Merkle

MERKLE

Celebrating 20 years of database marketing success

This is Merkle Some call Merkle an overnight success. President and CEO David Williams knows it has taken 20 years to say that. How this high-tech agency is inventing an industry and redefining database marketing Building the FutureMerkle’s bright, open and eye-catching new building was painstakingly designed with the company’s unique culture and community in mind Reasons to BelieveMerkle offers clients fresh ideas, a strong engagement process, a close-knit client community and unsurpassed customer service Great MindsMerkle CEO David Williams and Ted Ward, VP of marketing at GEICO, discuss the future of direct marketing; today’s marketing challenges; their relationship; and what keeps them up at night The CapabilitiesThe integration of Merkle’s six core competencies drives its superior client results The WorkCompanies who partner with Merkle are ready for change, and know success is about more than services — it’s about outcomes How We RollMerkle’s rigorous standards and unique culture attract the best of the best — those who make the cut have the chance to grow, learn and dream big A Bright Future Looking forward to Merkle’s next two decades

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INTRODUCTIONMerkle turns 20 this year, but in many ways it retains the passionate culture and kinetic energy of a start-up. David Williams, the company’s president and CEO, clearly likes things that way. A magnet for top-notch professionals from a wide variety of backgrounds, the database marketing leader has matured over the past two decades — through a constant process of evaluation that retains a fundamental focus on quality and customer results, while using the latest technology and best practices to respond to the changing marketplace.

This year was notable for the creation of a striking new Merkle headquarters in Columbia, Maryland, which contains everything that one would expect from an agency keen to prove both its innovation and its longevity. Inside its eye-catching building is an array of ingenious spots designed for brainstorms and confabs; high-tech meeting rooms; as well as a gym and the standard-issue pool table, for when people need a break from the intensity of their work.

Haymarket Media, the parent company of DMNews, was commissioned by Merkle to dig deep into the company’s culture, community and capabilities to articulate what makes the firm unique and successful. We were able to move beyond what we already know about the company, and learn from its leaders at every level and discipline about the solutions that are reaping client results.

Sharon Goldman, executive editor, DMNews, October 2008

DMNews is published weekly on Monday, except for July 2 and December 31. Publisher: Haymarket Media Inc., 114 West 26th St., New York, NY 10001. Periodicals postage paid at New York and additional points of entry.

Photographs by Chris UsherArchitectural photographs by Alan Goldstein

MERKLE / 4 / DMNews

One evening in 1988, then 25-year-old David Williams shared some exciting news with his family: He was about to buy a small Maryland-based data processing company. Admittedly, he had no experi-ence in list management, but the owner promised to teach the young aspiring businessman everything he knew. Wil-liams, who had worked for several years at an investment bank after graduating college, had dreamed of owning a busi-ness and envisioned building the small data processing shop into a successful company of substance and longevity.

His family, however, thought the idea was crazy: “They tried to talk me out of it,” Williams recalls. Eventually, as they recognized his determination, they changed their views — and in December of that year, he purchased Merkle and became its 24th employee. “I was the youngest kid in the company,” he says.

Twenty years later, Merkle is one of the largest and fastest-growing data-base marketing agencies in the nation, with 2008 annual revenues projected to reach $220 million and a workforce of 1,000 employees located in six offices nationwide. The privately held company provides strategic consulting, database services, content solutions, analytical ser-vices, interactive and creative services, and production management services to Fortune 1,000 companies and leading nonprofit organizations.

Perhaps owing to its corporate belief in constant evolution, Merkle has every appearance of being a hot, young com-pany. In fact, some are surprised to find out about its 20-year history. But with an enviable client list, a sure-handed, visionary leader and a loyal, long-tenured management team, Merkle also boasts all the elements of a long-term success story — providing a platform for some of the smartest, most experienced mul-tidisciplinary marketing experts in the country to achieve their best work.

Nancy Gifford, Merkle’s senior direc-tor of account management, is considered the company’s unofficial historian. As a Merkle employee who joined the com-pany two years before Williams — when it was still run by its previous owner, Harvey Blanton — she was skeptical when she first learned Williams had purchased the company. But Williams won her over almost immediately. “What impressed me most about David was that he was always questioning things,” she adds. “He didn’t make any changes. He

MERKLE

just wanted to understand our clients and how we worked.”

When Blanton suffered a heart attack just months into Williams’ apprentice-ship, Williams had no choice but to take the reins of the business far earlier than planned. Gifford says he rose to the occasion. “There was no doubt after six months that the company was going to grow,” she explains. “David has a vision, and he shares it in a way that inspires.”

Not surprisingly, Blanton’s abrupt departure jarred Williams. He recognized

that to succeed, he would need to bring on a strong management team and sur-round himself with top quality people. To accomplish that, Williams abandoned the standard practice of maintaining strict boundaries between work and personal life. In fact, his first management hire was his brother, Lance, a chemical engineer who had been working in commercial product sales at Unical.

The original Merkle staff often worked seven days a week, other than holidays, and many brought their children to

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MERKLE Some call Merkle an overnight success. President and CEO David Williams knows it has taken 20 years to say that. How this high-tech agency is inventing an industry and redefining database marketing ] ]

work. “Nancy [Gifford] had a little box of toys for the kids,” Lance recalls. But they and others who would join them later weren’t merely hard workers who worked long hours. This was — and still is — a community of individuals who share a passion for achieving greatness in their personal and professional lives. An abiding principle that could easily serve as Merkle’s mantra is encased in a simple frame Lance Williams has kept on his desk for years: “Perfection is our goal. Excellence will be tolerated.”

Over the years, the company steadily grew — and David Williams’ decid-edly unconventional management phi-losophies began to emerge. Rather than creating a board of directors comprised of so-called outside experts, he decided to hire in-house experts who would not merely serve as advisors, but help drive the company’s growth and success.

In the mid-1990s, he recruited four colleagues with the experience and knowledge he needed to take Merkle to the next level. In 1995, Michael Mathias joined, and in 1997, Don Patrick, Tim Berry and Patrick Hennessy came on board. The four executives are affection-ately referred to as “The Fab Four.”

Patrick, now Merkle’s chief operating officer, was previously a venture capitalist working on Wall Street. Like the others, he took a cut in pay to join Merkle. The idea of a group of close friends working together to do something they loved held special appeal for Patrick, as did Williams’ concept of building a great company.

“We’re not trying to be the largest data-base marketing company,” he explains. “Our intent is to be the best database marketing company — the company with the best clients, the best people and the best results.” But, at Merkle, success is not a milestone. Indeed, one of the keys to its steady rise to the top is the company’s all-eyes-forward view. “We run in sprints to get to goals, and we’re

really good at thinking about what’s coming next in the industry, leveraging that, and continually driving value for our clients,” says Hennessy, who adds that the company has consistently grown at an annual rate of 25% or more over the past 20 years.

Growth and expansion are watchwords at Merkle — especially as it applies to building business for its enviable roster of powerhouse clients. Companies that have come to rely on Merkle’s passion and expertise to drive results include house-hold names such as GEICO, Capital One, Dell, AARP, Nike, the American Heart Association, DIRECTV, Procter & Gamble and the Walt Disney Company.

Merkle constantly evolves its value proposition and expands its core com-petencies, in anticipation of marketplace changes. As many marketing experts have reported, the industry has recently begun to see a convergence of disciplines. But Merkle executives long ago saw the ben-efits of providing a fully integrated suite of services that leverage fact-based truths to drive marketing results.

Merkle clients already benefit from these integrated services, which company officials say will redefine database mar-keting. The company’s innovation blurs left- and right-brain competencies and is proving powerful in delivering unsur-passed return on investment to its clients. While Madison Avenue focuses on the next big idea, Merkle helps bring sharp focus to the effort, serving as a trusted advisor to C-level client executives to develop winning customer, media and messaging strategies, founded upon a bal-ance of quantitative as well as qualitative knowledge. Merkle refers to its service approach as “Think Brand. Act Direct.”

“We’re getting more involved on an enterprise level with clients,” says Gif-ford. “We’ve grown beyond just data-base and direct marketing. We’re helping companies with global strategy.” At Dell,

Merkle’s work hard, play hard culture helps to buld a sense of community and camaraderie. So it’s not unusual to see staff members discussing ideas over a couple of rounds of pool

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for example, Merkle is looking across its entire marketing budget: “We’re advising the company how to spend effectively and efficiently across all channels, based on data and analytics and our knowledge of that client’s industry,” she explains.

To accommodate its rapid growth, Merkle is also expanding its physical infrastructure around the country. In April 2007, Merkle opened a 20,000- square-foot office in Denver to enable expansion of its interactive services group. In June 2008, Merkle moved its response management group to a new 125,000-square-foot facility in Hager-stown, Maryland. That same month, Merkle completed construction of a new 120,000-square-foot, state-of-the-art headquarters, located in Columbia, Maryland.

