New Acxiom CEO Seeks to Bring Focus to Firm

CVR axciom 8-11-08

For years, one word in particular could be used to describe Acxiom Corp.: nebulous. That word applied to the corporate titles — like “company leader” — to the organizational structure, to even the function of the business.

CEO John Meyer, who took the helm of the global interactive marketing services firm in February, seems to have set his sights on bringing clarity to the Little Rock company.

In fact, the descriptor “global interactive marketing services company” was his first brainchild.

“One of the things that I’ve found is that it’s very difficult to describe what we do,” said Meyer, 52. “And some of that I think is because of our reluctance. Some of it is because what we do is not easily understood.”

In an exclusive interview with the Northwest Arkanas Business Journal’s sister publication, Arkansas Business, Meyer opened up about his changes at and plans for Acxiom.

“When I went around and I talked to customers and I talked to employees, they only could describe what we did based on what they did as opposed to having a vision for the whole company.

“And I saw that as somewhat of a disadvantage because we have all these capabilities; we have all these customers. But, if you looked at it, we sold a customer one thing and only one thing.

So Meyer and the management team’s first course of action was to find a way to describe the company as succinctly and memorably as possible. (Seesidebar, p. 11)

Ironically, viral marketing — an increasingly effective form of marketing — had been virtually useless to Acxiom because even the employees couldn’t succinctly describe the business.

None of this is to say former CEO Charles Morgan and other managers in the previous administration neglected the ambiguity. Tunnel vision, however, can be a side effect of 35 years of the same management.

Meyer found the duration of the Morgan regime surprising. He said, though, that the lengthy tenure of the management was beneficial because “an injection” of new management had not become an exhausted effort to put the company back on a profitable track.

New Acxiom Takes Shape

Seeking to make Acxiom more profitable, Meyer overhauled its organization.

The old model divided the company into three silos: a technology silo that included the company’s outsourcing work, a marketing services silo and a data products silo. Meyer said each silo operated as a completely separate business unit, providing all its own functions from sales to development to IT services.

The self-sufficiency of the silos limited many Acxiom customers to doing business with only one of the three business units and kept them unaware of the other services the company offered, Meyer said.

Meyer rejected the old model, instead consolidating common functions into companywide departments, particularly sales, IT and service delivery, such as building databases or writing marketing plans. Then he divided the company into two major categories: a “lines of business” unit and a “market-facing” unit.

Employees in the lines of business unit focus on driving growth of their particular line of business, for example, building databases. An employee in the market-facing unit focuses on building relationships in one of 12 industries and the European and Asia-Pacific markets.

The new organizational structure ensures that two kinds of people look at each deal. A person in the market-facing function — such as the employee who always works with the retail industry — analyzes the deal. And a “thin layer of experts” within the particular business line — such as digital marketing services — works with the market-facing employee on the deal.

“And so we only solve the problem once. And then in other places, because of the lateral thinking, you pull it across the organization. You become a thought-leader,” Meyer said.

Restructuring Sales

The restructuring largely affected the Acxiom sales function by consolidating the three sales departments of the three separate silos. Meyer, however, also created a “company head of sales” position, which started as global sales leader but is now senior vice president of sales. (See p. 12).

Meyer had two reasons for creating the head of sales position.

First, he noticed that sales almost seemed like an ancillary function.

“But everything really starts with a sale,” Meyer said, “because if you don’t have business, you don’t have jobs for people. You don’t have opportunities to push new things. So I really wanted to raise the profile of the sales function within Acxiom.”

Second, Meyer saw that the sales function needed structure.

“We needed some discipline,” he said. “We needed some discipline around how we compensated the people, how we measured their success, how we evaluated whether we wanted to pursue things or not, how we collected our pipeline so that we know what we were working on and the things we were working on were things we wanted to work on. And we didn’t have that.

“I wanted to create an organization where I could turn to this person and say, ‘You’re accountable for this.’”

More than just the hierarchy of the sales department has been rewired. Meyer has implemented two different methods of compensation.

“Because of the way we were set up, there was kind of a blending between somebody that would manage an existing relationship and somebody that would be responsible for selling a new relationship,” Meyer said.

“And when you do that, what you find — because it’s much easier to just kind of shoot the fish in the barrel, do the renewals, than it is to go out and create new customers — if you’re compensating people the same, people go to the place where they can get the greatest amount of benefit for the least amount of work.”

Meyer split the method of compensation into bonuses for the customer relationship managers and commissions for the hunters or relationship generators.

“And I’m expecting that this will drive growth,” Meyer said.

