WPP ad agency company, based in the UK, has announced the acquisition of 24/7 Real Media for dollars 649 million. London-based WPP has agreed to pay US$11.75 per share for 24/7, WPP said, giving the all-cash deal a value of $649 million.
WPP, UK-based advertising giant has agreed to acquire interactive marketing firm 24/7 Real Media for $649 million, continuing the trend of consolidation in the online advertising space. The company has three main businesses: a CPM-based display ad network, publisher-side ad-serving technology, and a search marketing consultancy.
In recent weeks, Microsoft was rumored to be a top contender among 24/7’s suitors.
New York-based 24/7 made it known earlier this month that it was in the market for an acquisition partner. Among those believed to have made overtures with the company is Microsoft, which was looking to answer Google’s acquisition of another online ad firm, DoubleClick.
The 24/7 search business was built from acquisitions of Website Results in 2000 and Decide Interactive in 2004.
WPP is a massive advertising conglomerate whose holdings include high-profile Madison Avenue firms such as Ogilvy & Mather and Young & Rubicam. The company’s 2006 revenues were nearly $12 billion.
WPP was motivated by the strong growth in the online advertising sector, which it said will be worth $33 billion worldwide this year, making up some 8 percent of all advertising spending.
On the search side, WPP already owns Outrider, now part of MEC Interaction, and Boston-based Catalyst. According to WPP’s statement, 24/7 will increase search spend under WPP’s management by $200 million, “taking search volumes to more than $450 million and adding a robust technology platform for managing search.”
The move reflects changes in the marketplace, noted WPP CEO Martin Sorrell. “Our clients and therefore our industry are becoming more media- and technology-driven,” he said.
This acquisition seems to be more about the ad network and ad-serving technology, as that is the focus of much of WPP’s announcement.
The deal extends a recent run of consolidation in the space, which includes Google’s $3.1 billion purchase of DoubleClick, as well as Yahoo’s decision to pay $680 million for the outstanding stake of Right Media. Late last year, France’s Publicis said it would acquire Digitas for $1.3 billion.
With 24/7, WPP gets a firm that does search engine marketing consulting and has an ad placement platform that works with major Web publishers and systems for tracking and reporting on the effectiveness of ads.
24/7 offers a host of online capabilities in a single purchase, noted Sterling Market Intelligence analyst Greg Sterling. “This is about having the necessary digital assets to compete,” he added.
The deal would not be a short-term boost to WPP’s earnings, the company said, adding that it was buying a fast-growing company, with 24/7 having posted 43 percent revenue growth for 2006. It also has important assets in online media — where its ad network includes 950 sites that draw 115 million users each month — search and technology, where its ad platform is used by more than 400 clients.
WPP will independently run 24/7 with existing management in place, and it will be part of WPP Digital, according to WPP..