WPP, the world’s second-largest advertising group, has decided to acquire 24/7 Real Media, the US digital marketing company, for $649 million, the company said in its announcement. The takeover has marked the continuing the trend of consolidation in the online advertising space. 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. The move reflects changes in the marketplace, noted WPP CEO Martin Sorrell.
The firm has that WPP will independently run 24/7 with existing management in place, and it will be part of WPP Digital. WPP is a huge advertising corporation whose holdings include high-profile Madison Avenue firms such as Ogilvy & Mather and Young & Rubicam. The company’s 2006 revenues were almost $12 billion.
The acquisition is an indication of the craving of traditional marketing firms to be able to offer their clients Internet advertising expertise, business they are otherwise at risk of losing to online players such as Google, which are alarmingly offering off-line marketing options as well alongside their Internet services.
The purchase extends a recent chase of consolidation in the sector, 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 had said that it would acquire Digitas for $1.3 billion. With buying firms with interactive experience, ad agencies are gaining access to technological expertise they might otherwise lack.
