billions of transactions every day around the world. But only a fraction of the data from these transactions is used to create value. ERN wants to grab and analyse the data from these billions of payments to create “valuable actionable insights”. In essence, it’s an attempt to put “Big Data” to better use. For example, banks or retailers might use payment data to improve their offer to consumers, create loyalty or sell them extra services. Even consumers could use it – for household budgets and forecasting, managing electronic payments or just analysing their spending patterns.

It could – presumably only after the consumer has opted in – even start punting relevant offers that are temporally and geographically relevant. For example, your transaction history data shows that you always buy a sandwich from Pret or a dress from M&S when you’re travelling on business. So, next time you’re away on business, you might get a voucher for a sandwich or a special offer on those summery dresses you always seem to buy when you’re waiting for a train or plane. ERN is developing a data analytics tool for card issuers called “Looop” which could make this sort of thing a reality, particularly as we move towards a more cashless society. According to the company, it is “on the brink” of signing up its first big customer (presumably a bank or card issuer).

A business like ERN relies massively on quality data and analytics, so the acquisition of two home-grown analytics firms is not unexpected. The first is Inspired Analytics, which offers analytical consultancy services, specifically to help design and build production analytics solutions; the second is Elucidata, which provides specialised consultancy in what it calls “data strategy and high-complexity, regulated data implementations”. The acquisitions were in the form of undisclosed fees and stock.

It’s my guess that both of these will be crucial in developing the Looop offering, but more important, ERN gets a bunch of experts who should help it fulfil its aims. For example, Jim Jeffrey, Inspired Analytics’ director of analytics, will become ERN’s analytics director, and James Baldwin, MD of Elucidata, will become MD of ERN’s Analytical Consulting division.

Edwina Dunn and Clive Humby are probably Britain’s best known data titans, having founded Dunnhumby, which created the all-conquering Clubcard for Tesco. They have another business, H&D Ventures, which aims to “personalise” Big Data for brands. Earlier this month H&D was acquired by the UK-based social media analytics firm Starcount.

Founded in 2011 and funded to the tune of more than $5m by Artemis and Praetura Capita, Starcount publishes daily “social playlists” - charts on who’s popular and unpopular, who’s doing what and so on. The charts measure brands, broadcasting and trends as well as people; and who their fans are, and where.

All good fun of course, but think of the use to which this information could be put (there are around 1.8 billion people using social media round the world, so Starcount is dealing with some very big Big Data indeed)! This is where Dunn and Humby come in – they’re experts (perhaps the best in the field) in analytics, engagement and loyalty. They’re taking a minority stake in Starcount, and will sit on the board. It’s a great move for all concerned, as the acquirer will get real expertise and H&D get to expand their reach into the social/digital sphere.

Finally, Ebiquity, the UK data insights consultancy, has just acquired outright US-based Stratigent for an initial consideration of $4m in cash, which could rise to $7m depending on the performance of the business. The acquisition was made from Stratigent’s founders, who will retain a minority interest, with an option to sell this for up to $1.5m in 2016. Statigent’s unaudited income for 2012 was about $3.5m, with an operating profit of just under $1m.

Ebiquity provides data insights to the marketing community; for, for example, a PR agency would be able to more accurately measure the effect a particular campaign is having.

Stratigent, one of the fastest-growing companies in its field, has helped over 300 brands devise, implement and benchmark their activity across channels such as websites, eDM, CRM/loyalty programs and kiosk technologies. It is also a leader in “owned media” analytics. Owned media is a channel you created and control, be it a blog, website, YouTube channel or Facebook page. Many companies and brands are increasingly seeing owned media as an important source of future revenue. This sort of acquisition is something we’ll be seeing a lot more of in the coming couple of years.

The deal is a good one for Ebiquity, which gets 20 owned media experts, and a larger footprint in the USA. Interestingly Ebiquity has secured £6m of funding, to pay for this and “future acquisitions”, so there is no shortage of ambition here.

How long until we start seeing data companies which are as large as the big global ad agencies?

Andrew Moss is a partner at Green Square, corporate finance advisors to the media and marketing sector.