Projected future growth is being taken into consideration as well. The company also purchased a four-acre parcel adjacent to the headquarters’ site that it expects to develop into a second, 70,000-square- foot building.

This physical expansion is meant to support an ambitious recruitment ini-tiative — Merkle expects to double its headquarters staff by 2012.

But even as the company charges off the starting block in its next big sprint — 90 people, for example, were hired in the first quarter of 2008 — executives are ever mindful of keeping Merkle’s culture firmly intact. The company’s executive team devotes about half of its time inter-viewing or recruiting potential employees to make sure they’re a good fit. “We want to make sure the culture stays strong, so we are proactive and fully engaged in the hiring process,” Patrick emphasizes.

Williams looks for people who don’t take themselves too seriously. “We work hard and play hard here,” he says. “We enjoy working with each other and we socialize. In fact, all my best friends work here.” Staffers agree with Williams’ char-acterization of the camaraderie among Merkle co-workers. In fact, in response to a recent survey, 58% of all Merkle employ-ees said they have a best friend at work.

Establishing a strong sense of com-munity was a top priority when Williams envisioned Merkle’s future 20 years ago. The company interviews candidates on the basis of competence, he says, but hires on the basis of key values — a desire to serve, a desire to learn and a desire to achieve — coupled with per-sonal attributes that most people use to describe the perfect friend. That, too, is intentional. “Think about it. What is the definition of a friend? It’s someone you trust, who’s loyal, who is smart and fun to be around,” he says. “Those are the characteristics of the kind of people I want around me.”

Given his “overnight” success in rein-venting database marketing — despite initial skepticism — Williams’ next great-est legacy may be showing other compa-nies how to create a platform that keeps employees motivated to be the best. “We have more than 1,000 people nationwide working on solving one single, funda-mental question: How to use information to better inform business decisions,” he says. “That’s energizing. I’m more excit-ed today than I was a decade ago and I expect to feel more excited a decade from now. I know the others who work here feel the same way.”

How would you describe your job?I started on the financial side and moved over to running operations. I can try to glorify it, but the way I describe my job now is I run things that nobody else here wants to run. I’m the inside guy.

Where were you before you joined Merkle?I worked on Wall Street for 10 years doing leveraged buy-outs and venture capital for JP Morgan. I knew Lance and David from college and loved working with them.

What do you like best about working at Merkle?Every day it’s something different and we love to push ourselves for our clients. We’re very financially conservative, but will take calculated business risks based on the confidence that we can do anything. But the best thing is our culture — we work and play very hard. We’re fun, entrepreneurial and very people-focused. A lot of great people work here, all counting on one another.

What keeps you up at night?Maintaining this distinct culture — it’s critical that we keep it strong. It all comes down to attracting, develop-ing and retaining the right people. We also want to have consistency. Our offices all look and feel pretty much the same. You can walk into our Denver or Seattle offices and experience the same culture and feel as our headquarters.

What do you think is especially unique about Merkle?First, we’re perfectly aligned on what’s right for our clients, employees and shareholders. Second, we’re building a new category of agency, driving the value of integration and offering a holistic approach to helping our clients acquire and retain their best customers. We’re building a company and defining a space in the industry that doesn’t exist yet.

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When David Williams purchased Merkle, he planned to learn about the business and its opera-tions from the company’s previous owner, Harvey Blanton. But just months into his apprenticeship, then 25-year-old Williams received devastating news: Blanton had suffered a heart attack and would not return to Merkle full-time.

Williams, the visionary, was suddenly thrust into a role for which he was neither suited nor ade-quately trained: handling the day-to-day operations of his newly acquired business. Williams knew he needed to bring on board someone who was highly skilled in operations; a person who could quickly — immediately — learn and drive that side of the business, and it had to be someone he could explicitly trust and count on. Only one name came to mind: Lance Williams, David’s older brother.

“The way I always thought of it was, if Lance can’t do it, it can’t be done. If he can’t figure it out, let’s just move on,” says David.

Lance Williams joined Merkle in April 1990, and was David’s first key hire. The combination of David’s vision with Lance’s ability to execute was a perfect match in the early years. “Lance gave me the confidence to be aggressive in the marketplace,” David explains.

When Merkle won MCI Friends and Family in the early ’90s, the company had just initiated a one-year transition plan to an IBM mainframe. “With MCI, we had 40 million records to process in seven days, which is 10 times more than we ever had to process before. Lance called IBM, explained the situation, and had the engineer walk him through how to set the thing up by himself. Lance and Nancy Gifford didn’t leave the building for four days. We delivered the project on time,” David says proudly. “I would put Lance’s problem-solving skills up against anyone in the world.”

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Don PatrickTitle: Executive Vice President & Chief Operating OfficerPrimary responsibility: Operations, marketing technology, infrastructure, HR

Lance WilliamsTitle: Vice President, database services

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Patrick HennessyTitle: Executive Vice PresidentPrimary responsibility: Leads client services group with Tim Berry

People refer to you and Tim as “two in a box.” What is that about?We’ve operated this way since we first started working together 11 years ago. We are both committed to driving the same business outcomes and try not to draw hard lines when it comes to our areas of responsibilities. We work together to decide what each of us should focus on to help drive the team’s performance and our effectiveness for the clients.

Why does this partnership work so well for you two?We have a great relationship and share similar business philosophies. We can say anything to each other and challenge each other — which happens often — but in a way that allows us to create better solutions. We’re both very passionate about building a great business for Merkle, its clients and employees.

Why did you join Merkle?It was really all about the people and the opportunity to learn. I can remember interviewing with David, Lance, Tim and Nancy Gifford, and coming away thinking that these are great guys to learn from and we’ll have a lot of fun along the way.

What’s your greatest achievement so far?The things I’m proud of are the relationships I’ve devel-oped within the company and the talent I’ve helped recruit. I’ve definitely chosen the best place to invest many years of my career. Also, Merkle’s value proposition has evolved so much over the years, I’m proud that I’ve been a part of that evolution.

What makes Merkle so special?For me it starts with David’s leadership. He’s a huge piece of Merkle — he created the vision, the environment and the culture, and we have a great culture here. Everyone who spends time at Merkle comes away saying “You guys have great people — smart, dedicated and fun,” which is just the way we like them.

How do you and Patrick work together?We play on each other’s strengths and spend a lot of time communicating. Lots of open debate and discus-sion around the best approach or solution. His strengths are in ideas, being very good in the moment and getting the right people. He’s very good at rallying a team. My strengths are more determining how to develop and exe-cute the best solution for our clients.

Where were you before you joined Merkle?I was in an analytics role at Rapp Collins and at other companies where I was involved with supporting products with data-driven solutions. When I first talked to David, I had never heard of Merkle. I flew in on a Friday night and talked to him and Lance. I got excited about David’s passion, his leadership vision, philosophies and using a data-driven approach to marketing.

What about the culture here?I can no longer distinguish between business and personal any more, which is perfect for me. Most of my friends are here. It’s more than a job.

What keeps you up at night?Nothing. I’m a great sleeper. But most of my thoughts are focused on finding the right talent, going as fast as we want to go and where we’ll take enterprise database mar-keting three years from now.

What makes Merkle successful?Our people. We hire the smartest people.

What made you decide to join Merkle?I bought into the vision of the company very early and, like many of us, it was the right time to take a well-informed risk. So it was a conspiracy of factors.

What exactly is your role as agency group leader?I’m responsible for creating the bridge between our core quantitative database and analytic work, and our creative and media execution services.

How do you spend most of your time?We have such a diverse set of talents in the organization. I spend most of my time creating a community where we can do the best work possible for our clients, bringing all these talents together. For the agency services group, this involves using quantitative insight to create and execute strategies that influence consumer behavior. This is the basis for our “think brand, act direct” services approach, where we take a universal brand platform and make it specific and actionable to individuals.

Why are executives, at an agency of Merkle’s size, so directly involved with the clients? Since we are continuing to define and redefine the space that we’re playing in, there’s no substitute for being on the front lines, really understanding their business and con-necting to their objectives. It gives you a much broader set of facts from which to make decisions.

What do you do for fun? Competitive cycling. I’m also passionate about wine.

How is Merkle like wine? I would liken Merkle to southern Australia as far as wine goes. Early on, Australia focused on big brash wines, but was fairly one-dimensional in its style. Over the years, it has softened and mellowed, and been more apt to adopt other practices that make it better.

Tim BerryTitle: Executive Vice PresidentPrimary responsibility: Leads client services group with Patrick Hennessy

Michael MathiasTitle: Executive Vice President Primary responsibility: Leads agency services group

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GRounded corners, colorful tones and flowing lines mesh with sharp, clean angles at Merkle’s state-of-the-art Columbia, Maryland headquarters

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Merkle’s bright, open and eye-catching new building was painstakingly designed with the company’s unique culture and community in mind

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Left: David Willliams examines the new building’s architectural plans. Right: Where it all happens — the network operations center

Left: David Williams’ bright, spacious office invites communication with the company’s various teams. Above: The company’s cubicle areas feature large whiteboards ready for brainstorming. Right: The soaring entryway stairwell

Right: A traditional meeting space gets a modern twist with plenty of light and sleek design

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Creative. Community-oriented. Precise. Futuristic. These are the adjectives that immediately come to mind upon entering Merkle’s new five-story, 120,000-square-foot corporate headquarters campus near Baltimore, in the high-tech corridor city of Columbia, Maryland. Completed in June 2008, the building’s sharp, clean structural design and precise grid accents visually reflect the company’s core DNA, combined with a warm and welcoming feel.

