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Alliance Data: Marketing Budgets Stabilizing

By Ken Magill

From the we’ll-take-good-news-where-we-can-get-it file comes a statement in Alliance Data Systems’ third-quarter financial report that marketers’ budgets are stabilizing.

Alliance Data’s marketing-services unit, Epsilon, achieved a revenue increase of 29 percent in the third quarter of 2010 to $171 million over the third quarter of 2009, according to the database-marketing-services provider.

At the same time, Epsilon’s catalog co-op database, Abacus, achieved double-digit third-quarter growth, as well, according to Alliance Data. The company did not specify Abacus’ revenue.

However, the company said, Abacus’ performance indicates good things about marketers’ budgets.

“Overall, the outlook for Epsilon’s business remains strong as the major offerings continue to demonstrate positive momentum,” Alliance Data said in its financial statement. “In addition, Abacus’ continued growth demonstrates a return to stability in retail and catalog marketing budgets.”

Abacus—a database in which catalogers contribute their customers’ purchasing behavior in exchange for the ability to pay for the names and addresses of customers of other catalogers who are likely to buy from them—was the focus of one of the dot-com era’s biggest marketing controversies.

DoubleClick acquired Abacus in 1999 for $1.7 billion in stock. The idea behind the acquisition was to get people to register their names somewhere on the DoubleClick network of thousands of sites and use Abacus data to serve them targeted banners.

The deal was envisioned as a way to get banners—whose click rates were suffering—performing by reaching likely mail-order buyers with offers tailored to them.

However, privacy advocates raised such a ruckus that DoubleClick dropped its plans to merge the data.

DoubleClick sold Abacus to Alliance Data in 2007 for $435 million.

The deal was part of a series of asset selloffs in which DoubleClick also sold its email-services offerings, DoubleClick Email Solutions and Bigfoot Interactive, to Alliance Data.

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