Stupid Magill Watch: Boy, Can I be an Idiot
By Ken Magill
Last week’s post about Epsilon’s financial statement and what I believed it meant—that Epsilon is doing just fine, thank you—prompted one enlightening reply in the comments section politely pointing out that I was being an idiot.
The article was so short, let’s review it in full here:
Someone needs to tell the folks at Epsilon they’re supposed to be reeling from the company’s recent data breaches.
This from parent company Alliance Data’s second-quarter financial statement on Epsilon:
“Revenue for the segment increased $51 million, or 38 percent, to $188 million. Organic revenue growth was approximately $17 million, or 13 percent, for the second quarter of 2011.”
Hey wait a minute: Weren’t clients supposed to leave Epsilon in droves?
Then what the heck accounts for a 13 percent organic revenue growth?
Maybe because the breaches weren’t nearly as serious as so many people made them out to be.
A company that loses the trust of its clients doesn’t experience double-digit organic growth.
When Epsilon’s data breaches became public knowledge a lot of people who couldn't possibly know what happened made all kinds of alarmist proclamations that never panned out.
I would like to think maybe they’ll think twice from now on before pontificating on issues they know nothing about, but I know that’s too much to ask.
Turns out that last bit of advice applies to me as much as anyone.
Dave Hendricks, COO of LiveIntent, posted a comment explaining more gently than I deserved how badly I’d misinterpreted the financial report.
“Most of these clients are under long term contracts. The breaches probably didn't spur a mass exodus, since everyone knows it's a total pain to migrate ESPs. 'Devil you know' rules in this respect.
“Also, there are contractual minimums in most of these contracts and their clients weren’t going to stop mailing. One other thing, if I am correct, Epsilon Interactive is a subsidiary of Epsilon and does not account of 100% of its revenues, so this number may be misleading.
“13% growth is not industry-high either. Email is still growing and 20% growth rates are still not uncommon, though they mostly appear in smaller mailers than EI. Would love it if someone else shed some light, but I would expect client exodus and fall out to take months if not a year or more to develop, if it even does. And when it did, it would be buried in the financial statements. Hard to extract this level of client detail.”
Wow. So I was wrong and condescending at the same time. What an endearing combination.
What’s that braying noise? Why, that would be me making a jackass out of myself, that’s what.
Oh, and rest assured: It will most certainly happen again.