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WPP Purchases Digital-Advertising Agency in Chinese Expansion

WPP Plc (WPP), the world’s largest advertising company, is adding to its network in China, buying a digital-ad agency as part of a strategy to expand in the world’s fastest-growing economies.

WPP purchased IM2.0 through its VML operating company, which is part of the Young & Rubicam network, WPP said in a statement today.

“IM2.0 is one of China’s leading and most successful pure-play digital agencies,” WPP said in the statement, noting the Mobile Marketing Association named it “agency of the year” in China this year.

China is WPP’s third-largest market -- behind the U.S. and U.K. -- with revenue, including associates, of $1.4 billion and about 14,000 employees. The London-based company is spending as much as 400 million pounds ($640 million) this year, buying digital-ad assets and companies in rapidly expanding markets such as Turkey, Brazil, India and Vietnam to counter slower growth in Europe and North America and capture new business from burgeoning economies.

IM2.0, which has offices in Beijing and Shanghai, creates online strategies and ad campaigns. Its clients include Dell Inc., Adidas AG, coffee maker Mondelez International Inc. and appliance manufacturer Qingdao Haier Co. It has a staff of 230 people, assets of about 200 million yuan ($33 million) and 2012 revenue of 72 million yuan, according to the statement.

Bloomberg News reported WPP’s purchase of IM2.0 yesterday. No price was provided for the deal.

Emerging Markets

WPP shares rose 2.3 percent to 1,270 pence as of 9:01 a.m. in London trading, valuing WPP at about 17 billion pounds. The stock has risen 43 percent this year.

The Chinese government has set 7.5 percent as the expansion goal for the economy this year, a rate it reached for the second quarter. The statistics bureau will publish gross domestic product figures for the third quarter this week. The economy probably expanded 7.8 percent from a year earlier, according to a Bloomberg survey.

With the IM2.0 purchase, WPP has bought five Chinese companies in 2013, including market researchers Miaozhen Systems and Sinotrust International Information & Consulting Beijing Co. Of the more than 40 acquisitions WPP made this year, 70 percent are in emerging markets such as Argentina, Myanmar, Bangkok and Kenya.

WPP may be displaced from atop the advertising world should a merger of the second- and third-largest ad companies, New York-based Omnicom Group Inc. and Paris-based Publicis Groupe SA (PUB), be completed. WPP took the throne after its 2008 acquisition of Taylor Nelson Sofres Plc.

Publicis and Omnicom announced the “merger of equals” in July, an all-stock deal that gave the combined company a market value at the time of $35 billion.

WPP forecast annual revenue growth of more than 3 percent in August. Chief Executive Officer Martin Sorrell said at the time that WPP would raise its target for revenue from fast-growing markets and digital operations to 40 percent to 45 percent of total sales in the next five years, up from the 35 percent to 40 percent range previously announced.

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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