WPP, the world's second-largest marketing services company, is paying $11.75 per share for the company, which amounts to a 30% premium over 24/7's average closing price for the past two months.

"The real catalyst for this was the Google/DoubleClick move (a $3.1 billion deal) and other things coming down the pike," said Martin Sorrell, WPP's chief executive, during a call with analysts. Recent weeks have also produced Yahoo's $680 million acquisition of Right Media and AOL's purchase of German ad network AdTech AG. Microsoft, which lost out on the DoubleClick deal, was also said to be bidding at one point for 24/7.

"You can call it a tipping point, if you want," Sorrell said. "We see larger clients looking at this area with greater intensity. There will be a faster shift in the future to the Internet."

David Moore, chairman and CEO of 24/7, said his company had been working with WPP for 12 months on various online ad projects. That some sort of deal was imminent became clear last week when 24/7 said it had hired financial adviser Lehman Brothers to suss out potential suitors.

A pioneer in digital advertising, 24/7 experienced organic revenue growth of 43% in 2006 and has a global footprint for its media, search and technology offerings. With 20 offices in 12 countries, it derives 61% of its revenues from outside the U.S.

With 24/7, WPP is getting a highly scalable technology platform in which to integrate all of its digital advertising, said Dave Morgan, who founded Real Media back in 1995 and is now chairman of the behavioral targeting firm Tacoda. (Morgan left Real Media in 2001, shortly before it merged with 24/7 that same year.)

"This is a strong, forward-thinking move for WPP," said Morgan. "Instead of buying Digitas or another ad agency, WPP is gaining the upper hand in ad serving so it won't have to defer to Google or aQuantive in the future."

"We are looking forward to working with the team at 24/7 Real Media to bring their relationships, skills and technologies to our operating companies and people for the benefit of our clients," said Mark Read, strategy director, WPP and CEO of WPP Digital.

WPP's network of marketing services companies presently includes media agencies MediaCom, Mediaedge:cia and MindShare; creative agencies Grey Worldwide, JWT, Ogilvy & Mather and Young & Rubicam; and interactive specialists Outrider and GroupM Interaction, among others.

"We focus on creativity and media," Sorrell said. "This adds a further dimension. It's the application of science to our business. We think this is increasingly important."

Analysts on Thursday immediately began speculating on the deal's impact, and the likely acquisitions to follow.

"This ties a rich information force to a strong sales and marketing force," said Gordon Borrell, president of research firm Borrell Associates. "If I were a competitor of WPP's, I'd be shaking in my hooves right now."

Unfortunately for WPP's rivals, there aren't that many data-rich ad companies left to buy. The short list includes ValueClick and aQuantive--neither of which would comment on 24/7's acquisition on Thursday. (Shares of ValueClick rose 2% to $27.88 at the New York close, while aQuantive's registered a 4.27% jump to $35.87.)

One agency executive who wished not to be named predicted that rich media companies would take this as an opportunity to branch into standard ad serving. But, the executive added, "there are clearly more agencies than ad servers right now."

In addition to $637 million that 24/7's shareholders are receiving, unvested stock and options are valued at $49 million and net cash is expected to be about $37 million at closing, to value the company at $649 million, WPP said in a statement.

"We've found ourselves drawn closer to the advertiser," Moore said on Thursday, regarding 24/7's reason for joining WPP. "We thought a marriage with a company like WPP would be ideal for our strategy going forward."

Other recent agency deals include Paris-based Publicis Groupe buying online advertising agency Digitas. More recently, Interpublic bought search agency Reprise Media.

"Our existing businesses are not asleep in the digital area," Sorrell emphasized. The goal is for WPP to draw as much as a third of its revenues from digital sources, and this acquisition is a way to accelerate that process.

"We think it's a tremendous opportunity," said Rob Norman, CEO of Group M Interaction Worldwide, WPP's online media-buying entity. "Clearly we will look at the full scale of tools we can use in an IT landscape from campaign management to bid management."

That said, Norman added, 24/7's media network will sit separately to keep its online buying neutral. "We won't be trying to influence our planners in that direction," he emphasized.

This news story is important. I recommend that everyone read it.