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Global advertising firm The Interpublic Group of Companies, Inc. (IPG - Analyst Report) recently formed a strategic partnership with Kiip, the world’s first mobile rewards network, to tap new markets and augment its revenue. The investment of an undisclosed sum by the advertising behemoth in the mobile and gaming advertising platform is likely to unlock value and offer more incentives for brands to better connect with consumers.

IPG Media Lab division of IPG Mediabrands will lead the partnership that would strive to introduce leading marketers to Kiip consumers. Kiip has pioneered a reward network model for various applications in its mobile and gaming advertising platform, which rewards users for their in-app “moments of achievement”. This in turn enables brands to better communicate with consumers and draw more attention compared to a mundane, small strip of advertisement message at the bottom of the screen.

The advertising companies could also have a deeper understanding of consumer demographics by tracking user activity and opt-in interest to redesign its products and/or marketing messages. Consequently, these companies can monetize mobiles to augment the quality of their promotional content. The investment, therefore, by Interpublic is likely to reap huge benefits for it as well as for its clients in the long run.

On the other hand, by teaming up with Interpublic, Kiip expects to propagate its unique business model, which is just over a year old, and attract a larger pie of global top-tier marketers who are willing to engage more with mobile customers. Kiip presently has a tie-up with over 45 premier consumer brands, and over 670 iOS (operating software of iPhone) and Android applications. The latest investment by Interpublic is among a series of such transactions since year-end 2012, by virtue of which Kiip has raised $11 million in its kitty.

Interpublic is the third largest advertising agency in the world, offering a range of advertising and marketing communication services. The company competes with the likes of Omnicom Group Inc. (OMC - Analyst Report), Publicis Groupe SA (PUBGY), and WPP plc (WPPGY - Analyst Report).   

We maintain our long-term Neutral recommendation on the stock, which currently has a Zacks Rank #3 (Hold).

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