“I wanted the project to expose our personality — the yin and yang of who we are as a company and where we sit within the marketplace. It’s the com-bination of our creative, technical and analytic capabilities,” says Merkle CEO David Williams. “We wanted it to speak to those competencies, with an element of surprise.”

Indeed, both sides of this duality are evident throughout Merkle’s space. An open, contemporary-style stairway to the building’s second floor dominates the first floor entrance. Here, as elsewhere, glass and steel coexist with warm wood, supple leather, and soft fiber.

Unlike typically sterile “waiting areas,” the expansiveness of the soaring, two-story lobby space allows visitors to begin their immersion into Merkle’s personal-ity. At any given moment, employees might be grabbing a latte or soft drink in the first floor café, holding a discussion with coworkers in one of several informal seating areas, or pausing to talk while hurrying across an open walkway above the lobby.

“Our headquarters isn’t merely a struc-ture. The space in which we work is actu-ally a platform for our people to grow and learn,” Williams emphasizes. “We wanted the space to bring that concept and our culture to life; to represent our sense of community.”

The building’s sense of intimate open-ness extends to its workspaces, which were designed by Denver-based Studio B2SJ, a multidisciplinary architecture and design firm that created and completed the interior work. “We’re not a closed, secretive company,” Williams explains, so rooms and offices are enclosed in glass rather than hidden beyond solid doors and walls. In place of a maze of tall, anonymous cubicles, designers lowered cubicle wall heights to encourage col-laboration between employees.

Expanding on that concept is the thoughtful placement of quiet conversa-tion areas that have the feel of residential living spaces. For instance, employees can unwind, hold meetings or work privately while enjoying a change of scenery on an expansive, covered patio on the second floor. Just below, on the ground floor, is a large, open patio area that boasts weatherproof tables and seats.

Three other companies shared in the building’s conception and development: Real estate advisory firm The Staubach Company served as a consultant through-out the project, while Columbia, Mary-land-based Manekin contributed as the project’s developer, building engineer and general contractor. The building’s architect was Baltimore-based Design Collective, an award-winning, multi-disciplinary design firm.

Matthew T. Herbert, a Design Col-lective associate, says one of the most pleasant surprises was how well all four entities worked together with Merkle to

successfully complete the building proj-ect in a compressed, 15- to 16-month timeframe.

“Most projects of this magnitude take at least two years from architec-tural design to move-in,” says Herbert. “I can’t say enough about David Wil-liams’ energy, enthusiasm and intelligence on this project. Without his hands-on involvement, we never would have met that schedule. He was involved in every stage of the design, from the shape and look of the building to making sure all the rooms had the right data ports.”

He adds that the architectural design of the building reflects the Merkle culture, which is “a kind of duality of creative marketing types and very analytical, tech-nical types; a young company with a long history; and an edgy, yet corporate, feel,” he explains. Williams helped Design Collective understand those concepts, he adds: “I think their culture rubbed off on all of us, and that made it a very enjoyable project.”

An emphasis on sustainability and environmental friendliness is evident throughout the building, says Herbert, who points out that the design includes various features that capitalize on heat and light to reduce energy bills — for example, the sun-filled West-facing side includes special glazing on the window glass to keep the building cool. In addi-tion, precast materials used in the build-ing’s construction are of high recycled material content.

Most importantly, the building also has an extremely efficient mechanical system that reduces energy consumption, which will save Merkle thousands and thousands of dollars over the life of the building. “All of these features reduce Merkle’s carbon footprint,” he says.

The building construction and Merk-le’s move from smaller quarters in Lan-ham, Maryland is part of the company’s overall expansion. A major hiring initia-tive was recently launched to double its current headquarters staff by 2012, while Merkle continues to add new clients and increase work across its existing client base. The new building can accommo-date up to 550 employees and includes a 10,000-square-foot, state-of-the-art data center.

However, don’t believe for a moment that the new headquarters is any kind of a finish line for Merkle. In fact, a recently purchased four-acre parcel adja-cent to the new building will be devel-oped into a second, 70,000-square-foot building to accommodate an additional 350 employees.

At the building’s grand opening celebration on June 23, 2008, Merkle employees lined up outside of the entrance doors to the new headquarters to mark the historic occasion with group photos and an official ribbon-cutting. Ginny Mudrock, who has worked in Merkle’s production department for two years, says the moment was electrifying. “We all felt like we achieved something special that day,” she says.

After the ceremony and photos, Mudrock turned to re-enter the building and then gazed upward at the building entrance signage, which read “Build-ing 1.”

“I immediately thought, ‘Aha! David’s already planning the next building,’” she says proudly. “And you know, he’ll do it. You can count on it.”

The warm colors, clean lines and contemporary style of the building’s design bring Merkle’s unique culture and personality to life

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REASONS TOBELIEVE

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When clients partner with Merkle, they receive more than world-class marketing services and a dedicated account team. They join a client network of database marketing executives in a close-knit community that offers everyone the opportunity to learn and grow professionally.

In May 2008, Merkle hosted its fifth annual DbM Executive Summit in Austin, Texas, attended by 177 clients from more than 80 companies and organizations, including 21st Century Insurance, BMW, Cystic Fibrosis Foundation, Capital One, CUNA Mutual, General Motors, Procter & Gamble, Under Armor and T-Mobile.

Each year’s Summit — a complimentary event — focuses on fostering collaborative dialogs, challenging conventional wisdom, and creating new insights. Attendees come away

with actionable ideas on how to elevate their organizations’ marketing programs and realize a greater return on their marketing investment. In addition, the Summit features distinguished speakers and industry leaders, as well as a Client Innovation Showcase in which top marketers present case studies that demonstrate innovative database marketing work and results.

“We showcase the best work and talk about the future of database marketing and how to get ahead of the market,” explains Merkle senior vice president Kelly Kennedy. “It’s also a chance to celebrate the year’s successes.”

Summit guest speakers in 2008 included world-class marketers such as Angie Moore, managing director of DRM at the American Cancer Society; Mark Jarvis, CMO of Dell;

Ted Ward, VP of marketing of GEICO; Ian Ayres, author of Super Crunchers; and Dave Frankland and Suresh Vittal, senior analysts at Forrester Research.

Twice a year, Merkle also hosts sessions for its Client Advisory Council, which is comprised of a group of 10 to 20 top marketing executives from the agency’s largest clients. Justin Bruton, Merkle’s director of marketing communications, is in charge of the Council: “This is a chance for clients to talk to each other — peer-to-peer — about the challenges they face, to share best practices and learn from each other,” he says.

“Overall, the council helps its members — and Merkle — continue to push the boundaries of database marketing. That’s good for everyone in our industry,” says Bruton.

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REASONS TO Merkle offers clients fresh ideas, a strong engagement process, a close-knit client community and unsurpassed customer service.

For most companies, service considerations come after the sale. Not so at Merkle, where the process of ensuring the highest level of client satisfaction begins even before the company’s business development executives make the first contact with a prospect.

According to senior vice president Dave Paulus, identi-fying companies at the top of their industries that are recognized as innovators is a key criterion for Merkle’s business development executives. “Our best fit is with a client for whom we know we can have a real, substantial impact,” says Paulus, who adds that Merkle chooses strong companies that are committed to a database mar-keting vision.

To that end, Merkle doesn’t tip-toe into an industry. “When we enter a vertical market, we always pursue the biggest and best companies in that vertical,” he says. “The best want to work with the best.”

Paulus and senior vice president Kelly Kennedy co-lead Merkle’s business development efforts, and they say they’re as fierce about keeping hard-won clients happy as they are about landing new accounts. “It’s all about accountability,” says Kennedy. In fact, 95% of the company’s top clients say they aren’t merely “satisfied,” but are so happy with Merkle’s service that they would provide a positive reference.

Paulus says potential clients want to know how Merkle will service their account — and it’s at that early stage when the company presents its “reference-ability” con-cept. “It sets the stage for customer service expectations and how we intend to measure the quality of our relation-ship over time,” he explains.

The concept Merkle developed focuses on the belief that every client is a potential reference. Reference-ability is measured through a scorecard process designed to mea-sure key indicators of client satisfaction — with factors

that go well beyond the typical customer survey. A highly defined and holistic approach, the process focuses on advancing the unique marketing needs of every client.

