Amazon keeps WPP boss up at night
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Amazon keeps WPP boss up at night

Sir Martin Sorrell is the CEO of the world’s largest advertising company, WPP. However, despite the recent birth of his family, it’s not the sound of screaming children that keeps him up at night. Rather, it’s Ecommerce powerhouse Amazon.

“The answer to the question ‘What worries you when you go to bed at night and wake up in the morning?’ isn’t a 3-month old child,” Sir Martin recently told Business Insider, “It’s Amazon – which is a child but not three months.”

Amazon is up by 13% so far this year

amazon gph

SOURCE: Yahoo Finance

The thing that Sorrell finds so concerning about Amazon is its move into advertising – and its potential, along with Google and Facebook – to shut ad agencies out of the loop by working directly with clients.

Sorrell refers to Google and Facebook as WPP’s “frenemies” – they do business together, but two former companies also have the potential (occasionally realised) to shut WPP out of the equation. Of the two, Google is the more friendly, according to Sorrell, while Facebook is largely ambivalent. Amazon, he says, is the least friendly of all.

No one really knows how much Amazon makes from advertising. The company’s “other” revenue from North America, however, is believed to consist mostly of ad revenue, and it grew 60% to $1.3 billion in 2016. Sorrell believes that Amazon is a threat to Google – advertising money, he thinks, is better spent where people actually go to shop. But Google and Facebook still dwarf amazon in this regard: while eMarketer thinks that Amazon will generate $1 billion in ad revenue in the U.S. in 2017, Google is expected to make $35 billion, and Facebook $15 billion.

Sorrell may worry about Amazon, but he’s happy to try working with them: "It's early days with Amazon, you never know what's going to happen. We put together an agency in Seattle specifically to deal with Amazon and cater to Amazon."

He did not specify how that relationship was evolving.

Disclosure
Dominion holds WPP in its Global Trends Managed Fund. Additionally, it holds Amazon in its Global Trends Ecommerce Fund.


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