Randall-Reilly’s acquisition last week of Smart Rhino Labs, which offers recruiting services for the trucking industry and provides its new parent with a deeper level of lead gen and data capabilities, could be the first of several deals as Randall-Reilly looks to build out its portfolio thanks to private equity firm Aurora Capital, which purchased the data-driven marketing services company last year.
“Last summer we went through our strategic planning process and started lining up priority acquisitions,” Prescott Shibles, senior vice president of data at Randall-Reilly, told Connectiv. “That’s why we didn’t buy anything right out of the gate with Aurora. Now, we’re open for businesses.”
Randall-Reilly is looking for four key elements from an acquisition according to Shibles: assets that provide complementary data sets; new capabilities that solve client pain points; businesses that bring in new clients where Randall-Reilly has existing data; or elements that reinforce existing barriers to entry. “Smart Rhino brings all four, but especially the first two,” Shibles adds.
In a Q&A with Connectiv, Shibles talks about how Smart Rhino will help elevate and scale Randall Reilly’s lead gen business, how harnessing data can help give power back to B2B publishers and why the industry’s focus on revenue mix over recurring revenue is a mistake.
Connectiv: What does Smart Rhino bring to the table for Randall-Reilly?
Shibles: Smart Rhino’s capabilities address the fact that clients lose about 30 percent of marketing effectiveness by missing out on leads. We saw that in our game—we can light people up with a tremendous amount of leads but the client has a hard time following up with them on a timely basis. You need to be able qualify them in short order, and you get way more information out of potential leads when you talk to them in person. Smart Rhino has offline capabilities to do just that. They have SMS capabilities, e-mail capabilities, a contact center built on a VOIP system with remote workforce. B2B publishers spend a fair amount of money on telemarketing to qualify their circulation because it’s the most scalable solution. That doesn’t just apply to circulation or recruiting but any lead gen business that we’re in. We think it will help us tremendously in leveraging and activating the data assets that we have in our businesses.
Connectiv: Where else are you looking for acquisitions—are you focused primarily on building out your data business?
Shibles: It doesn’t just have to be a data business in the way that you’re thinking—publishers have behavioral data that would be beneficial to us as well. Our EDA group is in several markets where we have no media presence and no behavioral data. This philosophy of ours for complementary datasets doesn’t preclude us from buying something with more of a media play with strong audience and behavioral data but no data business, per se. Our ability to layer our data on top of another publisher’s data could be a great path.
Connectiv: You’ve spoken about the need for publishers to move toward more of a recurring revenue, marketing service business. What does that look like?
Shibles: Our retention numbers should be telling us something about the marketplace. Display advertising is in decline. We keep coming up with new stuff to replace the old stuff. Look at native as an example. I’d love to see an industry-wide retention rate for native advertising. It all sounds good when you’re buying it, but so many media companies set expectations too high and then underdeliver. As an industry, we often set up new products to help the salesperson close business initially but not to retain it. On newsletters, we focus on total opens instead of unique opens. We refuse to adopt the viewable impression standard because we don’t want to compete on quality. All of these things make our inventory seem less valuable on the tail end, and we’re constantly having to build new product out to try to convince them that next time will be better.
What data does, if it’s good, it cements your relationship with the client, and it can be used beyond sales and marketing. Whether you’re feeding data into a marketing automation system, CRM system, or a website in some way, shape or form, those are ways to get ingrained into the client’s business and their sales and marketing workflow. In most cases, advertisers don’t have data. In many cases their CRM is filled with Dun & Bradstreet data, and that’s about it. There is a need to make sales teams more efficient. We’ve stuck in the two’s for GDP growth for nearly a decade. People need productivity and efficiency. The move to data can significantly affect the bottom line.
Connectiv: What qualifies as valuable data?
Shibles: It is complete, it is accurate, and it provides some prioritization. Prioritization is the key. That data needs to inform a decision. And if mobile was the great gamechanger of the last wave of change, AI is the next one. And I think part of the challenge most B2B publishers have is they’re thinking about data now when they should be thinking about AI, and data is the thing that feeds AI (or machine learning or deep learning or whatever buzzword that you want to use). The advent of the smartphone dramatically changed media consumption and facilitated the rise of Facebook which in turn made Google answer with a whole bunch of new capabilities. Everyone has the capability to target audiences explicitly now on major platforms and achieve scale. The way that we can differentiate as B2B publishers is by helping create focus, prioritization and automation.
Connectiv: How do publishers start to get a handle on their data?
Shibles: Accept the present. In many cases, publishers don’t have enough data in their marketplace to offer something that’s comprehensive enough. That’s the key thing. If you only have information on a small percent of your circulation, it doesn’t really help to try to create a data product. You’ve got to think about competition, partnerships and the vendor ecosystem differently.
The next thing I’d say is, understand which parts of your data have the most value and how to find your way to create more scale behind that. Recognize how many companies you have information on, not how many people. We’re spending a lot of time trying to really get our householding better organized and classified, so that new fields of data match a contact back to a whole ton of data that we have on the company themselves. If I get an e-mail address that I can reverse append first name, last, job title, I also want to make sure I can match them back to the location of the audience. The other side is you have to hire some technicians or a vendor that better understands how to leverage or connect data. If Dun & Bradstreet isn’t on your speed dial, they should be.
Connectiv: Are you able to quantify what data has meant for the value of Randall-Reilly as a company?
Shibles: The great myth of media banking today is that revenue mix drives valuation. It doesn’t. Recurring revenue does. Data is very sticky. And because of that your valuations are going to be higher. If people are selling razors on a subscription basis, everyone is chasing this recurring revenue model! Nobody wants to do that on advertising—the opposite is happening. We’ve gone from 12x schedules with most of it bought in the fall, to quarter-to-quarter, initiative-to-initiative. From a valuation standpoint, data will get you a couple turns at least.
The other thing I’d say is marrying recurring revenue with data is a barrier to entry. Recurring revenue for us held up during the recession. Proprietary data gives you better negotiating power over your customer, it raises your existing relationships with clients and it creates that barrier of entry so the fundamentals of the business are way better than someone who can launch and compete with you tomorrow.
Editor's note: Hear more from Prescott Shibles on building out a data business at the Connectiv CEO Summit, May 9-10 in New Orleans.
Matt Kinsman is vice president of content + programming at Connectiv, the only association focused on the integrated b-to-b model—including publications, events, digital media, marketing services and business information. Prior to joining Connectiv's predecessor American Business Media in 2011, Kinsman was executive editor of Folio:, the leading information provider for the magazine industry.