The sales team also stays involved after the account is won. If Kennedy lands an account, for instance, she becomes its executive sponsor. “We’re not a ‘love ’em and leave ’em’ organization,” she says. “We have a vested interest in seeing that we deliver the value proposition we sold to the client.”

Paulus agrees, adding that the company wants to make sure the executive team is never shielded from the busi-ness. “After all, you can’t work on the business if you don’t know what’s going on in the business,” he says.

Kennedy adds that Merkle ideally wants to be held accountable to the same metrics that the client-side team they serve is measured — usually a combination of return on investment, revenue growth and profit growth. Once performance standards are agreed upon, Kennedy says it’s not unusual for Merkle to “put some skin in the game” — by establishing a pay-for-performance arrangement. “It demonstrates our confidence and competence when we hold ourselves accountable,” she explains.

Like the entire agency, Merkle’s customer service programs are in a constant state of evolution and growth. Kennedy is the executive sponsor of a cross-functional Center of Excellence (COE) that meets to discuss prob-lems and create new initiatives to continually improve Merkle’s customer engagement efforts. Team members come from all areas of the company and meet on a regular basis. But unlike other COEs within Merkle, Kennedy’s Center of Excellence is a permanent institution. “This is an area in which there is always room for continual improvement,” she says. “We’re all about making sure the customer is truly happy.”

It’s almost like we’ve grown to be an extended family. There’s no more “us” and “them.” We started together from the very beginning, with thoughts around pro-grams, strategy — with a lot of what David talks about as database marketing 2.0. There’s nothing going on in our bank that they don’t know about. Not only have friendships developed, but good business partnerships. So, it’s both a fun and a valuable relationship.— Leigh Anne Kelley, senior vice president, database and direct marketing, Regions Bank

Our experience with Merkle is unlike any other that I’ve had as a client. From the start, our constraints, challenges and success criteria were integrated into the solutions delivered by the Merkle team. I’ve always felt that the work and the ultimate outcomes were a true collaboration and that the Merkle team was willing to forge a relationship where risk would be equally shared throughout the partnership.— Walter Scott, vice president, marketing and eBusiness, Corporate Express

Merkle’s thought leadership has been invaluable in helping NWF continually think about the future and understand the opportunities available to our organi-zation. In addition, our partnership with Merkle has made our staff smarter. Many of our learnings have been applied well beyond the intended purpose, causing a positive domino effect of additional growth, rigor and insights in other areas. — Dave Strauss, vice president, direct marketing and constituent operations, National Wildlife Federation

I think that Merkle has a lot of talent and they know what to do with it. They have very forward-thinking, very creative ways of looking at issues — with fresh ideas, things that we’ve never heard before. I remem-ber the day David Williams came into our conference room and he sat down with nothing but a bottle of water — no presentation, no paperwork. It was just this back and forth conversation that was not cookie-cutter. I felt like everything we discussed was for GEICO. They want us to succeed and they want to develop a relationship with us.— Amy Furman, dir. of database marketing, GEICO

Merkle’s big differentiator is their client engagement process. The client leads and technical leads tend to be able to talk about a lot of different things. So the orga-nization is talking to people who can actually go make the decision. The Merkle Client Council is [also] really informative. Not only connecting with my peers on what we’re doing, but also talking to Merkle manage-ment and sharing where the industry is going and how they can better support what we’re doing is fantastic.— David Zucker, director of CRM and analytics, Dell

BELIEVEShooting for success

‘‘‘‘

s

At Merkle, customer engagement comes first

Senior Vice Presidents Kelly Kennedy and Dave Paulus co-lead Merkle’s business development efforts

— and work hard to make sure customers are happy


Both Geico and Merkle are leaders in their respective industries. As a company, what does it take to become a leader? And how do you stay at the top?

TW: This is a topic we’ve spent a fair amount of time discussing within our group recently. We’re in a very competitive industry right now, so how do we become No. 1 in something and stay there? The most important part is having some firm grasp of a long-term strategic perspective and surrounding ourselves with good partners to help us get there.

DW: For us, it’s very similar — we’ve talked about staying the course. We talk about two time frames: 10 years and 90 days. We have a 10-year vision of what we want to do, but there are also the things we have to advance against in the next 90 days.

TW: You’re right, if you can’t get something done in 90 days, you’ll never move forward. You can have a great vision and just no plot of how to get there. The other thing we figured out as a company is we can’t be the best of class in all the different pieces of the puzzle that are required in a marketing envi-ronment. [For example], we can’t be best-of-class database management and marketers. We’ve got to rely on good, smart partners.

DW: I would agree — we’ve talked about our company as one with horse blinders on. We

don’t get distracted by all the things we could do, we just focus on the things we want to be world class in.

There’s a lot of talk today about the “convergence” taking place. What is all the talk about? Are we witnessing a true evolution, or have marketers merely repackaged the concept of integrated marketing?

TW: I remember this rush to have conver-gence between direct agencies and general agencies. Then, all those mergers took place, and then independent direct shops came back again. The fact is, they converged all along, it’s just the way that individual companies use the levers of the various tools — it’s all a big pot now. I think there’s some advantage to having the specialists in each of those areas working with you, but whether they are owned by a common enterprise at the top is insignificant to us. We’ve chosen to pick smart, leading-edge, typically some-what smaller and more nimble, companies to deal with.

DW: I agree, I think discipline trumps the engagement model. I think if you put three organizations together in a relationship with someone like Ted, there’s a dynamic of how do you get all those people to work together. But that is immaterial compared to trying to put best-in-class competencies together.

TW: We make sure we sit [all of our agen-cies] down a couple of times a year. We have an annual agency day — it’s an opportu-nity to share some ideas, what’s current in each of those discreet chimneys. But at the same time we have some projects where I don’t know what [the agencies] are doing together; they come back to us.

DW: Segmentation is a good example, where we are working with The Martin Agency independent of even the GEICO enterprise. I think [GEICO does] a good job of bringing us together and sharing their very specific vision. We’re always hearing the same objectives.

TW: I honestly believe that by having best- of-class partners that are extremely compe-tent in their arena interfacing with others who are also best of class, you get a much better set of ideas and options and strategies developed. I’d say the segmentation stuff we’re working on is just a perfect example of the way all of that comes together.

Would you say direct marketing is more important now than it was 20 years ago?

TW: I’d say it has to be more important because of the tools that exist now to almost market to someone individually. You can identify much more precisely the psycho-graphic, demographic, all the other graphics of an individual consumer. You also have the potential to reach them individually.

The media channels have gotten so divided, and the capabilities available to the client so much more diverse, you now have to spend time saying, “How do I take advantage of my day [doing] direct marketing?”

DW: I think somebody like GEICO has an advantage because their DNA is that of a direct marketer.

TW: I’ve used that term — DNA. [Direct marketing is] not a big deal for us, it’s always been there. I think some clients struggle with the notion.

DW: In reality, you guys became a world-class mass marketer after you were a direct marketer.

TW: When I started here, my job was to start the advertising division. We were solely direct marketers.

What excites you about direct marketing today?

TW: I think, all the different options you have — I mentioned the segmentation stuff. It’s fascinating because we started using it to look not only at the consumers that we want to become customers, but at the people that touch us but maybe don’t buy. And what did the ones that didn’t buy look like? How would they look compared

MINDSGREAT

Merkle always seeks to be best of class in all of its diverse competencies, and so does GEICO, the auto insurance heavyweight that has partnered with Merkle for the past seven years. The mutual respect between these two market leaders became clear during a recent discussion with Merkle CEO David Williams and Ted Ward, VP of mar-keting at GEICO, in which they discussed the future of direct marketing; today’s marketing challenges; their agency/client relationship; and what keeps them up at night.

Ted Ward (left), VP of marketing at GEICO,

and Merkle CEO David Williams talk

about challenges, capabilities and

competition


to our existing customer? And, on the back end, what did the people who leave us look like, and what can you do to get them back? [Most] of our hires are either former actuaries or math majors. I don’t think I’ve hired one general agency person — it’s an indication that even the general media side of our business is being driven by analysis of data and trying to find the smart way to approach the next group of consumers that you want to acquire and retain.

DW: All media is becoming more address-able, therefore the direct marketing skill set can be applied more readily to all types of media. Even with the addressability of the set-top box and what’s coming in cable targeting, you could see network TV as the most targetable media someday in the future. My context in direct marketing is the conver-gence of insight, measurement and target-ing. So, when you look at your ability to do those things in a world-class way, all media is evolving to create more insight and make that insight actionable through targeting, and measured more effectively on the back end.

TW: The cost of technology allows you to do this. I think the biggest change in the past 15 to 20 years is that computing power and the amount of data you can push around has gotten so much less expensive.

DW: Ted’s right, it’s technology that’s enabling all this. The revolution going on is technology; the evolution going on is digital media — they’re directly related. I do think it is all going to be about the ability to capitalize on that one-to-one relation-ship. People talk about one-to-one direct marketing, but it’s usually one-to-many, or one-to-some, but one to one is coming and companies are embracing it — like GEICO, which [began] as a direct marketer, or some-one like Ted, who has been engaged in that piece of the business for a long time. Just the difference in CMO interest in direct and database marketing, especially compa-nies who aren’t core direct marketers, has changed dramatically in the past 12 months.

