WPP Increases Investment in AppNexus

WPP has agreed to invest $25 million in AppNexus in a deal that will raise its stake in the ad technology company to nearly 15%, WPP CEO Martin Sorrell said.

The ad holding company previously had a small equity stake in AppNexus of under 1%. As part of the transaction, WPP will transfer ownership of its “Xaxis For Publishers” ad serving product to AppNexus.

Mr. Sorrell said the deal continues WPP’s strategy of investing in the fast-growing “programmatic” media buying sector, and highlights its support for “independent” ad technology solutions, as opposed to those offered by companies that also sell ad space.

“The only alternative to AppNexus is to align with Facebook or Google. At least we’re agnostic,” he said.

Xaxis CEO Brian Lesser said hiving off ”Xaxis for Publishers,” an ad-serving product that delivers online ads, will enable WPP’s Xaxis unit to focus its resources on what it does best. Specifically, that means investing in data and media products.

“We can’t build everything,” Mr. Lesser said. “We know data and relationships and how to reach audiences in innovative ways. That’s what’s important to our clients.”

WPP originally acquired its Xaxis For Publishers technology, formerly called Open Adstream, when it purchased 24/7 Real Media in 2007. AppNexus CEO Brian O’Kelley said the addition of the XFP technology and staff makes AppNexus “the clear alternative to Google” for ad serving.

According to WPP, Xaxis currently buys more than $750 million worth of media a year, and is valued at $4 billion. WPP said its digital revenues overall topped $6 billion in 2013, accounting for approximately 35% of its total revenues.

WPP said AppNexus has revenues of over $100 million and is currently valued at $1.2 billion, based on a funding round in August through which it raised $60 million from a Boston-based public equity and asset management firm.