What: WPP’s wholly-owned companies, GroupM, and Kantar Media have partnered with measurement company Rentrak to deliver new services in television measurement and consumer insights to clients in the United States.
Why it matters: WPP will add Kantar Media’s US television measurement business into Rentrak in exchange for US $98 million of Rentrak common stock.In return, Rentrak gets Kantar Media’s TV measurement business in the US.
WPP‘s wholly-owned companies, GroupM, the global media investment management company and Kantar Media, its media research and analytics business, have partnered with Rentrak, the US-based film and television measurement company. The partnerships are designed to deliver new services in television measurement and consumer insights to clients in the United States.
Under the terms of the agreement, WPP will add Kantar Media’s US television measurement business into Rentrak in exchange for US $98 million of Rentrak common stock. WPP will also purchase shares directly from the company for US $56 million in cash giving WPP a final ownership stake of 16.7% of Rentrak.
Through the terms of the deal, WPP’s various companies, like media agency GroupM, will now have access to Rentrak’s local-and-national TV viewing data and measurement to combine with Kantar’s digital media and purchase data.The transaction, when closed, will include Kantar Media’s customer contracts and customer relationships involved in U.S. television measurement, creating the benefits of clarity and simplicity for clients in the U.S. TV ratings marketplace with a single and passive TV measurement ratings service. This transaction gives Rentrak and Kantar better scale to rapidly innovate their products and services in the United States. No Kantar Media TV measurement or global development capabilities outside of the United States are affected by this transaction.
Under the agreement, Rentrak will also integrate its national and local TV measurement with a number of Kantar’s U.S.-based services that focus on digital media, advertising expenditure and purchase data. The integration will provide advertisers, agencies, TV networks, multichannel video program distributors (MVPDs) and local television stations throughout the U.S. with even more powerful tools to understand consumers’ purchasing habits and the ability to link TV viewing habits with purchase and other behavior in the United States.
“Irwin Gottlieb and Rino Scanzoni of GroupM are right on target about how this kind of scaled viewing and purchase behavior data for targeting and measurement is critical for the future of TV ad business as audience fragmentation continues to accelerate,” said Dave Morgan, founder and CEO of venture-funded TV ad targeting company Simulmedia.
The transaction, which is subject to customary regulatory approvals, is anticipated to be completed by the end of calendar 2014.Goldman, Sachs & Co. served as financial advisor to Rentrak.No Kantar TV measurement or global development capabilities outside of the US are affected by the transaction.
The deal will help position audience-based TV buying as a complement to content-based or program-specific buys. An important step, as dollars begin to move between programmatic video and linear television.These agreements continue WPP’s strategy of developing its services in important markets and sectors and strengthening its capabilities in digital and data investment management businesses.
These agreements continue WPP’s strategy of developing its services in important markets and strengthening its capabilities in digital and data investment management businesses
WPP’s digital revenues surpassed US $6 billion last year, and accounted for approximately 35% of the holding group’s total revenues of US $17.3 billion. The group projected as much as a 10% increase to 40-45% for digital as a percent of total revenue within the next five years.WPP has steadily invested in tech from outside companies. Last month, the company deprived itself of digital media platform Open AdStream from Xaxis, selling the tech to AppNexus for US$25 million. This move, in turn, gave WPP a roughly 15% stake in the ad tech company’s US$1 billion-plus business.
However, it seems that GroupM’s partnership with Nielsen, a Rentrak competitor, could be affected by this acquisition.
From a financial standpoint, the deal gives Rentrak an incremental revenue boost of US $7 million to US $9 million annually, according to PiperJaffray analysts in a research note. Rentrak expects the agreement to produce multiple long-term revenue streams resulting directly from the acquisition of Kantar’s TV service, as well as from anticipated future joint marketing agreements with Kantar and the company’s expanded relationship with, and endorsement from, GroupM.