Wednesday, October 24, 2007

The New York Times

October 24, 2007

WPP Group Continues Digital Shopping Spree

For the second time in six weeks, the WPP Group, the giant advertising company, has bought a leading interactive agency as part of a digital shopping spree.

WPP said today that it had acquired Blast Radius, an agency based in Vancouver, British Columbia, that also has offices in Amsterdam, London, New York, San Francisco and Toronto. The financial terms were not disclosed.

Blast Radius, which opened in 1997, works for marketers like Nike, Starbucks and Whirlpool. Its revenue last year was $41.8 million Canadian dollars.

The trade publication Advertising Age estimated this month that revenue for Blast Radius revenue in 2007 will be $60 million in American dollars.

Blast Radius is considered a specialist in the growing realm of social networking, which is particularly popular among younger consumers who share information about themselves on Web sites like Facebook and MySpace.

Blast Radius will be aligned with Wunderman, a WPP agency that specializes in direct marketing and relationship marketing — fields that social networking fits in with well. Wunderman is part of one of the largest WPP divisions, Young & Rubicam Brands.

“With Wunderman, we will continue to help clients create customer-centric brand strategies,” Gurval Caer, president and chief executive at Blast Radius, said in a statement, “but will now be able to do so on a more global basis.”

Mr. Caer and the more than 400 other Blast Radius employees are to remain there after the acquisition, Wunderman said.

Wunderman already acquired this year two digital agencies, Aqua Online, in South Africa, and These Days, in Belgium. It also acquired a controlling interest in DataCore Marketing in Westwood, Kan.

In addition to those deals, WPP’s recent digital acquisitions also include Schematic, an interactive agency in Los Angeles, which was bought for cash last month, and 24/7 Real Media, bought for $649 million in July.

As major marketers speed up their shift of advertising spending to the new media from traditional outlets like newspapers and television, the giant advertising companies like WPP are racing one another to buy the remaining independent digital shops.

Indeed, an article in the Oct. 1 issue of Advertising Age, which reported that WPP was “closing in on a deal” to acquire Blast Radius, carried this cheeky headline: “No indie digital agency is safe from Sir Martin.” The reference was to Martin Sorrell, the WPP chief executive.

An example of a large deal by a WPP competitor came in January, when Digitas, another leading interactive agency, was acquired by the Publicis Groupe for $1.3 billion.

And this week, the Interpublic Group of Companies, another WPP rival, announced a partnership with BzzAgent in Boston, which specializes in so-called word-of-mouth marketing, also called conversational marketing.

The deal-making has not been limited to advertising companies. For example, Microsoft bought aQuantive and Yahoo purchased BlueLithium; a deal for Google to buy DoubleClick is pending.

Montgomery & Company acted as the financial adviser to Blast Radius. Farris, Vaughan, Wills & Murphy provided the legal advice.