The acquisition lassos new search, network sales and ad trafficking capabilities into the U.K.-based agency conglomerate's corral.
In a move that will bring it new search, media sales, and publisher-side ad technology holdings, U.K.-based agency holding company WPP has agreed to buy 24/7 Real Media.
The long-rumored deal, valued at $649 million, is expected to close around the end of July. Key management will stay with the business.
WPP executives said the company had been in talks with 24/7 Real Media for about a year. Early discussions focused on technology and media partnerships, but executives suggested the up-tick in acquisitions in recent weeks motivated the company to pursue a buy.
24/7 Real Media has three business units. From its founding in 1995, its original focus was digital media sales, an area that still provides significant revenue and growth for the company. Its youngest business and biggest money maker is search marketing, where the company has experienced the most dramatic growth in recent history -- over 60 percent last year. However, its ad trafficking and reporting platform, Open AdStream, appears to be what sparked WPP's overture most.
WPP Strategic Director Mark Read said that's because "the market's been evolving extremely rapidly particularly over the last few weeks." He pointed to the acquisition of DoubleClick by Google, that of Right Media by Yahoo and, most recently, that of AdTech by Time Warner's AOL division.
"There has been a tipping point in terms of the realization of the significance of these types of technologies," said Read. "What we're starting to see is larger clients, who tend to move a little more carefully and a little more slowly, starting to look at this area with more intensity. You can anticipate there will be a faster shift in the future."
Adding to its appeal is 24/7's global footprint, particularly in Japan, which mirrors WPP's own international focus. Other strong markets include Canada and South Korea.
WPP's digital holdings include GroupM, Grey Interactive Worldwide, OgilvyOne and Young & Rubicam's just-launched interactive unit. The company estimates digital accounted for approximately 9 percent of 2006 revenues, compared with a global digital share of the overall ad spend at around 6.6 percent.
With the acquisition, WPP will join a small club of agency groups with in-house ad management offerings. Avenue A/Razorfish also possesses ad serving and network capabilities with its Atlas ad technology unit and DrivePM performance marketing units. Google's pending purchase of DoubleClick will put all the large ad trafficking companies out of play.
24/7 Real Media's Open AdStream platform also recently added mobile ad serving to its capabilities, signaling a future area of competition between the ad trafficking firms.
Holders of 24/7 Real Media will be paid $11.75 a share, a 30 percent premium over the company's average closing price over the past two months. Lehman Brothers and Piper Jaffray & Co. were financial advisors on the agreement.
The agreement is a blow to Microsoft, which was rumored to be aggressively pursuing 24/7 Real Media after losing out to Google in a bid to acquire DoubleClick. 24/7 Real Media is one of a very few independent companies with a global footprint in both ad trafficking and media sales. Another is aQuantive, which has consistently stated its intention to remain an independent, pure play digital firm.
Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects.
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