Photo: BI / WPP
WPP gave us a bit more detail today on how much money it made from its $5 million stake in Buddy Media when the company was acquired by Salesforce (and renamed Marketing Cloud). It said:The proceeds from the sale of the company’s stake in Buddy Media have now been received. In addition, conditional contracts with an escrow have been exchanged with a prospective buyer for the sale of the freehold of 285 Madison Avenue, the New York headquarters of Young & Rubicam Inc. The sale should be completed shortly. Together, these two transactions should yield an exceptional cash gain of well over $100 million.
Previously, WPP had said its Buddy Media stake was cashed out at more than $50 million.
Crain’s New York previously reported the Y&R building was sold for $190 million. So the “gain” (or profit) on the Y&R sale must be somewhere between $50 million and “over $100 million.”
Salesforce reported earlier this week that it acquired Buddy Media for $745 million despite the fact that the company lost $20.5 million on revenues of $18 million in the first half of 2012.
Buddy Media is also the “preferred social ad management partner” for WPP’s agencies.
Separately, Salesforce noted that Buddy Media had one customer with whom it had a “volume-based incentives” scheme for doing business with Buddy Media. That customer earned $7 million in “warrants” under the scheme, and had placed $1.9 million in business through Buddy Media in 2012, or 10 per cent of the company’s entire business.
That would probably make “the customer,” as Salesforce described it, one of Buddy Media’s largest. WPP, of course, is the largest ad agency company in the world. Could WPP have a volume discount agreement with Buddy Media?
A spokesperson did not immediately respond to a request for comment; Buddy Media has previously declined to elaborate on the details behind its volume discount scheme.
Regardless, that customer appears to have a very sweet deal. Buddy Media recorded a $2.2 million expense for servicing the $1.9 million in business the deal generated.
- Here’s A Look Inside The Buddy Media Money Pit
- BUDDY MEDIA: Did Salesforce.com Just Overpay For A Money-Losing Company?
- WPP’s Buddy Media Deal Could Signal Era Of Consolidation In Facebook Ad Buying
- WPP Made $50 Million From Sale Of Buddy Media
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