WPP eyes small, mid-sized digital deals

By Michele Gershberg

NEW YORK (Reuters) - WPP Group Plc (WPP.L: Quote, Profile, Research, Stock Buzz), the world's No. 2 marketing services company, is eyeing small- to medium-sized acquisitions of digital advertising companies amid growing competition from the likes of Google Inc. (GOOG.O: Quote, Profile, Research, Stock Buzz), the company's chief executive said on Tuesday.

"We will be making investments in the digital area," WPP CEO Martin Sorrell told the Reuters Global Technology, Media and Telecoms Summit via video conference from London.

"We would tend to focus on ... let's call it the small to medium sized-acquisitions, which is consistent with what we've been doing historically," Sorrell said.

Consumers are spending nearly 20 percent of their media time on the Internet, among other new outlets, prompting advertisers to move more of their marketing budgets to the Web.

WPP aims to boost the revenue it generates from digital assets to about one-third of total revenue from about 20 percent, or $2.3 billion, in 2006, Sorrell said. The increase will be driven by its own digital agencies as well as new investments, he said.

WPP is one of several companies, including Microsoft Corp. (MSFT.O: Quote, Profile, Research, Stock Buzz), which have been reportedly looking at Internet ad company 24/7 Real Media TFSM.O amid a wave of consolidation in the industry spurred by Google's growing reach beyond textual Web search listings into ad other formats.

Google reached a $3.1 billion agreement to buy DoubleClick, which helps advertisers serve up and track online ads, in April. Rival Yahoo Inc. (YHOO.O: Quote, Profile, Research, Stock Buzz) said last month it would buy the rest of Right Media Inc. for about $680 million.

Sorrell would not comment on specific companies WPP was looking at, but he noted the relative ease with which Google can make acquisitions.