WPP, the world’s second-biggest advertising group, has bought 24/7 Real Media, the US digital marketing company, for $649 million (£325 million), it announced yesterday.

The cash deal for $11.75 a share was described by analysts yesterday as “inevitable” as WPP attempts to strengthen its presence in the digital advertising market amid increasing competition from online rivals.

The agreement follows Google’s acquisition of Double-Click for $3.1 billion and Yahoo!’s purchase of Right Media, the ad exchange, for $680 million in April.

It is understood that Sir Martin Sorrell, WPP’s chief executive, switched his attention to 24/7 Real Media after losing out to Google over Double-Click. He later attacked that deal for causing “regulatory issues”.

Analysts said that the 24/7 acquisition would help WPP to develop synergies between its existing businesses GroupM, the media investment management group, and Cantar.

The move is expected to be a precursor to further acquisition by advertisers of other similar digital marketing specialists as the industry goes online. Microsoft was also understood to have been eyeing 24/7.

Lorna Tilbian, an analyst at Numis Securities, said: “This deal was inevitable. Advertisers like WPP want to be able to offer clients the full package and digital is an increasingly important part of that.”

WPP said that the deal would dilute 2007 earnings by about 1 per cent, adding that it is still on course to achieve operating margins of 15 per cent for 2007 and expects to achieve a cost saving of £2.5 million. 24/7 Real Media will account for 3 per cent of WPP’s market capitalisation.

The New York-based company was founded in 1995. It is listed on Nasdaq, has about 400 staff and operates in 12 countries. Last week it reported a 34 per cent increase in revenue on last year to $54.4 million in the first quarter and expects to achieve full-year revenue of up to $275 million.

The takeover is expected to be completed by autumn.

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