Growing Pains

Meyer said cutting jobs is a last resort.

“Although we’ve had a little bit of people reduction, we haven’t had a lot,” he said.

For employees, however, having jobs shipped overseas is just as frightening as losing them. Either way, some of them are out of work.

To Meyer, who has spent about 22 years living outside the United States, global orientation is crucial to Acxiom’s growth strategy.

Here’s how Meyer views off-shoring:

“If you’re going to be a global company, you truly have to make sure that the workforce you have is spread in the areas where you can utilize their relationships, you can utilize the business growth. And it goes without saying that there’s some labor arbitrage.”

However, the arbitrage — profiting from market price discrepancies — only lasts about four or five years, Meyer said, because economies mature.

When the marketplace evolves, employees in that market can become the company’s nucleus that can grow with the economy, he said. Eventually, that unit becomes a profitable diversified business unit, through bringing in income rather than just collecting foreign price discrepancies and by performing functions that a U.S. branch cannot.

“From Conway, we can’t really sell to people in India. You need to have people locally that speak the language, that grew up with people, that have the relationships,” Meyer said.

“Since the rest of the world is not as developed in the use of marketing services, there are functions here that we can put over there that would be valued more than they would if they’re left here.”

The company’s expansion into Gdansk, Poland, in April was a result of such thinking.

“And we need more critical mass over there — really all across Europe,” he said.

Meyer added that these are not jobs being shipped from Arkansas to Poland.

This same philosophy has recently led Acxiom to plan expansion in the Asia-Pacific region.

“We are looking at growing a center in China. It’s a giant market. They’re just starting to get started in marketing,” Meyer said.

The expansion will occur sometime within the next year and will add jobs. The business unit will be centered on analytics initially and then perhaps expand into other functions.

Tackling a Tough Economy

With the recent troubles in the financial industry, Meyer expects much of the company’s growth to come from expansion in other sectors, such as automotive, insurance and retail.

Meyer said the tough economy has made things easier, though.

Meyer, taking advantage of what he described as lowered expectations in a sluggish economy, has sold off the company airplanes and the Chenal and Riverdale facilities and relocated the affected Arkansas employees to the Conway or downtown Little Rock offices.

As for the mergers and acquisitions side of the company’s growth strategy, Meyer said he would much rather be a grower and a builder.

“I actually think that when you have to buy a technology or a capability, that’s a reflection on the management not being smart enough or not willing enough to take the risk to develop it themselves. It just shows that you missed your opportunity in the market,” Meyer said, adding that most acquisitions don’t work.

Speaking of acquisitions that don’t work: “Truthfully, having a private equity deal blow up was a good thing for me,” he said.

Meyer said he wouldn’t have wanted the responsibility of turning around a company with $2 billion in debt, but heading a company with $600 million in debt leaves him a little financial muscle to reposition the firm.

As for the stock price, which has suffered from the failed $3 billion go-private deal with Silver Lake Partners and ValueAct Capital, dwindling from $28.09 a share in May 2007 to $11.44 a share last Wednesday, Meyer said: “It needs to go up.”

“We need to get back on a growth path,” Meyer said. “We also need to put some processes and procedures into the business that we haven’t had before — things like in sales, things like business reviews, things like individual accountability.

“And we’ll get there. We’re actually on a pretty good track.”

Meyer has such faith in the company and restoring a corporate culture that attracts workers that he bought about 15,500 shares out of his own pocket shortly after he started. “Put your money where your mouth is,” he said.

A Few Good Words

Acxiom CEO John Meyer and his new management team sought to think up a few buzzwords to describe the company’s function in a digestible and memorable way.

Meyer detailed the team’s reasoning behind the choice of “global interactive marketing services firm.”

Meyer said Acxiom ought to be marketing its services wherever they will sell and, in some cases, helping shape markets by introducing marketing services. “There’s other parts of the world that don’t even fathom what we’re attempting or how we do it,” Meyer said.

That’s why he and his team consider “global” an important adjective to help describe the company.

“Interactive is somewhat of an industry buzzword. I could have said digital because when people think about our business, they think a lot about direct mail. But in reality, direct mail is really just a subset of what we can do with e-mail, banner ads, [text messaging] and things. And so what I wanted was to find something that was not ignoring our past, which was direct mail, but incorporating whatever future channels may come.”

Meyer expects forms of mobile advertising and video game and interactive television advertising to emerge, so an all-encompassing, forward-looking adjective was appropriate.

Meyer said “marketing services” was pertinent, even if less flashy. “We don’t aspire to be running accounting systems.”