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By Nathalie Tadena 

Ad giant WPP is pleased that two audience measurement firms it invested in, comScore and Rentrak, are merging to provide a more robust alternative to Nielsen.

WPP, the world's largest ad holding company, has minority stakes in both companies and will have a 16% stake in the combined entity, with an option to increase its stake to 20%.

WPP "tried to encourage [comScore and Rentrak] to get together" in some way, WPP Chief Executive Martin Sorrell said at an Advertising Week event in New York on Wednesday. "A formal alliance like what was announced last night is great."

ComScore, which is known for its Internet-traffic measurements, announced on Tuesday that it will acquire Rentrak, which uses set-top-box data to gauge TV viewing, in an all-stock deal valued at about $732 million. The combined company will be able to create a metric that can measure media content and ad campaigns across various platforms, becoming a more formidable competitor to Nielsen, which dominates the measurement market in the U.S.

"Clients and media owners really want better measurement," Mr. Sorrell said. "With the growth of out-of-home, with the growth of multiscreen viewing, with the changes of millennial and centennial media consumption habits, it was inevitable that we had to have a better currency."

Mr. Sorrell said WPP has been focused on measurement for many years. WPP's "data investment management" division, which provides research, measurement and consulting services, made up nearly a quarter of the group's revenue last year and is one of its core strategic priorities.

"We have always been interested in how you can correlate and integrate what we do in advertising/ media with data," Mr. Sorrell said.

Mr. Sorrell said that several years ago WPP identified a handful of companies in the measurement space in which it wanted to buy strategic minority stakes, among them Rentrak and comScore. Mr. Sorrell said he is "not a believer of the plonker strategy" of plonking down large amounts of money to control a company, especially when valuations are high.

Many media executives have complained that Nielsen hasn't been able to keep up with a changing media landscape as new digital platforms emerge. Mr. Sorrell has also been a vocal critic of the current measurement system, adding that he saw a "really big opportunity to ensure that the measurement of online became better because the hurdle is too low."

There has been increasing concern among clients about the viewability, value and validation of their media buys, Mr. Sorrell said. Clients' procurement and finance departments are also looking at digital spending in a much more sophisticated way, which further warrants more precise digital measurement, he added.

Write to Nathalie Tadena at nathalie.tadena@wsj.com

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(END) Dow Jones Newswires

September 30, 2015 13:13 ET (17:13 GMT)

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