Amazon‘s advertising business is already threatening Google and will be capable of challenging its dominance in the future, according to Martin Sorrell, Chief Executive Officer of WPP, the world’s largest advertising holding company. During a Tuesday interview with CNBC at the World Economic Forum in Davos, Switzerland, Mr. Sorrell said his firm spent approximately $5 billion with Google, $2 billion with Facebook, and $200 million at Amazon last year, noting that its investments in the latter are likely to rise going forward. WPP expects to spend around $300 million on Amazon advertisements over the course of 2018 and is prepared to ramp up its commitments to the Seattle, Washington-based tech giant even more should its marketing business grow in an appropriate manner.
Mr. Sorell believes the threat Amazon poses to Google is multifaceted but still primarily revolves around its e-commerce platform which accounts for about 55 percent of all product searches in the United States, he claims. While Amazon’s advertising business is still 20 times smaller than Facebook’s and only amounts to around two percent of Google’s related turnover, the marketing mogul believes the company is on track to grow in an aggressive manner going forward. The biggest obstacle to Amazon’s improvement in the segment isn’t necessarily related to its advertising efforts but its general business practices that threaten to make many jobs obsolete, the entrepreneur said, specifically referring to the first checkout-free Amazon Go store which opened its doors to the general public just yesterday. The technological revolution the company is trying to create may make some actors reluctant to support it or outright oppose it due to Luddite-like stances, the executive suggested.
Amazon’s advertising unit has been touted as the next big thing in the industry for years now, with recent reports suggesting the retailer is preparing a major marketing push in the near future. Besides the popularity of its product search engine, Amazon’s strength lies in the fact that its online platform is primarily visited by people who are already prepared to spend money, which is the ideal audience for marketers. Not only are advertisers aware you’re interested in making a purchase when you’re on Amazon but they also have the knowledge of the contents of your virtual shopping cart and transaction history, making every ad unit pushed through the retailer potentially much more valuable than paying for advertising through a more general-purpose platform such as Google and Facebook, even though the latter two are believed to have a much deeper understanding of their audience.