Should cMos think more like agency presidents or should agency presidents think more like cMos?

TW: When people ask me what I do, I say I’m a marketer who happens to be selling car insurance. You have to have it from both directions. For me, the challenge is to stay current about what’s going on in the marketing world. I’d better be very well informed and understand my partner. I don’t need to understand every aspect of database management — that’s why I hired these guys — but I have to understand their capabilities and business model. [And] it’s incumbent on someone like David to figure out how to understand car insurance enough to provide those [capabilities].

DW: Our challenge is to understand enough about the customer business model to leverage what we’ve learned from all the applications that we get exposed to today. The role of marketing overall in the orga-nization, especially in sales and marketing combined, gains an ever more expanding scope. We have to understand how that role is evolving for someone like Ted.

What do you think is the biggest challenge facing marketers today?

TW: I’d say juggling all of those different opportunities. There are so many reasonable avenues to explore. [It’s about] figuring out how to test the next good idea efficiently, and to get there before your competition does or to get there smarter than your com-petition. Our experience with the Internet — we were a little late to embrace it, but once we embraced it, we invested the neces-sary resources to develop it and make it best of class. The whole Caveman campaign, for example, came out of a challenge of how to let people know that there is a GEICO.com and that it’s easy to use.

DW: Marketing is getting more complex — just because we have more insight, it doesn’t mean the answer becomes more obvious. We have all this great insight, but how do we link it to programs, behaviors and adver-tising that actually influences the consumer in the way we want it to?

TW: That’s the right take — the technology enables it, but doesn’t make it any easier to decide what the right combination is.

DW: To me, it’s [about] trying to under-stand each other’s world. In our relationship with GEICO, we’ve found a company that’s open to change, evolution and innovation over time. That tone gets set. I think those who are constantly revisiting the status quo are making the big progress now.

What keeps you up at night?

TW: [My ability to keep] good, smart peo-ple on my staff who can keep up with my partners — so we can challenge them and take advantage of their superior knowledge in their specific field. Our best database marketing people don’t know as much as these guys, but we want them to — and we want to keep them around.

DW: I’m obviously worried about the peo-ple, but what keeps me up at night is that creative tension of opportunities — there are so many ways to create better outcomes, and the pace is accelerating. For Merkle, it’s about how we help our clients move the needle at the end of the day.

TW: From my perspective, your culture — what I know of it — mimics ours some-what. We want to be bigger, faster, growing, best in class. I don’t necessarily mean big-gest in scale, but the biggest, fastest growing

star in the group. The results show — our pace of growth is incredible, we tripled, quadruped the size of the company in the past 10 to 12 years. [Merkle and GEICO] tend to look alike, I think, in many ways — so, culturally, we’re a decent fit.

What are you most excited about in the work you’re doing now with Geico?

DW: We’re most excited about the con-vergence of what I’d consider world-class, enterprise view-level segmentation, com-bined with media mix work and customer lifecycle management. So, we understand how media are performing inside those segments, and then link that to customer behavior over time.

TW: We’re even trying to push one layer further, into the creative communication that we deliver via those channels. So we’re trying to juggle all the balls better than the competition.

DW: That’s where the partnership really works, because we’re really in the optimiza-tion business. So they can create appropri-ate things based on the insights that we can learn from and then optimize those activities.

How would you describe the marriage between Geico and Merkle? You’re obvi-ously past the newlywed stage.

TW: It’s not a bad analogy. We dated for a while, the people got comfortable with everybody, and we got comfortable with the payback on monies that we invested. As you become satisfied with the work you engage more deeply. I forget what end we started in …

DW: It was really the data end.

TW: Yeah, I guess it was. And it has abso-lutely migrated to be so much more encom-passing — we do an overwhelming portion of our direct mail through you guys. As you get comfortable and your people recog-nize that the work was good and produced results, you say, OK, let’s give more work to them.

DW: Everyone talks a good game about relationships, but GEICO, and Ted in par-ticular, sort of lives and breathes that. So, to use the term everyone doesn’t like so much, from the “supplier” perspective it’s a very attractive environment, because you can evolve nicely. There’s a lot of continuity here — [sometimes] part of the challenge is just

the reorganization that happens every nine months with a new executive that has a new agenda and mandate. Matching up to that is much more difficult over time.

TW: We started [this conversation] with that idea — [continuity] allows you to have that 10-year perspective, to have a longer term strategic approach. I mean, the segmentation stuff, it’s not like we flipped the switch and it happened. We started working on it 18 to 20 months ago. If you were churning through another person and another manager you could never get there.

DW: It’s interesting, I was involved right from the beginning, but GEICO was very cautious when we first came in the door. [So] it was about staying engaged — we were willing to make an investment of our time and resources to say, OK, let’s go at a pace that’s appropriate for them.

TW: If anything, Merkle is pushing us, which is kind of what we want. We don’t have a lot of horses inside our corral, so we rely on our partners to push us, to say look at this, this makes sense. We don’t know as much as they do and we’re so busy making sure we do the stuff that’s working right, that the ponies that are running fast keep running fast. Finding that next thorough-bred is the challenge and these guys provide the new breed. [We rely] on really smart partners to push good ideas and then [we are] open enough to accept them.

DW: The advantage you have is that you know this business – you have all that ben-efit of history and instinct. I remember once I was sitting next to Ted, he had his laptop open and he was working on an Excel spreadsheet. It was yesterday’s results and he was in it cell by cell, by category — I said, this guy’s into his numbers.

TW: We talked about our direct DNA. We look at stuff daily. I can tell you what our retention of customers was yesterday. I can tell you exactly how many policy holders we have in each state.

DW: What’s great about GEICO is there’s always an undercurrent of, “What’s next?” That comes from that desire to be the market leader. The rhythm we have with GEICO is that we have to produce results, but they are able to carve out a little bit of time and talk about other possibilities — things that we could be looking at that could be impactful next summer, not next week. Other companies talk a good game about making those investments, but it’s more hit or miss.

MINDS


CAPABILITIESTHE

Z Shen, Vice President, Quantitative Solutions Group

With more than 100 statisticians and marketing analysts on his team, Zhengda “Z” Shen knows analytics are the soul of everything Merkle does as a database marketing company. The group builds and maintains more than a thousand models and analytical projects annually, helping transform data into valuable, actionable knowledge. But this left-brained team (90% hold quantitative MBAs or advanced degrees in fields such as statistics, economics and engineer-ing) still knows how to kick back and have a good time.

The backbone of the organization:“Everything we do is focused on helping our clients better understand their customers in order to improve marketing ROI. And we want to know our work is making an impact now, not three years from now. ”

our solutions and focuses:“Targeting leverages statistical tools to identify the right audience for marketing programs. Insights cover market research, profiling and segmentation to determine who your best customers and prospects are. Measurement is all about ROI and marketing mix optimization — looking at your marketing dollars to determine the optimal spend across media and channels.”

Dealing with non-numbers people: “We engage heavily with both analytic and non-analytics people. Many of us in our organization play a heavy client- facing role as we look for clients that will partner with us so that we can deliver the best results.”

Staying at Merkle:“I’ve been with Merkle for more than eight years. I like that the company is growing, and provides lots of opportunities. The people are smart, hard-working and we are all trying to achieve the same goals. And everyone is always learning. Finally, we have some world-class clients across many industries, so I get to see a wide variety of different corporate cultures.”

Playing hard: “We do have fun in my department. In addition to tradi-tional events like happy hours, sometimes we have internal competitions in statistical modeling. We’ll say, ‘Who can build the best model?’ We do that for fun.”

Biggest challenge of working at Merkle: “The company as a whole is experiencing more than 20% annual growth, and my group is growing at more than 50% annually, so naturally we have growing pains. I have already hired 46 people this year, so it’s been a little challenging to integrate all those capabilities into the group. There’s a strong desire to keep the culture strong.”

Quantitative solutionsTransforming data into knowledge

Greg Fox, Senior Vice President and Chief Strategy Officer, Fundraising Services

At Merkle, looking at the big picture is paramount. So in 2000, Greg Fox joined Merkle to formally establish the company’s strategic consulting competency. With nearly a quarter-century of experience in developing and imple-menting industry-leading database marketing strategies and solutions for many of America’s largest organizations, Fox was ready to let strategy lead action at Merkle, by using trend data and insights from the client’s customer database to inform marketing decisions.

choosing Merkle: “I chose Merkle because I was impressed with David’s enthusiasm — a contagious desire to do something differ-ent, to reinvent the way database marketing was done. I wanted to join a company that clearly understood the dif-ference between data-driven strategies and campaign tactics. The industry needed a new paradigm and I knew Merkle was just the company to create it.”

