WPP Group planted a stake Thursday in Rentrak by acquiring $98 million of the media measurement company’s common stock (12.4% of total shares). In return, Rentrak gets Kantar Media’s TV measurement business in the US.
WPP also made a $56 million cash investment in the company, which, barring regulatory approval, would give the holding company 16.7% total ownership in Rentrak. Rentrak, noted PiperJaffray analysts in a research note, now has “penetration across all the largest media-buying agencies and all the major agency holding companies.”
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.
“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.
It remains to be seen how GroupM’s partnership with Nielsen, a Rentrak competitor, will be affected. Nielsen and GroupM jointly developed a tool called Nielsen Cross-Platform Campaign Ratings, designed to determine measure reach and frequency overlaps for online and linear campaigns.
From a financial standpoint, the deal gives Rentrak an incremental revenue boost of $7 million to $9 million annually, wrote PiperJaffray analysts in a research note.
WPP’s digital revenues surpassed $6 billion last year, and accounted for approximately 35% of the holding group’s total revenues of $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. WPP last month divested itself of digital media platform Open AdStream from Xaxis, selling the tech to AppNexus for $25 million. This move, in turn, gave WPP a roughly 15% stake in the ad tech company’s $1 billion-plus business.