The corporate venturing strategy of UK-based communications services group WPP was handed a big win last year when it sold US-based social marketing company Buddy Media to US-based cloud technology company Salesforce for $745m.
Mark Read, chief executive of WPP Digital, said 32% of WPP’s portfolio was digital, adding “one of the things we are most proud of” was coming seventh in a recent PaidContent survey of the world’s most powerful digital media companies.
Both Read and WPP chief executive Sir Martin Sorrell will be speaking at our annual symposium in May (see the agenda here).
Read said the company’s WPP Ventures, set up last year, was part of WPP’s corporate venturing initiative. “Tom Bedecarré [founder of digital ideas and innovation company Akqa] is very well connected in Silicon Valley and experienced in the digital industry. WPP Ventures was set up so he could be our person on the ground on the west coast [of the US], as an indication we were taking it seriously.”
The company has netted some successes under Read. In an interview with Global Corporate Venturing in November, when he was ranked 18th in our Powerlist of the most important people in corporate venturing,
Read said: “On Omniture [a cloud advertising company sold to technology company Adobe] we made a $35m gain, while on Buddy Media we made around $60m. Not everything is successful. At the moment we do not have a separate dedicated fund but are tightly integrated into our operating companies.”
Read is overseeing the entire group’s transition to the digital age, which it is pursuing through corporate venturing and other tools, such as acquisition.
Last year WPP hatched a number of corporate venturing deals, including a $7m investment, as part of a $10m round, in Dolphin Software, the parent company of MySupermarket, a UK-based supermarket shopping price comparison website, and reinvesting in Say Media, as part of a $27m round.
Michael Lazerow, chief executive of Buddy Media, said in our Powerlist profile of Read last year: “Mark straddles the worlds of big advertising media, creativity and the creative agencies, and he is someone who understands all sides of the table. He helped us as a young company realise our dream. He can see things through young companies’ eyes and large agency networks. Business is not a zero-sum game. Everyone has to win to get value out of a partnership. With Mark, it was not just how can we benefit from the great relationship with Buddy Media, but how can we help Buddy Media?”
Read said: “Our strategy has been a mix of acquisitions and of investment, with both things depending on what companies are looking to do.”
Read added: “This year we are very serious about mobile and e-commerce, as it will be so transformative.” Asked whether there were similarities between the current boom in mobile investing and the dot.com era, given seemingly high valuations for many companies in the sector, Read said: “In the direct space we are looking at I do not know there has been exuberance. It is hard to underestimate the impact [the shift to mobile computing] is going to have. It will be totally transformative and it is critical to make the right investments, and those will pay off.”
WPP looks to help its portfolio companies win business. Read said: “The focus has to be on being a good investor for these companies – more than bringing them just financial investment, but helping them develop clients.”
WPP is also operating with a global approach to corporate venturing. Last month WPP invested $70m to take a 20% stake in Globant, an Argentina-based information technology services company. Read said: “This is not just a US or UK phenomenon. We are seeing a lot of businesses in Brazil and China, for example, with interesting opportunities in those markets. We spend a lot of time building relationships and identifying these companies. There is no single way.”
WPP corporate venturing deals
Ace Metrix 2010
Buddy Media 2010 $745m Salesforce
eCommera 2010
Globant 2013
HDT 2008
InGameAd 2008
InVidi Technologies 2007
Jumptap 2007
Moment Systems 2010
MySupermarket 2012
nPario 2011
Omniture 2009 $1.8bn Adobe
Proclivity 2008
Say Media 2007
Vice Media 2011
Visible Technologies 2006
Visible World 2003
Wild Tangent 2006