Just the facts:“We’ve got a unique offering here that effectively blends the brightest quantitative and qualitative minds in the industry. Understanding that every consumer decision is based largely on a combination of emotional and rational thinking, we needed to create an unparalleled solution that uniquely turns factual customer data into actionable solutions that maximize and optimize revenue for our clients.”

Understanding cause and effect: “The approach we’re taking at Merkle isn’t necessarily revo-lutionary; but it’s certainly evolutionary. In every outcome, there is an incredible opportunity just waiting to be discov-ered. I’ve learned first-hand that if you’re curious and willing to uncover the ‘truth’ through data, there are no limits on what you can create.”

A strong, talented staff: “It goes without saying that having a great staff is vital to any consulting agency, so you would expect my staff to be highly talented. However, the true strength of my team is not measured simply by what they are individually, but rather what they form collectively. By harnessing each per-son’s unique strengths, talents, disciplines and passions, we are able to continue producing great results for our clients.”

Working with other Merkle teams: “I’ve been in this industry for 25 years, but I’ve learned more in the past three years than I did in the first 20. With-out a doubt, Merkle employs some of the greatest minds this industry has ever seen. There are no limits to what can be accomplished when you work collaboratively with a group of brilliant people with extremely diverse skill sets.”

Strategic consultingThought leadership at work

Craig Dempster, Senior Vice President, Content Solutions Group

If analytics are the soul, data is truly the heart of Merkle’s business. And it is Merkle’s content solutions group that decides which of the vast amounts of information available from a cluttered field of industry sources will be most effective in driving marketing results for clients. Craig Dempster leads a dedicated, data-loving team of industry experts, content analysts and strategists to determine the most valuable mix of data assets that will achieve optimal marketing performance.

The science side of data:“There’s an art and science to this whole process, but not a lot of people focus on the science side. We do. We’re data agnostic — we don’t own any data ourselves. So we’re unbi-ased. All we care about is acquiring data content that will help produce a better result and a higher return on invest-ment for our clients.”

Dealing with lots of data: “At Merkle, we create more than 700 models each year from a staggering amount of data — we source more than two billion records monthly, with over 2,500 different market-ing variables, representing 270 million unique individuals and 125 million households. That’s a lot of data.”

Passionate recruitment:“Beginning in 2000, Tim Berry, Patrick Hennessy and David Williams started to recruit me — but at that time Merkle just didn’t have the scale I was looking for. But in 2006 I saw what it was doing in the marketplace, and Patrick said, ‘Craig, I think that it’s time you joined.’ I was down in Florida on vacation and Tim and Patrick actually came down and played a round of golf with me. That’s a big part of who we are, we’re so passionate about recruiting — our belief is you have to treat a top recruit like a top client.”

A smart team: “At most organizations, you can walk around and say, ‘he’s smart, yep, she’s smart,’ and then skip a bunch of people. But here you walk in the door and everyone that you inter-act with is smart. It’s a testament to our recruiting process, to our evaluation of our employees and to the rigor that we have in developing the best people in the industry.”

Serious stick poking: “We like to poke and needle each other, and never take ourselves or even the meeting we’re in too seriously. I think that’s why we’re successful with customers. We’re comfortable with who we are and we want customers to see us for who we are. Laughing at ourselves is what keeps us sane — we’re a $200 million business that’s acting like $2 million business about to go under. That’s the pace we run at, and that’s what makes it exciting.”

Content solutionsDetermining the right mix of data


The integration of Merkle’s six core competencies drives its superior client results CAPABILITIES

Christian Wright, Chief Technology Officer

In 2007, Christian Wright took on the newly created posi-tion of chief technology officer at Merkle. He is respon-sible for defining the value proposition and architecture of Merkle’s technology products and services. Wright says that his job is about actively taking on the company’s internal mantra of “cheaper, faster, better” — in terms of improving operational costs and performance. But it’s also about being viewed as the industry leader in marketing technology solutions.

Speed of change:“The great thing about being in technology in the market-ing industry is that marketing systems constantly change and evolve. Every three or four years, you get a revolution in technology that creates something new and better to meet the changing needs of marketers. As a technologist, you can’t ask for a better, more entertaining scenario.”

Leading the ongoing technological evolution:“Right now, we’re working on several large projects that are going to shape our technology offering over the next few years. The scope and influence of marketing is changing and growing, and our technology platform needs to support it. As convergence becomes reality, the nature of our marketing technology solutions will continue to evolve.”

The typical Merkle employee: “I’d say strong-willed, independent, free-thinking, team-oriented and driven. You have to be an independent and creative thinker at an individual level, but you’ve got to be willing to sacrifice and compromise for the sake of the team. People will say, ‘I’ll bat third today instead of fourth,’ because it’s better for the team.”

Joining Merkle: “Opportunity was the key word. I wanted to join a company that was in a stage in its lifecycle where I could have a large impact. For me it’s about the upward trajectory, trying to change the way things are done. It’s a great opportunity to make sure things are done differently and we’re not stuck in a legacy investment from 10 years ago.”

Best part about being at Merkle: “Hands down, it’s the quality of the people — to be able to go anywhere within Merkle and work with great people. There’s nothing more disheartening, especially in larger organizations, when you’ve got an organization full of dull-ards or people not working to the same corporate goals as you. We don’t have that problem.”

Database servicesMarketing technology enablement

Anne Alden, Creative Director

Merkle may have been founded on data and analytics, but these days Merkle is also known for its evidence-based creative work, developed using the knowledge uncovered by Merkle’s quantitative insight and enabled by its market-ing and database work. Anne Alden leads a group of designers, copywriters, Web developers and editors who partner with clients to create integrated online and offline marketing solutions that drive customer acquisition, retention and loyalty.

Dealing with data vs. creative:“Merkle creative is a lot different than most agencies, in that we’re stewards of brands, not necessarily the creators of brands. I came to Merkle because I liked the idea of getting my hands on the information I needed to succeed — the analytics, the data and reporting — so I could really understand customers and users. I love evidence-based creative, because you need to have a good concept [that is] proven to work.”

Learning about the target customer:“In the traditional agency, everybody brainstorms and comes up with ideas and then pushes that idea out to the masses. That’s not our way. Every day we’re learning some-thing new about the customers. For me, that dialogue is the heart and soul of marketing.”

creating a common voice for the client:“Data helps us coordinate efforts to reach the right audi-ence with direct mail, e-mail and so forth. Instead of shouting at them from different directions, we want to create a common voice for our client, so we’re not pum-meling consumers from different directions or not talking directly to them at all.”

Being a creative in a company full of techies:“The technology and data people are kind of creative, too, in their own way. They’re not just crunchers and they all have interesting personalities. And we help them realize that the type of creative people here are not the black turtleneck-wearing, big-glasses-types. We’re real people that happen to have a talent for, and a love of, good creative. We definitely do our best to break that ‘agency creative’ stereotype.”

That other conference room: “We do a lot of fun stuff here in Denver. We have a micro-brewery downstairs in our building, called the Rock Bot-tom Brewery. We’ve started to call it ‘Conference Room R.’ A lot of bonding goes on in that conference room. We’re all willing to go blow off steam and then check it at the door.”

Creative servicesIntegrating right- and left-brain approaches

Peter Harper, Vice President, Production

Sometimes it pays to be organized. When Merkle acquired direct marketing agency CFM Direct in 2007, Peter Harper was recognized as a standout asset and a welcome addition to Merkle’s production group, which integrates analytical insight with creative and production management processes to ensure the best possible marketing outcomes. With more than 18 years of direct marketing experience, his team helps identify opportunities to streamline production processes and improve efficiencies.

An efficient childhood:“I’m organized. I keep things in their spot, but I’m not crazy obsessive about it. I think it started because my father had his own business and I worked for him. I was like, there’s got to be a better way to do this or that. I always wanted to find a good way to do things. I married someone who’s also effi-cient, so that helps now — I don’t have to be as efficient.”

Being an enabler: “We think of ourselves as enablers. The production team has a constant presence throughout the campaign process, ensuring what is being developed can be produced effi-ciently, on time and within budget. Our philosophy is that strategy and execution work hand in hand, driving each other for the best outcome. The result is an environment of continuous improvement — enabling knowledge to improve performance.”

consultants first: “Our team is continuously challenged to improve on a variety of metrics — speed to market, cost, quality, effi-ciency and, of course, results. We are consultants first. We partner with industry-leading vendors to improve bottom line efficiencies, and we’ve achieved millions of dollars in production savings opportunities for our clients — sav-ings that they can use to plow back into their businesses for other uses.”

Since the acquisition:“It’s been good — everyone has always been pretty easy to work with. They’re open to finding a better way to do things, and ready to change if things need to change. We really clicked, because the cultures of our companies were very similar — the positive attitudes, the belief in the people — which is unique.”

Biggest challenge of working at Merkle:“Just keeping up with the pace, with the evolution of where things are going. It’s a large company and there’s a lot of change.”

