The deal consists of two main elements. Firstly, AppNexus is to acquire Open Adstream, the ad-serving platform from Xaxis, and secondly, WPP will invest $25 million (£15.3 million) in AppNexus.
AppNexus recently received $85 million in funding, valuing the company at $1.2 billion.
Following the deal, AppNexus will combine Open Adstream with its existing technology in a bid to offer the most innovative offering in the market.
Following the sale of Open Adstream Xaxis will focus on developing its own platform, Turbine DMP, as well as its analytics suite and other optimisation technology.
Sir Martin Sorrell, the chief executive of WPP, said: "Our clients want world-class solutions from independent ad technology companies.
"We're delighted to deepen our partnership with AppNexus, which has proven itself as a clear leader in ad tech and a company with the scale and ingenuity to continue to transform our industry."
Brian O'Kelley, the chief executive of AppNexus said: "Publishers want a technology partner they can trust. Open AdStream has been one of the most effective and trusted ad serving platforms in the world for years. We're going to make it number one in programmatic."