Merkle on move as agency grows

Market analysts relocating to Columbia as staff builds

May 15, 2008|By Hanah Cho | Hanah Cho,Sun reporter

Inside the coffee lounge at Merkle Inc.'s soon-to-be-old Lanham headquarters is a countdown clock for the company's move to Columbia.

It's T-minus 16 days and ticking. The move couldn't come fast enough for the database marketing company, which hired more than 80 employees since the beginning of the year to accommodate new business. Merkle expects to hire as many as 90 additional people by the end of the year as well as add 20 percent more employees annually for the next four years.

By 2012, Merkle's work force in Howard County could more than double to 900. The company now has about 1,100 employees nationwide.

The privately held company has built its business during recent years by analyzing consumers and their spending behaviors to help clients devise better marketing strategies.

"We are growing very rapidly right now. The market conditions are very good," said Merkle Chief Executive Officer David Williams.

Even as companies scrutinize their marketing budgets a bit more amid a sluggish economy, Merkle is not worried.

"Where that scrutiny comes is generally through looking at the efficiency in spending," Williams said. "Merkle is well-positioned to help people not only analyze how efficiently they're spending their marketing dollars but to improve the targeting of how those dollars are spent through a more scientific and fact-based approach."

Founded in 1971, Merkle has evolved from strictly managing large mailing lists for unions and trade associations to providing data analysis, brand strategy consulting and marketing for Fortune 1000 companies and nonprofits. Clients include Procter & Gamble, Blockbuster and the American Heart Association. (Merkle also has done work for The Sun.)

Merkle is the 13th-largest marketing services agency in the United States, based on last year's revenue, according to Advertising Age. The company, which reported about $181 million in revenue last year, expects sales to reach $220 million this year.

Dave Frankland, a senior analyst at Forrester Research, said Merkle has built a reputation by focusing its marketing approach on analytics. That has helped Merkle compete well against bigger companies like publicly traded Acxiom and Experian Marketing Services, whose corporate parent is one of the three largest credit bureaus, Frankland said.

"In other words, it's not just building a database, it's actually being able to mine that database for insight and act upon it," he said.

It works like this: A consumer product company taps Merkle for a direct-to-consumer marketing campaign. Merkle helps the client build a database of potential customers and then uses statistical and regression models to predict the likelihood of those customers to buy a new product, for instance.

Williams put it this way: "We gather and track information about how consumers are behaving and use statistical techniques to predict and describe consumers so we could do more relevant marketing to those consumers."

He largely attributes the company's success and yearly revenue increases to its quantitative solutions unit. In fact, some 125 statisticians and analysts, many with graduate and doctoral degrees in math, economics and statistics, do nothing but create predictive models on understanding consumer behavior, he said. (Some of the new hiring is for this unit, since Merkle hopes to double its size.)

John Mace, associate director of annual giving at the Dana Farber Cancer Institute in Boston, said Merkle is helping the nonprofit group refine its year-round fundraising efforts and branch out to other channels, such as the Internet, to draw donors. The institute recently renewed its contract with Merkle for another three years, Mace said.

"Since we've been with them, we've seen a definite upturn in the quality of the giving ... and the amount of funds we've been able to raise from the audience we approach has gone up," Mace said, noting that the group is sending out fewer direct-mail items and raising more money. "We attribute that in no small part to Merkle's efforts."

When Williams bought Merkle in 1988, he was the company's 24th employee and one of its youngest at 25. Besides adding technological and analytical capabilities and services to expand its business, Merkle also acquired smaller firms, including three in the past four years.

Today, the company has employees in Hagerstown, Boston, Chicago, Denver, Philadelphia and Seattle.

As Merkle began evaluating its expansion plans several years ago, Williams said the company looked at locations inside and outside Maryland. The company was drawn to Howard County because of its proximity to the Baltimore region, because the cost of living is generally lower than in the Washington area, and because it has convenient access to BWI Marshall Airport.

Another big incentive was being able to own land and buildings for its new headquarters at the Columbia Gateway business park, said Williams, who has lived in Howard County for two decades.

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