Production managementFull-service direct mail production execution


WO

RK

TheSituationThe Teachers Insurance and Annuity Association — Col-lege Retirement Equities Fund (TIAA-CREF) provides savings and investment opportunities in preparation for retirement. One of many services TIAA-CREF provides is Independent 529 Plan, a prepaid tuition plan specifically directed towards private colleges and universities. Merkle has worked with TIAA-CREF since 2004, and began managing the paid search program for Independent 529 Plan in November 2007.

ChallengeFor Independent 529 Plan, the major online conversion metric is called an “Inquirer” — a visitor to the Web site who completes a request form, receives additional materi-als by mail and is added to the prospect e-mail contact path. Independent 529 Plan’s goal was to increase the number of Inquirers while holding costs down. The plan’s business leaders and legal advisors were reluctant to create additional pages, which posed a challenge.

TIAA-CREFOnline inquiry acquisition program

Regions BankChecking account acquisition campaign

SituationRegions Bank, a top 10 US bank with branches located throughout the southeastern US, provides a variety of business and consumer financial services, including retail banking. Merkle developed a campaign focused on acquir-ing new checking account customers with household incomes of more than $50,000, and new movers within Regions’ footprint, based on the insight that half of all households that open or switch to a new checking account base their decision on “life events” such as moves.

ChallengeThe first challenge was devising a way to to draw consum-ers from their current banks, because switching banks is perceived to be difficult and consumers are typically

pleased with their current banks. The next challenge revolved around gaining more affluent consumers and the company’s ability to portray the bank’s checking account offer as high value. The final hurdle was attaining bank-able customers in a cluttered marketplace already full of “Free Checking” promotions.

ApproachMerkle developed a direct mailer and designed several versions with messages built around the targeted consumers’ demographics. Based on the targets’ different life stages, Merkle eliminated or added one or more of the bank’s checking product features in an effort to portray Regions Bank as a “something-more” company.

ResultsThere was a 60% increase in new account openings from the third quarter to the fourth. The mailed population also beat the non-mailed by 20%.

ApproachMerkle met Independent 529 Plan’s cost and conversion goals by enhancing keyword strength, as well as updating and expanding the existing tracking and analytics systems to boost online tracking and to incorporate offline track-ing. In collaboration with the plan’s team, Merkle designed creative that performed exceptionally well against the existing control norms. Merkle also developed and imple-mented additional enhancements to both the home page and landing page in a non-invasive manner that fit within TIAA-CREF specifications.

ResultsThe revamped home page drove the Inquire rate beyond 140%. The second-stage, new landing page further increased the Inquire rate by 340%. Future plans for the program involve more demographic targeting, additional multivariate testing to optimize results, and rolling out findings within paid search to other parts of the site to increase overall conversion rates.


GMAC Financial ServicesCentralized marketing database

SituationGMAC Financial Services is a diversified, global financial services company that operates in approximately 40 coun-tries in the automotive finance, real estate finance, insur-ance and commercial finance sectors. The company began working with Merkle in early 2008 on database services, analytic services and database marketing strategic support.

ChallengeThe company had been operating its lines of businesses relatively independently, without any platform to support its cross-enterprise marketing activities. Merkle began developing a centralized marketing database to support enterprise-wide marketing analytics and campaigns.

ApproachMerkle deployed a customer data management solution that integrated GMAC customer data across its lines of business, incorporating Merkle’s best practices for household, individual and residence matching. Merkle also conducted deep discovery to define the requirements to support key marketing activities. Merkle’s analytic and strategy teams have supported short-term initiatives to better prioritize infrastructure functionality and to increase cross-sells, value and retention.

ResultsMerkle’s full marketing solution is still in development. So far, it has provided a consolidated view of the customer across GMAC, which has enabled initiative sizing and analytic activities. This view is currently being used as a platform for targeting models, campaign planning and high-level reporting.

SamsungNew consumer appliance product launch

SituationFounded in 1938, Samsung is a global leader in the develop-ment and manufacture of innovative products, with a core focus on consumer electronics, mobile phones and technol-ogy products. Samsung supplies bricks-and-mortar retailers, as well as online retailers, with a wide range of consumer electronics, telecommunications and technology products.

ChallengeSamsung called on Merkle for analytics, strategy, targeting support, creative and interactive services to help introduce its new appliance, an innovative new oven range, while building awareness for Samsung’s home appliance product line.

ApproachIn order to drive traffic to oven range pages and increase sales of the new oven range, Merkle created an e-mail that featured product details and competitive comparisons, technical specifications and a link to learn more at sam-sung.com. The recipient list was carefully chosen, based on past open and click behavior. The target audience included engaged e-mail subscribers who opened in the last 12 months. This proved to be effective with an open rate of more than 18%.

ResultsTraffic spiked on the Web site when e-mails were deployed. Sell-through data showed a jump in sales of the oven range online during the week the e-mail was sent (the range was not yet available in stores). Sales also spiked in retail stores the week immediately following the deployment. Since Samsung does not sell generally direct-to-consumer, the exact attribution of sell-though to this email cannot be calculated. However, taking other variables into consider-ation, Samsung witnessed a 30% lift in sales around the deployment of this e-mail.

DIRECTVMarketing technology platform and analytics

SituationA Merkle client since 2001, DIRECTV has delivered satellite-based television services to residential and business customers nationwide since its launch in 1994. Merkle has worked with the company since 2001 to support the launch of DIRECTV’s direct sales organization as a core compo-nent of its growth and go-to-market strategies.

ChallengeDIRECTV wanted to increase the frequency and size of its direct mail prospecting campaigns while reducing the time needed to execute and deliver final mail files to print vendors. Merkle was tasked with building an enterprise marketing technology platform and giving DIRECTV sophisticated analytic capabilities.

ApproachMerkle implemented a Marketing Knowledge CenterTM to increase data warehouse performance, and also created an enterprise class campaign management tool. To enhance postal processing and hygiene, Merkle implemented Knowl-edgeLink to allow for daily updates of all inbound sources and feeds. Merkle also provided marketing analytics capa-bilities that enable DIRECTV to build customer acquisition models and leverage local performance data.

ResultsThe Marketing Knowledge Center is refreshed daily and processes millions of records and data sources daily, allowing daily monitoring and evaluation by DIRECTV executives. CDI processing delivers significant cost savings to DIRECTV, and campaigns are now executed in half the time and at 250% greater output capacity.

CARE USADonor campaign to support girls’ education in Afghanistan

SituationCARE is a US-based nonprofit international humanitarian agency that focuses primarily on fighting world poverty. In 2006, Merkle worked with CARE to launch the “I Am Powerful” campaign, which exposed the plight of women and girls who disproportionately suffer in impoverished communities. As part of the campaign, Merkle developed a direct mail package that targeted donors for whom the message of education for girls would resonate: educated, affluent American women.

ChallengeThe project’s biggest challenge was that the “I Am Power-ful” program had to be created from scratch. It lacked an established group of core donors, and therefore needed to do the heavy lifting of converting one-time donors into loyal, more frequent contributors. The campaign targeted women, age 35 and older, who were married, mothers, well educated and had a household income of $60,000 or more — women who research indicated, respond to CARE’s core issues.

ApproachMailings were sent in August, just before the start of the school year in the US. Messaging informed donors that $49 would help pay for a year’s tuition for one girl in Afghanistan. Each mailing included an eyewitness trip report from Dr. Helene Gayle, CARE President and CEO, that told the story of a young girl’s education before and after CARE’s involvement. A key component was an involvement device: a 16-centimeter plastic ruler upon which the donor was asked to write a personalized note of encouragement to a girl studying in Afghanistan.

ResultsWhile fiscal year 2007 produced modest results for a newly launched campaign — a response rate of 2.36% and a gross yield per thousand (GYPM) metric of $1,100 — the GYPM leapt 52% in FY08 to $1,675 and the response increased to 3.52%.


Depending upon the time of day, visitors at Merkle’s offices might hear the unmistakable sound of billiard play in the distance. Or, they may see an employee expertly operating an espresso machine. In the late afternoon, they might observe a yoga class in session or hear quiet con-versation from a group gathering in the café area. Inevitably, the question leaps to mind: Where do I sign up? But, hang on — things aren’t as simple as that.

Merkle’s distinct culture is enriched, but not embodied, by employee ameni-ties like fitness classes. Instead, company values like “desire to serve,” “desire to learn” and “desire to achieve,” hint at the organization’s core characteristics. Merkle’s people serve each other as well as clients. They are expected to achieve personally as well as professionally. More importantly, experience, desire and even strong skills don’t necessarily guarantee job applicants a place at the company. “We interview on competence and hire on attributes, and we hire only the best of the best,” says Don Patrick, executive vice

president and chief operating officer.Joining this community of friends,

scholars and high achievers isn’t easy. Prospective employees meet with five to eight interviewers representing a cross-functional group made up of Merkle managers and staff. “We all have a stake in the hiring process and preserving our culture — hiring the most competent candidate isn’t enough,” says senior vice president Kelly Kennedy. Next, the can-didate — regardless of level — delivers to the interview team a formal presentation germane to his or her area of knowledge or expertise. After rating candidates on a scale of 1 to 10, the interviewing team caucuses to decide whether or not the candidate should be hired by voting yes or no. A “yes” vote requires a rating of 9 or 10.

