NEW YORK (Reuters) - WPP Group Plc WPP.L, 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, 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, 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 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.
“They have considerably more firepower ... and they can breeze in and pay $3.1 billion for DoubleClick,” he said.
“Our ambitions would be substantially more modest, but no less important,” Sorrell said. “There are things we can do on a smaller scale, which I think is significant and will give us a position and a seat at the table as the technology is changing at a fairly rapid rate.”
WPP has invested in smaller ad companies, including Spot Runner, which created a Web-based technology for placing television ads, and online video game network WildTangent.
While Google’s annual revenue was close to $11 billion last year, Wall Street expectations for its growth potential has pushed its market capitalization above $140 billion.
By comparison, the world's four largest advertising holding companies including Omnicom Group OMC.N , Interpublic IPG.N and Publicis PUBP.PA, generated a combined $33 billion in revenue, while their total market capitalization is close to $50 billion, Sorrell noted.
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