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WPP Plc. Partners With Microsoft

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Ireland-based advertising agency WPP Plc. (WPPGY) recently penned a partnership agreement with Microsoft (MSFT) Advertising. The contract will be given effect through the company’s global advertising entity, 24/7 Media. This was done with the clear intent of enlarging the client-base of both companies through providing enhanced digital advertising services.

Under the pact, 24/7 Media’s services will be integrated with Microsoft Advertising’s advanced solutions which would not only escalate the company’s productivity levels but also cater to providing a seamlessly flexible, user-friendly and inexpensive digital marketing solution platform for its partners and consumers.

WPP Plc.‘s 24/7 Media and Microsoft Advertising will be jointly engaged in providing improved media planning services to their clients through 24/7 Connect, a latest tool which was recently launched by 24/7 Media. Moreover, following the agreement, Microsoft Advertising Exchange, particularly created for serving the need of publishers, will now be considered as an intermediary advertising exchange of 24/7 Media.

Explicit in its enthusiasm regarding the deal, management states that it has finally been able to meet the demand for providing cross border digital marketing solution internationally with this partnership. Post the agreement, the online advertising market is likely to surpass $98 billion in the fiscal year of 2012.

Earlier, in the first quarter of fiscal 2012, WPP Plc. witnessed about 7.6% augmentation in revenue from the prior-year quarter. Geographically, the company fared well posting a noticeable growth of 11.2% in Asia Pacific, Latin America, Africa, the Middle East and Central & Eastern European regions.

Additionally, among the company’s four business segments, Advertising & Media Investment segment witnessed strongest performance in the quarter through generating total revenue of £973.0 million (US$1,528.4 million), which increased 8.4% year over year.

We believe that the current deal will be highly beneficial for the company, primarily because WPP plc. enjoys a reputation of providing the best digital advertising technology solutions globally. It should, however, be aware of the stiff competition from its rivals such as Local.com Corporation (LOCM), AirMedia Group Inc. (AMCN) and Clear Channel Outdoor Holdings Inc. (CCO). 

The current Zacks Consensus EPS Estimates for WPP plc. are $5.66 and $6.32 for the fiscal years of 2012 and 2013, respectively. The company currently carries a Zacks #3 Rank which denotes a short-term (1-3 months) Hold rating. We currently maintain a Neutral recommendation on the stock.

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