This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Acxiom: Big Data Equals Big Money

Mary-Lynn Cesar, Kapitall: Big data brings in hundreds of billions of dollars to those who know how to use it. 

You may not have heard of Acxiom (ACXM), but it most certainly has heard of you. Each week, out in a data center in Conway, Arkansas, the marketing technology firm’s 23,500+ servers process more than a trillion transactions from over 700 million consumers worldwide.

Acxiom has roughly 1500 data points on each individual in its database, which is why besides knowing publicly available information like home ownership, marital status, and political affiliation, it also knows your age, sex, race, level of education, family size, health concerns, interests, shopping habits, predilections… and much more. The firm then sells this information to its clients, like FedEx (FDX), HP (HPQ), and Sephora, to help them deliver direct marketing more effectively to consumers.

This is the multibillion dollar data brokerage industry, a world where Acxiom and a handful of other data mining firms reign supreme. It’s why Facebook (FB) included Acxiom in a group of select companies to assist with the expansion of the social network's advertising offerings earlier this year: Acxiom helped enhance Facebook’s custom audiences tool and launched partner categories, a new feature that lets advertisers choose audiences based on data-driven insights available from Acxiom.

Advertising is big business for Facebook, representing 88%, or $1.6 billion, of the $1.81 billion generated in revenue in the second quarter of 2013. And in July during the company’s most recent earnings call, COO Sheryl Sandberg commented on the success of custom audiences, stating “the number of marketers using custom audiences more than doubled relative to Q1.”

Click on the image below to see Facebook's sales data over time.

Yet, despite its prominence as a consumer data broker, Acxiom tends to fly relatively, and comfortably, under the radar. At least, that was the case until last Wednesday when the firm unveiled its new consumer portal AboutTheData.com. The beta site lets users log in and view, as well as edit, the personal data the firm has collected and maintains on file. “Make Data Work for You – know what data says about you and how it is used” the home page reads, reiterating the company’s claims of increasing transparency and empowering customers. The timing of the portal’s launch couldn’t have been better considering Acxiom is currently under investigation by the Federal Trade Commission.

Privacy concerns in a barely regulated industry

Last December, the FTC announced it was reviewing the data collection and usage methods of nine major data brokers in order to analyze the industry’s privacy practices. In addition to Acxiom, the FTC subpoenaed information from Corelogic (CLGX), Datalogix, eBureau, ID Analytics (owned by LifeLock (LOCK)), Intelius, Peekyou, Rapleaf, and Recorded Future.

The investigation is one of several data brokerage-centric measures recently undertaken by the consumer protection agency. In June 2012, the FTC successfully levied an $800,000 penalty against data collector Spokeo in its first foray into tackling the sale of online and social media data for use in employment screening. And this past June, FTC Commissioner Julie Brill proposed an industry-wide “Reclaim Your Name” initiative where data brokers provide consumers with access to their personal data.

The idea that companies with data mining operations should increase the transparency of their records isn’t new. Google (GOOG) released its Ad Preferences Manager tool – now under Ads Settings – in March 2009 to allow users to view and edit interest categories or opt-out from targeted advertising. Later that year, data aggregator BlueKai launched the BlueKai Registry, which does the same for consumer shopping preference data. However, thanks to the relative lack of laws governing data brokerage, “Reclaim Your Name” won’t amount to more than a suggestion or, at best, a voluntary program. The viability of "Reclaim Your Name" could change if the report from the FTC's investigation advises legislators to introduce more regulation to the industry.

Big business

Data became a $300 billion industry in 2012, and it’s positioned for immense growth over the coming years due to the expansion of the digital universe. According to market research firm IDC, 2837 exabytes of data comprised the digital universe in 2012; that number is expected to rise to 8591 by 2015 and soar to a whopping 40,026 in 2020. The World Economic Forum has described personal data as a valuable asset class, writing in a 2011 report that it will generate “a new wave of opportunity for economic and societal value creation.”

After earning nearly $1.1 billion in revenue during fiscal 2013, down 2.8% from 1.13 billion in fiscal 2012, Acxiom has good reason to try and appease the FTC’s calls for greater transparency. Any industry legislation to emerge from Washington DC would make it harder for the data broker to maintain the status quo, which lately has been less than stellar. Acxiom posted year-over-year losses in revenue over the last six quarters, the latest being its 2% decline to $266 million during the first quarter of fiscal 2014.

And this year, by July, Acxiom had already lost six customers. While the FTC plans to release its industry report later this year, the company is counting on its soon-to-launch Acxiom Audience Operating System, a cross-channel, cross-platform targeted marketing technology, to usher in a much more exciting and successful era.

Click on the image below to see Acxiom's sales data over time.

Dig Deeper:  Compare analyst ratings to annual returns  for stocks in this article.

 

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

DOW 18,061.82 -170.20 -0.93%
S&P 500 2,104.83 -21.23 -1.00%
NASDAQ 5,024.6120 -64.75 -1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs