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By Alexandra Bruell 

WPP's digital ad-buying group Xaxis has acquired Triad Retail Media, which helps retailers sell ads on their websites.

Triad was purchased from private-equity firm Rockbridge Growth Equity LLC. While terms of the transaction weren't disclosed, people familiar with the matter say Xaxis bought Triad for roughly $300 million.

Xaxis said it's the largest deal it's ever done, without disclosing specifics.

Triad helps retailers like Wal-Mart create ad units to sell ads on their e-commerce sites, and it also gets paid by brands to create the ads. Many of those brands are consumer-packaged-goods companies that are selling products in the stores.

"Our desire has been to have a much better understanding of the retail, e-commerce and m-commerce experience," said Xaxis CEO Brian Gleason. "Retail is changing, and the retail media industry will become a final touch-point between the consumer and transaction. The closer we can bring brands to that relationship is pivotal for us."

Triad, which employs over 700 people with headquarters in St. Petersburg, Florida, has grown its revenue about 25% to 30% every year since it launched over a decade ago, said Triad CEO Roger Berdusco. Triad's gross revenue in 2015 was $502 million, up from $366 million in 2014, the company said. Triad's gross margin, which does not include the portion of revenue that publishers make when they sell ads, was under $200 million.

For Xaxis, the acquisition signals further expansion into the business of buying and selling premium digital inventory. Xaxis is known for buying and reselling digital ad inventory to clients at a markup as part of a process that uses technology and data to serve ads to people as they browse the web. It's a process referred to as "arbitrage" trading, and one through which clients often agree to waive their right to see how much the ad inventory costs.

E-commerce ads are typically considered premium inventory and wouldn't be packaged in an arbitrage buy, said Mr. Gleason.

Triad's clients also include Kohl's, CVS, Nestlé, Procter & Gamble and Intel, among others.

For Triad, "this is really all about growth," said Mr. Berdusco. "It gives us tremendous running room internationally. Having the infrastructure Xaxis and WPP bring can help us expand into new markets more quickly."

Scaling through Xaxis's many international offices affords Triad the opportunity to help retailers that don't already sell ads on their websites. Retailers' margins on selling e-commerce ads tend to be much higher -- upward of 70% -- than margins on the actual business of selling e-commerce products, which are closer to 3%, said Mr. Berdusco.

E-commerce gets hit with high costs such as quick, free shipping and site experience updates, so retailers are looking to offset those costs through ads. More recently, the growth of Amazon internationally has been pressuring other retailers to offer such perks, so there's an opportunity abroad to find and help those retailers offset costs, he said.

Triad facilitates most transactions between an e-commerce site and a brand through direct, one-to-one interactions complete with age-old insertion orders, but it's moving more ad inventory through systems that can automate the process.

Triad also has dabbled in automated ad buying. The company helps brands already advertising on e-commerce sites automatically serve ads to audiences on other sites based on data it can access.

"We currently help brands [reach people] on the path to purchase outside retailer e-commerce sites," said Mr. Berdusco. "Xaxis, with its tech and ability to find audiences, can help improve that product."

Xaxis could integrate a brand's e-commerce campaign into a larger ad plan for the brand, said Mr. Gleason. For example, Triad can help a food brand create and place an ad featuring recipes on Walmart.com's home page and mobile app. Xaxis could then send a version of the ad to individuals on desktop and mobile devices and track consumer interaction with the ad across those sites and devices, linking "what has been done on Triad to the rest of the digital execution."

Triad also wants to tap into Xaxis technology that supports video ad-targeting, said Mr. Berdusco. That might mean more effectively serving video to target audiences and optimizing the creative based on what Triad is learning from the audience, he said.

"We see a lot of energy in the marketplace for video," he said. "There's a lot more we think we can do through audience targeting and leveraging retailer video."

Write to Alexandra Bruell at alexandra.bruell@wsj.com

(END) Dow Jones Newswires

October 13, 2016 11:22 ET (15:22 GMT)

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