Although WPP Group was considered the underdog in its battle with Microsoft to purchase digital ad agency 24/7 Real Media, the British ad holding company won out as the interactive shop agreed to its buyout offer of $649 million. As part of the deal, which received the unanimous approval of both companies’ boards, WPP will pay the 24/7’s shareholders $11.75 for each share, a price that represents a premium of 30 percent over the average closing price of 24/7’s shares for the last 60 trading days. Pending regulatory and shareholder approvals, the purchase is expected to be completed in the third quarter of 2007. Release

WPP’s purchase of 24/7 marks the latest in a flurry of deals from large ad holding companies looking to quickly bolster their digital marketing capabilities. Over the past six months, rivals like French ad holding company Publicis Groupe bought Digitas for $1.3 billion and reorganized its global interactive ad units around it earlier this month. This past week saw WPP creative agency Young & Rubicam shift employees to its new in-house digital group.

Doubts were cast on WPP getting 24/7 following reports that WPP chief executive Martin Sorrell “blanched” at the company’s $600 million asking price, while Microsoft, after having lost DoubleClick to Google, would be more than willing to shell out even more. More after the jump.

Update: NYT: The purchase is seen as an attempt to maintain a certain equilibrium to the online ad market in light of Google/DoubleClick, as Sorrell told participants in a conference call discussing the deal. “In the marketplace there will be an increasing need for an alternative given the shifts that have taken place recently. Our acquisition of Real Media will bring a little, a small amount, of balance into the marketplace.”

At least one industry source, Dave Morgan, chairman of Tacoda, an online ad network, and former chief executive at a company that became part of 24/7, told the Times he agrees: “Martin Sorrell has said that he views Google as a ‘frienemy,’ He wants Google to view him as a frienemy, too. He has now given his response, which is that he’s not going to just sit and wait and see what happens. He’s going to take an aggressive position against a world where Google and Yahoo will dominate.”

—Adweek: The purchase of 24/7 represents the charting of new territory for WPP. It will insert WPP into the publishing and technology business. With 24/7’s network, WPP will control ad inventory, while the server brings a technology component holding companies have traditionally lacked. While 24/7’s technology is geared for publishers, it could help WPP develop an ad server for its agencies, WPP Digital CEO Mark Read said.

—Ad Age: Integrating 24/7 into WPP will double the size of the holding company’s search business. 24/7 has a strong search marketing concentration in Asia, thanks to a relationship with Dentsu. WPP executives say they are not worried about a conflict of interest in a holding company owning an ad network, and didn’t expect to see a dropoff in spending from advertisers at competitive agencies - WPP’s media division, Group M, they pointed out, is still buying digital ad network DrivePM from aQuantive.

• 24/7 Real Media On The Block, Officially
• WPP, Others Eye Bid For 24/7 Real Media Ad Network: Report
• WPP Might Not Get 24/7; Consolation Prize Is Digital Street Cred