WPP’s Big Win With Buddy Media

There are those that turn their noses up at advertising holding companies dabbling in tech investments. WPP Group has been the most unapologetic booster of taking stakes in tech companies, with a roster of investments in at least a dozen firms.

The strategy has paid some dividends. The company said yesterday that it will see a $50 million return on the $5 million investment it made in Buddy Media in 2010, thanks to the recent $689 million purchase of Buddy Media by Salesforce.com. The profit is evidence of the potential financial upside for those agencies and holding companies willing to play venture capitalist.

It also serves as a counterpoint to WPP’s high-profile stumble as an investor with Spot Runner, the local TV-buying platform that WPP plowed $10 million into. WPP ended up suing Spot Runner in 2009, alleging its founders basically ripped WPP off.

Besides Buddy Media, WPP also has a stake in Say Media, mobile ad network Jumptap, and is currently evaluating one in video ad firm Videology.

As Digiday has noted, these investments continue to blur the lines between agnostic agent and supplier, and agencies are becoming increasingly incentivized to preference certain media and technology vendors over others in the interests of their own bottom lines.

Just days prior to the agreement of Salesforce’s Buddy Media acquisition, WPP announced it had selected Buddy Media as its “preferred social ad provider” and would begin rolling out its product across GroupM agencies including Maxus, MEC, MediaCom and Mindshare.

It’s unclear if that decision had any bearing on the closing of the Salesforce deal, but given the fact that it’ll result in a substantial stream of revenue from the agency group it seems feasible that Salesforce at least considered the WPP endorsement as part of its decision and valuation process.

WPP isn’t alone among its peers in seeing big returns from investments. Interpublic Group parlayed its early stake in Facebook into a $133 million profit in a sale for half of its shares.


More in Marketing

Why the New York Times is forging connections with gamers as it diversifies its audience

The New York Times is not becoming a gaming company. But as it continues to diversify its editorial offerings for the digital era, the Times has embraced puzzle gamers as one of its core captive audiences, and it is taking ample advantage of its advantageous positioning in the space in 2024.

Why B2B marketers are advertising more like consumer brands to break through a crowded marketplace

Today’s marketing landscape is more fragmented than ever. Like consumer brands, business brands are looking to stand out in a crowded and competitive marketplace, making marketing tactics like streaming ads, influencers and humorous spots more appealing.

As draft puts WNBA in spotlight, the NBA is speeding up ballplayers’ transition to creators

The NBA’s star athletes are its greatest marketing asset.