New employees attend Merkle Boot Camp, a week-long orientation. But post-boot-camp employees don’t stay up-to-date by studying monthly indus-try journals. Instead, ongoing education and training — in the form of the com-pany’s in-house Merkle University — are

integral parts of the company’s culture, emphasizes Martha Spivey, director of workforce development. In the second quarter of 2008, the company offered over 250 classes, most conducted in a live classroom format during the workday.

The “university” is highly structured, led by CEO David Williams and a com-mittee of seven other Merkle employees. It is comprised of four “schools” — Data-base Marketing, focusing on industry client solutions; Technology, focusing on the variety of tools used by Merkle; Employee Development, which includes personal development, leadership and management training; and Operations, focusing on understanding best practices and client-specific execution skills.

Attendance at Merkle University is required of every employee, explains Deney Lam, senior manager of quantita-tive solutions, who is a co-dean of Merk-le’s Database Marketing School. “You can’t get a compensation increase if you don’t complete educational credit require-ments set for your level,” he says.

Credit requirements range from 10 for non-exempt Merkle associates to 75 credits for company vice presidents and above. As CEO, David Williams is required to accumulate 150 credits each year. Each hour of course work generally yields one credit for the student and five credits for the instructors. This furthers Merkle’s goal of creating a company of teachers, rather than a company of students.

Complementing the company’s robust formal education is Merkle’s mentor pro-gram, which encourages sharing of prac-tical knowledge and expertise between veteran employees and rising stars.

“I’ve benefited from mentors through-out my career and it just seemed natural to get a formal program going here at Merk-le,” says senior director of content strategy, Lisa Donnelly, who created the program and enlisted Spivey’s help to get it off the ground. The program began with 10 pairs, but now 40 pairs have signed on. Each is required to work together for six months to build skills in specific areas, such as people management. “Most pairs continue the relationship,” adds Donnelly.

The company’s strong emphasis on learning is what drew Stephanie Laud, director of database solutions — and also a co-dean at the university’s Database Marketing School — to Merkle. “I’ve learned so much from so many smart people at Merkle,” she says. “My passion centers around delivering the best for our clients, and the company’s requirement that we continue to learn is one more way we drive marketing results.”

left: Merkle University is an integral part of the company’s culture.below: Lisa Donnelly, senior director of content strategy, created Merkle’s mentor program

ROLLHOW WE


Merkle’s rigorous standards and unique culture attract the best of the best — those who make the cut have the chance to grow, learn and dream big

On July 28, 2008, on the second day of a wilderness survival expedition in the remote, rugged terrain of southern Utah, Erin Hutchinson felt herself slipping away, experiencing complete and utter helplessness for the first time in her life. “I thought to myself, ‘this is ridiculous. No way am I getting out of here alive,’” recalls Hutchinson, who is Merkle’s direc-tor of marketing events. Seven months before, she and two other Merkle employees – Susan Klasmeier, manager of marketing communications and Kathryn Conway, manager of public relations — had applied for a Merkle Dream Grant, which offers employees the company-funded opportunity to complete a life-changing adventure.

Each quarter, the company offers a Dream Grant to one individual and one group. “The grants are meant to partner you up, and put you in a situa-tion that you’ve not been in before or never had the opportunity to be in,” explains senior director Lisa Donnelly, who used her Dream Grant to go on a dog sledding adventure in Ely, Minnesota. “It’s about team building, where you’re made to rely on your co-workers.”

Other Merkle Dream Grants have made it possible for employees to help Hurricane Katrina victims in New Orleans, climb Mount Rainier and swim with sharks in Costa Rica. Renee Canfield, who accompa-nied Donnelly to Minnesota, said Merkle employees are naturally competitive, so they search for adven-tures that are as creative and challenging as possible.

Klasmeier and Hutchinson had to convince Con-way to go along with their idea of a survival expedi-

tion. “It didn’t really sound like something I’d always dreamed of doing. I asked them, ‘Can’t we apply to go to Fashion Week or a film festival?’” laughs Conway. “But they convinced me. We’re all competitors. The crazier and more challenging adventures are the ones that win the grants.”

The three women were joined by nine other adventurers, all of them male. After hiking 40 miles in rugged, mountainous terrain over the first two days of the seven-day trip, Hutchinson suddenly grew ill from altitude sickness, a condition caused by rapid ascent and acute exposure to low air pressure at altitudes above 8,000 feet. Severe symptoms often include dizziness, nausea and vomiting.

Hutchinson said all her companions sacrificed their water rations to comfort her and keep her hydrated, even though they didn’t know when or if they’d find water again. “In that moment, it was amazing to see how everyone responded — my Merkle friends and people who didn’t know me at all,” she says, adding that she recovered fully by the next morning and suf-fered no lingering effects.

The most important lesson she learned, says Con-way, was how to stay optimistic in the face of severe trials. “It’s about looking at the positive,” she recalls. “When I was sleeping on the ground, instead of wish-ing I had a blanket, I thought, ‘I’m really glad it’s not raining.’” All three women say they were tested physi-cally, mentally and emotionally, and they’re thankful to Merkle for giving them the opportunity to challenge themselves. “It was an incredible, life-changing experi-ence for all of us,” Conway says.

Living the dream

Ron Park is proof positive that working at Merkle pays off in more ways than one. Park, who joined Merkle in 2003, was promoted this year to vice president of quantitative solutions and was also the ninth recipient of the company’s Chairman’s Award — given annually to the employee judged to have made the biggest impact on the company in the previous year. Best of all is the prize that comes with the award: a two-year lease on a new BMW — in Ron’s case, an X5 SUV.

“It was pretty exciting,” says Park, who went with his wife to pick out his new car a few weeks after receiving his award. But clearly this perk is not the main source of his happiness at Merkle. “I joined Merkle because of the people I met,” he says, grin-ning. “We have great natural resources here.” Not surprisingly, he says he loves his job, which involves data analysis, segmentation and modeling. “Every day is different, and working at Merkle forces you out and beyond your comfort zone,” he explains. “It’s fast paced, but people don’t take themselves too seriously.” Park says he especially appreciates the company’s emphasis on doing the right thing for clients and going the extra mile. “What’s best for the client is always best for us, too,” he says.

So how does Park feel pulling into the parking lot every morning in his Beemer? “Well, actually my wife drives the car most of the time,” he says proudly. “Sometimes, I work late hours and travel. Hopefully, the car makes up for some of that.”

The Chairman’s Award gets employee motors running

Merkle grants employees the times of their lives

Big impact brings big rewards

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FUTUREAs we celebrate 20 years of success at Merkle, I am very proud of what we’ve achieved and how far we’ve come as a company. The quality of our staff and our clients would have been hard to imagine 20 years ago. Back then, I had just two things on my side – youth and naivety. They allowed me to dream big, take risks, challenge the way things were done, and have confidence that our vision for this company’s future could be reality. But our accomplishments of the last 20 years are not mine alone. I share them with over 1,000 talented employees who have the desire and the skills to innovate in every area of our business, and I also share them with an outstanding group of world class customers that give us the opportunity to push the envelope each and every day.

Database marketing is still in its infancy. In the future, the role of database marketing – the role of facts, insight and informa-tion in marketing - will continue to expand to inform the entire marketing enterprise from media mix and targeting, to offer development and pricing strategy, to merchandising and store locations, to customer relationship management and lifecycle optimization. Indeed, there is significant opportunity ahead for this industry and that’s energizing. I am more excited today than I was a decade ago and I expect to feel more excited a decade from now. We have no finish line at Merkle. We are constantly asking ourselves, “What can we do better?” To that end, I firmly believe our best work is still ahead of us.

My goal for Merkle has not changed in 20 years: Build a great company. A great company has the best people and the best clients. The best want to work with the best, it’s that simple. This is the formula that yields great work and great results, which are the fuel for our innovation, growth, and continued success. Although we have many achievements to celebrate, we are nowhere near done with what we set out to do, which is to create a real industry around information-based marketing. I can’t think of a company that is better positioned to capitalize on the market opportunity that faces us. We have spent 20 years preparing for this moment.

I believe that Merkle’s greatest strength is its culture and as long as we keep challenging ourselves to be better, while focusing on having a real and substantial impact on our clients’ busi-ness, coupled with a strong vision for the future of database marketing we will continue to be successful. Building a great company is not easy, if it were everyone would be great. Build-ing a great company is about vision, discipline, desire and execution. That is what we will continue to focus on in the future as we continue our journey of building a world-class database marketing agency.

David Williams, President and CEO

A BRIGHT

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