NEW YORK (AP) – WPP Group PLC, the world’s second-largest marketing conglomerate, is buying online advertising company 24/7 Real Media Inc. for $649 million in the latest deal to plunge media and technology companies further into the Internet advertising boom.
The deal announced Thursday came fast on the heels of Internet search leader Google Inc.’s $3.1 billion acquisition of DoubleClick Inc. in mid-April, a move that gave Google a major foothold in online display advertising.
Yahoo Inc. also struck a deal last month to buy the rest of privately held online ad exchange Right Media Inc. that it didn’t already own for $680 million.
Those moves by Google and Yahoo are motivating traditional advertising agencies such as WPP to act quickly so as not to get left behind in the race to offer online advertising services, particularly since Internet ad spending is growing far faster than advertising through traditional media outlets such as television, radio and newspapers.
Youssef Squali, an analyst with Jefferies & Co., says advertising agencies are trying to ‘protect their turf’ by preserving their relationships with clients, and that the flurry of recent deals has heightened tensions between technology companies and traditional ad agencies over divvying up the spoils of the online ad boom.
24/7 Real Media ran an online advertising network, allowing advertisers to make one deal that would allow an ad to appear on hundreds of sites at once, saving advertisers the headache of making many separate deals.
In January another major advertising conglomerate, the Paris-based company Publicis Groupe, purchased the online advertising company Digitas, and last month the Interpublic Group of Cos. said it would acquire a privately held marketing agency, Reprise Media Inc., for an undisclosed price.
With 24/7 Real Media now sold — unless a higher bidder emerges — relatively few publicly traded online advertising companies remain, says analyst Brian Pitz of Banc of America Securities, a result of the recent ‘land grab’ in the sector.
The two remaining companies of any scale in the online advertising arena are ValueClick Inc. — which runs an online advertising network along the lines of 24/7 Real Media, but with a greater number of smaller sites — and aQuantive Inc., which acts as a broker for buying and selling keyword advertising on search leaders like Google.
Microsoft Corp. has been widely seen as a potential bidder for an online advertising company such as 24/7, but so far the software giant has yet to make a move.
WPP is paying $11.75 per share for 24/7 Real Media, a 30 percent premium over the company’s average closing price over the past two months.
Shares of New York-based 24/7 rose 39 cents, or 3.5 percent, to $11.65 Thursday, while shares of WPP edged up 11 cents to $75.14.
London-based WPP is a major advertising services company and includes several major agencies, such as Grey Worldwide, JWT, Ogilvy & Mather and Young & Rubicam. It’s the second-largest marketing conglomerate in the world after Omnicom Group Inc.
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