WPP Buys 24/7 Real Media for $649 Million

3 comments

The second largest ad agency worldwide wanted more online marketing expertise.

They paid a 30 % premium over the stock market price, and better than three times gross trailing year revenues. You can't calculate a multiple on net revenues, because 24/7 lost money in 2006.

"You can call it a tipping point, if you want," [WPP CEO Martin] Sorrell said. "We see larger clients looking at this area with greater intensity. There will be a faster shift in the future to the Internet."

My question is when the ad agencies are going to get around to gobbling up SEO/PPC shops, since that's where the real online marketing action lives. Are there any agencies that have reached the scale to be attractive to the likes of WPP? If not, why not?

Comments

WPP has no business going online

I am sorry.. but that Agency is the definition of technically backwards. They bought an ad server.. for over 1/2 a billion dollars...

it goes up and down in the elevators

the problem with buying agencies is that all the assets leave every night and go home to sleep (I think one of the Saatchi brothers was the first to say it).

A few like Bruce Clay might have some proprietary technology of limited value (search tech goes out of date fast!).

But there are no assets except the people.

And almost everywhere in the world, slavery has been abolished. You might think I'm joking, but I'm not.

It's impossible for the buyer to fasten the staff of the bid target in for more than a few months, with a non-compete for management for a year or two.

So these big agencies get burned. They buy a shop and find out that the leaders are gone within six month and they are holding an empty husk.

In a previous life, I used to be an (ad) agency guy.

It's more likely that some bid ad agencies might start going after individual talents (already have) with middle level five figure salaries though. And frankly just how fucking hard is it to do the search optimisation for Procter & Gamble or Coke?

I'll give you a clue: PG.com: 164,000 backlinks, including Hugo Boss, Braun, Gilette, Folgers and Wikipedia. Get me the Pepto Bismal.

Coke.com is relatively poor with 112,000 backlinks. They have to make do with NCAA Football, lots of .edu sites, piles of non-profit and profit festivals and our friends over at Wikipedia again.

I've written some more about ad agencies (not) buying search companies at home. Can anybody tell me if we still have trackback here?

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