WPP has agreed to invest $25 million in analytics and optimization firm Omniture. The move exhibits WPP’s ongoing strategy of investing and acquiring technologies to enhance its consulting capabilities. The deal could further establish Omniture’s foothold among existing and new agency partners and ad clients.
As advertisers and their agencies deal with media digitization, they’ve found themselves struggling to make sense of reams of data collected through consumer interactions with their ads and Web sites.
“There’s a lot of information and not enough insight,” said Mark Read, WPP’s director of strategy and CEO of WPP Digital. The deal “will create better insights for our clients…and as a result generate more consulting revenue for WPP,” he said.
The investment also reflects WPP’s efforts to diversify its revenue streams, which could prove especially prescient as ad spending plummets. However, the partnership also fulfills the company’s goal to provide more quantifiable solutions to its clients. According to Read, about $4 billion of WPP’s $50 billion in revenue comes from its consulting business.
“There are so many agencies that don’t embrace technology, and WPP really embraces technology,” said Josh James, CEO of Omniture. WPP’s commitment is especially relevant during the economic decline as advertisers reduce ad spending and need to know what to cut and how to ensure the remaining budget performs effectively.
“It puts them in the position to have even tighter relationships with their customers…and spend their customers’ dollars more efficiently when they’re placing ads,” added James. Around 200 of Omniture’s clients are ad agencies. Some of Omniture’s current partners are WPP-owned firms, including GWT, Ogilvy, and ZAAZ; 30 of WPP’s top 50 advertiser clients have Omniture installed. The deal with WPP is not exclusive, said James.
Both James and Read spoke to ClickZ News from Davos, Switzerland, where they were attending the annual World Economic Forum.
WPP has been on a tech- and consulting-centric trajectory in recent years, acquiring market research firm TNS in October 2008, and snapping up 24/7 Real Media in 2007, in part for its ad management platform, Open AdStream.
Open AdStream is already integrated with Omniture’s Genesis system, which centralizes marketing applications and reporting, according to James. The companies plan to connect Genesis with several WPP-owned technologies including audience networks and search marketing systems from 24/7 Real Media and GroupM, and TNS’s data-related products.
The partnership could prove beneficial for Omniture by reinforcing relationships with existing agency and advertiser clients, and introducing the firm to new customers. WPP’s promise to train 500 of its current employees on Omniture’s products could be valuable, especially in helping Omniture educate marketing execs about recent offerings. “We only had one product until 18 months ago,” said James, noting the firm now offers around eight products.
“[Clients] want consulting to go along with the technology that they buy from us,” he continued. “It’s important to us to have the industry and partners and customers really understand that there’s definitely an online marketing ecosystem being built up around the data that we manage for our customers.”
Omniture is cash-flow positive, according to James, but the company expects to use WPP’s investment toward improving its products. In terms of product development, he added, “WPP can now be there giving insight based on what they hear from their customers.”
Analytics comprises only a portion of Omniture’s business, said James, who expects the firm’s optimization business to continue growing. Half of Q3 2008 bookings were for its optimization products which optimize things like ad spending and landing pages, and enable personalization. The company plans to launch a recommendation engine similar to Amazon’s, according to James. “Over time the majority of our revenues will come from those things.”
Read said WPP has no immediate plans for more analytics or research-related investments, yet he did note the firm will “continue to develop [its] presence” in the sector.
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