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Data Green Square

Data is big business, and it might be getting sexy, too

By Andrew Moss

June 14, 2013 | 6 min read

In Drum blogs past, we’ve often looked at companies that engage in M&A activity in order to reinvent themselves. This is of course nothing new – firms have always changed their business model in order to grow – former rubber boot maker and paper specialist Nokia, which became the world’s largest mobile phone manufacturer, being perhaps the best-known example.

One particularly striking example of this process of reinvention is Reed Elsevier (or Reed Business Publishing, RBP, as they used to be known). Reed, which was once the business-to-business publishing arm of consumer magazine giant IPC, is perhaps still best-known as a publisher (via the Reed Business Information subsidiary) of leading trade mags like New Scientist, Flight International and Estates Gazette, as well as a raft of scientific and medical journals.

But in reality the former “Ministry of Magazines” has long been a far more complex business. Back in the 1990s, it started to buy database services and events companies – canny moves which protected it against the rise of the internet, which decimated so much of the traditional B2B publishing industry. Now Reed Elsevier is as much – if not more – of an information company as it is a publisher. Subscription-based (and therefore protected from the vagaries of the advertising market) databases such as Lexis-Nexis are a huge part of its business.

So I was not in the least surprised to hear about its purchase of carbon market analysis firm Tschach Solutions GmbH (TS) for an undisclosed sum. The deal was done by Reed’s ICIS energy information unit, a global concern of 700 souls whose aim is to give companies in global commodities markets a competitive advantage by delivering trusted pricing data, high value news, analysis and independent consulting, enabling their customers to make better-informed trading and planning decisions.

TS (whose senior management will join ICIS), based in Karlsruhe, Germany, was founded in 2010 and provides research and price forecasts in the European Union carbon market and United Nations Clean Development Mechanism emissions-credit program, so it’s a superb fit with the existing ICIS business.

And, as an acquisition, it’s got great long-term prospects, especially as energy use and emissions become more legislated. According to the ICE Futures Exchange in London, trading in EU carbon permits rose 5.9% to a record 2.1 billion metric tons in the three months through to March 2013, compared with the last quarter of 2012. Prices in the EU’s greenhouse-gas market, the world’s largest by traded volume, have slumped 41% in the past year amid a surplus of allowances that regulators are struggling to fix – so anyone who can provide impartial information and intelligence is going to be very popular indeed.

It’s another example of something that we’ve touched on many times in these Drum pieces – that while not sexy in creative terms, data is big business – and it’s only going to get bigger. Over the past couple of months, most of the biggest acquisitions to appear on the Green Square Deal Monitor have been of data companies. And – guess what – people are starting to put data to creative uses.

Take Edwina Dunn and Clive Humby, founders of Dunnhumby, the data firm which helped pioneer – and power – Tesco’s wildly successful Clubcard, who last month bought a £1m-plus stake in Purple Seven, the UK’s leading theatre analytics company. Yes, there is such a thing as theatre analytics!

Culture and entertainment does not – initially at least – sound like a good fit with data analytics, but think about it: Purple Seven has a database of 19 million theatregoers. That’s information on where they live, what they go to see, where they see it, and when. Using that information, theatre owners can make informed decisions about what each of those theatre lovers might want to see next – so they can be targeted with timely and relevant marketing.

But why stop at theatre? Why not build a database of concert-goers, or sports fans? Unsold seats or tickets are the great fear of all event organisers (outside of the West End blockbusters, most theatrers are half-full much of the time) and I can see clients queuing up round the block to get their hands on the kind of information Purple Seven can provide - according to some estimates, there is around £250m of unrealised commercial opportunities across the arts sector.

Dunn and Humby are shrewd operators – they helped the UK’s biggest retailer build closer links with its customers and I see no reason why they can’t do the same with the UK’s theatres (and gig and sport venues and promoters).

Aside from the 19 million names on the database - Purple Seven already works with around 75% of theatres and entertainment venues in the London region, including major commercial theatre groups like Ambassador and cultural centres such as the Barbican - I suspect that Dunn and Humby saw an opportunity to enhance (and find more uses for) Purple Seven’s ‘How was it for You?’ (HWIFY) audience feedback service, by developing it into an interactive platform that offers customers recommendations based on their preferences and highlights promotional deals available.

Dunn says that customer insight will enable theatres and venues to provide a better service to their audience, while attracting the elusive ‘one-hit wonder’ customers back for a second show, and I think that she and her husband are already thinking way beyond theatreland.

Perhaps data IS sexy after all.

Data Green Square

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