Premier global communications company
) recently made a strategic investment of around $10 million in
SFX Entertainment, Inc., a digital media company, to tap the
fast-growing electronic dance music (EDM) markets.
In addition to increased focus on sponsorship and branded
entertainment opportunities, the move reinforces WPP's strategy
to extend digital media beyond traditional advertising space to
connect more with the demographic segment of 16-34 years old.
Since its inception in 2011, the NYC-based SFX has created a
global platform to promote dance music by leveraging vast
industry experience (averaging over 30 years) of its CEO and
senior management team. SFX has tied up with various leading
festivals, events, clubs and online brands to garner a collective
audience of over 100 million that are connected through
The company has also made a number of acquisitions to
strengthen its presence in the industry, namely Beatport,
ID&T North America (Sensation and Mysteryland), Life In
Color, Disco Donnie Presents and Miami Marketing Group, home of
LIV, Story and Arkadia.
With such complimentary business associations, SFX brings on
board a huge database for the youth consumer segment and enables
WPP to develop useful content and targeted advertisements to
augment its revenues and drive traffic for its clients. Dance
music is reportedly worth $4 billion a year and DJ event is one
of the fastest growing segment in live entertainment with a 45%
year-over-year growth since 2007.
An investment in SFX will also assist WPP to cement its
footprints in the faster-growing sectors like digital, data, and
application of technology. Over the next 5-year period, WPP
expects digital revenues to account for 35%-40% of its total
revenue. In 2013, the company expects its digital revenues to
exceed $6 billion, representing over 33% of its total revenue.
Through its operating companies, WPP offers a host of advertising
and marketing services including advertising & media
investment management; consumer insight; public relations and
public affairs; direct and digital promotion and relationship
In 2013, the company anticipates a like-for-like revenue and
gross margin growth of around 3% and operating margin improvement
of 0.5 margin points, with a primary focus on revenue and gross
margin growth at a faster rate than the industry average. The
company expects to achieve it by its market-leading position in
the new markets, in new media, and in consumer insight.
AIRMEDIA GP-ADR (AMCN): Free Stock Analysis
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At the same time, WPP should also remain wary of tough
competition from other players in the market such as
Clear Channel Outdoor Holdings Inc.
Publicis Groupe SA
AirMedia Group Inc.
). WPP currently has a Zacks Rank #3 (Hold).