The news last week that MasterCard plans to acquire Applied Predictive Technologies deserves a bit more attention.
Applied Predictive Technologies (APT) is a provider of software and services for designing and evaluating a variety of tests: marketing, merchandising, promotions, price, and store configuration. Applied Predictive Technologies brings to new corporate sectors the software and skills associated with experimental design and analytics. Until recently, this skill set has been available only to sophisticated online advertisers, pharma companies (for clinical trials), and a few others sectors that could afford eggheads with this knowledge.
Applied Predictive Technologies bills itself as cloud-based software, but I suspect it has a heavy services component in training and support, as it is famous for hiring bright undergrads in substantial quantities. Applied Predictive Technologies’ client base is largely brick and mortar retailers, consumer packaged goods companies, and restaurant chains, but it is not limited to those areas. Here’s a selection of clients from the Applied Predictive Technologies corporate fact sheet:
Applied Predictive Technologies’ acquisition by MasterCard is interesting for several reasons:
1. APT has nothing to do with payments. Applied Predictive Technologies’ customers are, however, major merchants processing millions of MasterCard transactions. For MasterCard, APT represents a real driver of merchant value separate and distinct from payments processing. MasterCard’s addition of APT is a substantial step into adding value on the “other side” of the transaction. (MasterCard has long had a consulting presence on the issuer/corporate side.) At $600 million (probably about 6x revenues) Applied Predictive Technologies is not a huge transaction, but it is no token step either.
2. It will be interesting to see if the payments processing part of the business can benefit in any way from this association and vice versa. Maybe APT can help merchants test the effect of no longer accepting American Express, Discover, Visa, cash or PayPal! MasterCard, one would think, could certainly help move APT more into the financial services world. Card issuers, bank branches would all seem to be fertile ground for APT’s products.
3. Applied Predictive Technologies’ acquisition represents a nice win for Accel-KKR which invested $54 million in APT in 2006 and, to a lesser extent, Goldman Sachs, which put in $100 million just two years ago. It is also a nice win for a local, DC B2B start-up, which I always appreciate.
Over 15 years, APT built a solid business applying basic testing and analysis principles (“Test and Learn” is the name of their flagship product) right under the noses of IRI, Nielsen, JDA, Oracle/Retek and many others. You would have thought this would have been impossible, with giant software and analytics companies all about. Applied Predictive Technologies has my admiration and MasterCard’s money–which is much better than the reverse!