Alliance Data Systems Corporation provides marketing and loyalty solutions in the United States and internationally. It facilitates and manages interactions between its clients and their customers through consumer marketing channels, including in-store, online, email, social media, mobile, direct mail, and telephone. The company's LoyaltyOne segment owns and operates the AIR MILES Reward Program and BrandLoyalty program that are coalition and short-term loyalty programs. This segment also offers loyalty consulting, customer analytics, creative services, and mobile solutions. The company's Epsilon segment provides direct marketing solutions that leverage transactional data to help clients acquire and build relationships with their customers. Its services include strategic consulting, customer database technologies, omnichannel marketing, loyalty management, proprietary data, predictive modeling, permission-based email marketing, personalized digital marketing, and direct and digital agency services. This segment's marketing services comprise agency, marketing technology, data, strategy and insights, traditional and digital marketing, and affiliate marketing services. The company's Card Services segment offers credit card processing, billing and payment processing, customer care, and collections services for private label retailers, as well as private label and co-brand retail credit card, and loan receivables financing, such as securitization of the credit card receivables that it underwrites from its private label and co-brand retail credit card programs. This segment also designs and implements strategies that help its clients in acquiring, retaining, and managing repeat customers. The company serves financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications, insurance, and healthcare markets. Alliance Data Systems Corporation was founded in 1996 and is headquartered in Plano, Texas.
Business Analysis of Alliance Data Systems
The Media & Entertainment Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Alliance Data Systems compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Alliance Data Systems to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Alliance Data Systems with an interactive chart.
- Revenue Growth: Alliance Data Systems reported a revenue growth of 10.8% year-on-year during 2016. Media Agency Services Industry grew at 3.6% in the same period
- COGS share of Revenues: As a percentage of revenue, Alliance Data Systems spent 59.9% of its total revenues on COGS. Media Agency Services industry average (COGS share of revenue) in the same period was 23.6%
- R&D share of Revenues: Alliance Data Systems R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Alliance Data Systems spent 2.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Media Agency Services industry average SG&A spending in the same period was 55.9%
- Inventory share of Revenues: As a percentage of revenue, Alliance Data Systems spent 3.8% of its total revenues on Inventories. Media Agency Services industry average Inventory spending in the same period was 3.6%
- Accounts Payable share of Revenues: As a percentage of revenue, Alliance Data Systems invested 8.0% of its total revenues on Accounts Payable (A/P) Media Agency Services industry average Accounts Payable investment in the same period was 46.6%
- Accounts Receivable share of Revenues: As a percentage of revenue, Alliance Data Systems invested 11.2% of its total revenues on Accounts Receivable (A/R). Media Agency Services industry average Accounts Receivable investment in the same period was 43.0%
- PP&E share of Revenues: As a percentage of revenue, Alliance Data Systems invested 8.2% of its total revenues on Property, Plants, and Equipments (PP&E). Media Agency Services industry average PPE investment in the same period was 13.4%
- Intangibles share of Revenues: As a percentage of revenue, Alliance Data Systems invested 67.3% of its total revenues on Intangibles. Media Agency Services industry average Intangibles investment in the same period was 67.1%
- Net Margins: Alliance Data Systems Net Margins in the year 2016 were 7.2%. Media Agency Services industry average Net Margins in the same period were 6.9%
Sector and Industry Association of Alliance Data Systems
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Alliance Data Systems is associated with Media & Entertainment Sector and Media Agency Services Industry.
Media & Entertainment sector is comprised of the following industries: Broadcasting, Cable, and Filmed Entertainment; Media Agency Services; Publishing. The definitions for each of the industries is as follows:
- Broadcasting, Cable, and Filmed Entertainment industry includes companies that provide radio and television programming. It also includes companies that provide music and filmed entertainment.
- Media Agency Services industry includes companies that provide advertising, public relations and marketing services. It also includes billboard providers and telemarketers.
- Publishing industry includes newspapers, magazine, and book publishers.
Industry Ranking of Alliance Data Systems
With $7.1 billion revenues, Alliance Data Systems ranked number 3 of all the companies in the US Media Agency Services industry. There were a total of 13 public companies in the US Media Agency Services industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Media Agency Services industry by revenues during 2016 were:
- Omnicom Group ($15.4 billion)
- Interpublic Group Of Companies ($7.8 billion)
- Alliance Data Systems ($7.1 billion)
- Clear Channel Outdoor Holdings ($2.7 billion)
- Outfront Media ($1.5 billion)
- Lamar Advertising ($1.5 billion)
- MDC Partners ($1.4 billion)
- Innerworkings ($1.1 billion)
- National Cinemedia ($447.6 million)
- QuinStreet ($297.7 million)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
- Conduct a holistic benchmarking; to identify and target additional sources of value
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