Putting the Parts Together

Some mergers go badly. Think DaimlerChrysler AG or AOL Time Warner.

Indications are Automatic Data Processing Inc. is making the right moves in blending newly acquired Cobalt Group Inc. into the fold.

“There have been some early throes of mapping it out, and both sides are figuring out how to leverage each other's assets,” says Steve Anenen, president of ADP Dealer Services and the merger's chief overseer.

But the two entities share similar strategies, core values and philosophies on customer treatment, he says. “It makes the merger a lot easier.”

ADP's dealer-services unit, with annual revenues of about $1.5 billion and 25,000 clients in 98 countries, is one of the world's largest providers of dealer-management systems and other information-technology services.

It plans to get even bigger and more far-reaching with its enhanced digital- marketing efforts. “The grand vision is to take all that we do in North America and do it globally,” Anenen says.

That's a big reason it purchased Cobalt for $400 million this summer. “Nobody is better in digital marketing than Cobalt,” he says. “We want to play to each other's strengths.”

John Holt founded Cobalt in 1995 as an automotive website-design firm. It is now involved in many online activities, particularly digital marketing. ADP had played a bit in that game. With Cobalt, it expects to be a major leaguer.

Holt now is senior vice president of ADP's Digital Marketing Group. He'll lead all of ADP's digital-marketing efforts, working with dealers and 11 auto makers.

His assuming such a vital position within ADP is evidence of a smooth merger. Holt reports to Anenen, and Cobalt as a brand remains alive and well.

The Internet game has just begun, Holt says. “After 15 years of my life doing this, we're only in the second inning. Whether it's mobile or social media, there always is going to be something.”

At Cobalt, Holt tried to get auto makers and dealers to work closer together on marketing efforts by coordinating ad spending and staying on the same message.

He also advocates the two groups use digital marketing to nimbly leverage campaigns that work and quickly reel in those that don't by using analytics measuring consumer responses.

“My charter from Steve Anenen is to continue to grow those things,” Holt says. “The beauty of this industry is that it is both huge and intimate. But it can also be inefficient.”

Dealer reaction to the ADP-Cobalt hookup largely has been positive, but not without some questions, says Kevin Henahan, ADP's senior vice president-marketing.

Some concerned dealers wanted to know if they will receive unequal treatment if they are Cobalt customers but get their DMS services from a provider other than ADP.

“The answer is, ‘No,’ they will not be treated unequally,” Henahan says.

Dealers also expressed concern at the possibility of paying twice for duplicated services. That will not be the case, he says.

Meanwhile, the goal of the ADP-Cobalt merger is to make the whole greater than the sum of the parts.

So far, so good, Anenen reports. “It says volumes about the maturity of both organizations.”