In the year to March 31, the company had a turnover of £2.62m and made an operating profit of £480,000.
Mark Scott, chief executive of Cello, said: "Response comprises approximately 25% of [Cello's] annual operating profit. It is a dynamic data-based business benefiting from the shift of client spend towards accountable, research-based activity. Magnetic will strengthen our position with a range of existing and potential new clients in the UK."
The deal is structured so that Cello initially pays £1.25m in cash, loan notes and shares. A further initial payment of £320,000 is expected to be paid in cash and loan notes subject to verification of the net current assets of Magnetic.
The rest of the maximum £4.32m payment will be worked out according to Magnetic's business performance from now to December 2010.