Dive Brief:
- WPP CEO Martin Sorrell thinks Amazon’s deal to acquire Whole Foods could be a tipping point for turning the e-commerce giant into a key digital advertising player, as reported by The Wall Street Journal.
- He said he believes the deal will change how WPP clients control and think about budgets since Amazon would have access to its current trove of online consumer behavior along with the offline consumer insights provided by Whole Foods shoppers.
- Sorrell also lamented the growing power of Google and Facebook with their combined control of 75% of digital advertising. He specifically cited inscrutable algorithms from both tech giants and said he viewed them as media companies rather than technology companies and that they have to be responsible for the content they publish.
Dive Insight:
Amazon’s current role in the digital ad world is somewhat in dispute. The Journal cited eMarketer figures that Amazon will generate $1.81 billion in worldwide ad revenue this year for a 0.8% market share. But, in May BMO Capital Markets managing director for media and internet equity research Dan Salmon offered a contrasting view that Amazon will hit ad revenue of $3.5 billion this year with a 63% growth in 2018 bringing the total up to $5.7 billion. Salmon based his larger forecast on various sections of Amazon’s earnings reports as the company doesn’t specifically release ad revenue figures.
Sorrell has previously mentioned Amazon as an up-and-coming online ad player. In a Q4 earnings call in March he called Google, Facebook and Amazon “frenemies” of WPP pointing to Google as the friendliest of the group and Amazon as the most unfriendly. He went as far as to say Amazon keeps him up at night instead of his then three-month-old daughter. Sorrell said he believed Amazon had an advantage because while people conduct research on Google, ads on Amazon are more valuable to brands because people on the e-commerce site are more likely to be thinking about making a purchase.
In addition to the Whole Foods deal, Amazon has made other moves that have the potential to strengthen its role in advertising. The company's Alexa digital assistant and related devices like the Echo smart speaker are leaders in a quickly emerging space where consumers engage with a variety of services using their voice.
