WPPGY Acquires Blue State Digital - Analyst Blog

Advertising titan WPP plc (WPPGY) through its operating company WPP Digital, acquired the entire assets of US-based Blue State Digital LLC. The company also acquired all the share capital of Blue State Digital's United Kingdom subsidiary.

Blue State Digital specializes in online fundraising, advocacy, social networking and constituency development programs. The agency primarily works for non-profit, educational and cultural organisations, political entities and corporate clients.

Blue State Digital employs over 130 people and reported consolidated revenue of approximately $12.8 million for the year ended December 31, 2009. Gross assets were roughly $3.0 million.

We believe WPP plc lays a lot of emphasis on new markets, new media and consumer insights. The acquisition of Blue State Digital will enable the company to offer better services relating to marketing communications and public affairs.

The company has a dominant market share in many areas and has the pricing power to improve margins and sustain future profit growth. Moreover, revival in the global economy has enhanced advertising spending by the companies across the world.

Global advertising expenditure is expected to be approximately $502 billion in 2011, representing an increase of 5.8% over $474 billion in 2010, according to a report by GroupM. Expenditure in the U.S. is expected to be roughly 29.4% of the global forecast, an increase of 3.7% over $142.5 billion in 2010.

WPP plc faces competition from its peers like Interpublic Group of Companies Inc. (IPG), Omnicom Group Inc. (OMC), and Publicis Groupe SA.

We currently maintain an Outperform recommendation on the company.

 
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